Inspections of Non-U.S. Firms
Under the Sarbanes-Oxley Act and the Board’s rules, non-U.S. registered firms are subject to PCAOB inspections in the same manner as U.S. registered firms. Firms located in foreign jurisdictions are inspected to assess their compliance with the
Sarbanes-Oxley Act, the rules of the Board, the rules of the Securities and Exchange Commission, and professional standards in connection with their performance of audits, issuance of audit reports, and related matters involving issuers and brokers
The PCAOB has inspected non-U.S. registered firms since 2005. These inspections have generally been carried out in two ways:
- PCAOB-only inspections, where the PCAOB conducts the inspection on its own in coordination with the home country regulator; or
- Inspections conducted jointly with the home country regulator. Under a cooperative framework for non-U.S. inspections that was adopted by the Board, the PCAOB may rely, to a degree deemed appropriate by the Board, on inspection work performed by the home country regulator.
The PCAOB often enters into formal cooperative arrangements with foreign audit regulators in order to minimize administrative burdens and potential legal or other conflicts that non-U.S. firms may face in the foreign jurisdiction in question.