The European Commission has given the green light to the exchange of audit documents between the oversight authorities from the EU and their Australian and American counterparts. The decision, adopted on 1 September, recognises the “adequacy” of the auditor oversight authorities of Australia and the United States. This adequacy was evaluated in light of the cooperation criteria set out in the EU’s Statutory Audit Directive (2006/43/EC).

In particular, the Commission verified the capacity of the competent authorities of these two countries to implement guarantees in terms of respecting the rules of professional secrets and confidentiality.

The decision targets the following three authorities: the Australian Securities and Investments Commission; the US Public Company Accounting Oversight Board; and the US Securities and Exchange Commission.

As auditing has moved beyond national borders, international cooperation is necessary to ensure that high quality audits are carried out worldwide, underlines the Commission.

Reciprocal bilateral working arrangements - authorising access to these documents - between EU member states and the non-EU country concerned must be agreed before any exchanges may be made. These bilateral working arrangements must contain “appropriate safeguards regarding the protection of personal data as well as the protection of professional secrets and sensitive commercial information related to the companies whose financial statements are audited as well as the auditors of such companies”. Furthermore, it is the individual responsibility of each EU member state to define how this exchange of documents may be carried out (paper or electronic transmission of documents, access to documents during joint inspections, etc).

The decision further specifies that audit working papers or other documents held by statutory auditors or audit firms may only be communicated “for the exercise of their functions of public oversight, quality assurance, investigations and penalties over auditors and audit firms”.

“The exchange of audit working papers is an important step in moving towards our ultimate objective of equivalent rules and mutual reliance on each other’s audit oversight systems”, said Internal Market and Services Commissioner Michel Barnier.

A similar decision has already been adopted for the auditor oversight authorities of Canada, Japan and Switzerland. The Commission has specified that it may adopt similar decisions regarding the auditor oversight authorities of other countries in the future.

The decision is available at www.europolitics.info > Search = 277735