With the recent Dodd Frank law amending the accounting rules to permit exchange of information with overseas regulators, the Public Company Accounting Oversight Board (PCOAB) and its British counterpart Professional Oversight Board (POB) have signed an agreement to cooperate in the oversight of auditors and public accounting firms in either jurisdiction.The six largest global accountancy firms – BDO, Deloitte, Ernst & Young, Grant Thornton, KPMG and PwC have also welcomed this co-operative agreement.
The agreement provides a basis for the resumption of PCAOB inspections of registered accounting firms that are located in the U.K. and that audit, or participate in audits, of companies whose securities trade in U.S. markets. The PCAOB previously conducted inspections in the United Kingdom with the POB from 2005 to 2008, but has been blocked from doing so since that time.
The agreement could open the door for the PCAOB to look into Ernst & Young UK’s role in the accounting fraud involving the removal of billions of dollars of fixed income securities from the Lehman Brothers balance sheet to deceive investors about the bank’s liquidity; the Repo 105 scandal.

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