Professor Bainbridge...on law, politics, religion, culture & food

SOX and the Ugly American

The UK Financial Times reports on grumbling by UK firms about regulatory imperialism by the US SEC and PCAOB post-Sarbanes-Oxley:

Having US inspectors trawling through foreign audit firms must mean wasteful activity. Even where there is a high degree of co-operation, some repetition is bound to occur. And achieving this co-operation will not be possible without large amounts of time and effort that could have been directed elsewhere.

Extending the US writ in this way is offensive at a deeper level. This requirement of Sarbox amounts to telling audit regulators throughout the rest of the world that the US authorities do not believe they will do a proper job. Behaving as though you have a monopoly of virtue is rarely attractive and in this case is also misplaced, since Sarbox falls far short of a regulatory ideal. Even more fundamentally, it is unacceptable that legislators in one country can declare unilaterally that their law should run outside their - jurisdiction.

The obvious answer would be some form of reciprocity. If an audit firm has been approved by UK regulators, that ought to be good enough for the PCAOB.