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EU weighs how to oversee foreign accounting firms under new law

European Union regulators are weighing how to supervise foreign auditors of companies with shares listed in the 27-nation area, under a new law ending self-regulation of the accounting industry.

The European Commission, the EU's executive agency in Brussels, today requested public comments on whether to exempt audit firms in countries such as the US as sufficiently regulated at home. „We need to make sure European capital markets remain attractive to investors and issuers from these countries,” Financial Services Commissioner Charlie McCreevy said in a statement. „I also hope that audit regulators in these countries will participate and help us to improve our cooperation on regulation of European audit firms.” EU countries are due to begin regulating accounting firms by June 29, 2008, if they haven't already done so, under a law agreed to by the governments in October 2005.

The measure applies to auditors of all companies with shares trading in the EU, raising questions on how to regulate accountants abroad. The law is part of a corporate governance overhaul responding to corporate scandals including the bankruptcies of Parmalat SpA of Italy and Enron Corp. in the US Ending self-regulation of the industry in Europe also fulfills an agreement with the US struck by McCreevy's predecessor, Frits Bolkestein, in March 2004. The commission is asking businesses and other interested parties to comment until March 5 on issues including whether to recognize audit standards from other countries and how to share documents with regulators abroad. (Bloomberg)