BOSSES at a York accountancy firm are celebrating after becoming the first in Europe to snip through a whole raft of red tape brought in by the American authorities in the wake of the Enron scandal.

Garbutt & Elliott, the chartered accountancy firm and business adviser, has been granted audit registration by the powerful US authority, the Public Company Accounting Oversight Board (PCAOB).

The accreditation - the only one so far in Europe - will enable the firm to further develop its growing client base of US subsidiaries in the UK.

Under new regulations, due to come into force in July, any non-US auditing and accounting firms providing audit services for US-listed companies or substantial subsidiaries must be registered with the board.

The board was established as a non-profit accounting watchdog following the high-profile financial collapse of energy trader Enron in 2001 - the biggest corporate failure in US history.

Enron auditor Andersen, once one of the world's largest auditing firms, subsequently collapsed itself, following its implication in a complex tangle of dubious accounting practices.

Now the stringent board registration scheme sets standards for audit quality control and auditor independence.

Alan Sidebottom, the Garbutt & Elliott director who oversaw the registration process, said: "Clearly, there must be question marks over auditor independence in corporate culture.

"For example, if a firm provides both auditing and consultancy services to the same client, you may have a potential conflict of interest.

"It is perceived by certain authorities that even if the firm suspects a client of dubious financial practices, it may not wish to risk losing lucrative consultancy fees, often significantly more than audit fees, by blowing the whistle.

"With Enron, Andersen was providing both business consultancy and auditing services. This is now strictly prohibited under the new PCAOB rules."

Garbutt & Elliott's decision to apply for registration earlier this year was prompted by its increasing amount of work from US-listed companies and subsidiaries, thanks partly to its membership of Moores Rowland International, a worldwide association of independent accountancy firms.

David Dickson, managing director, said: "The achievement of PCAOB registration puts us in an excellent position to continue to benefit from our international connections as a member of Moores Rowland International.

"The amount of work we do for US firms is developing, and we expect it to continue growing, becoming at least 15 per cent of our total workload within two years."

The accreditation was, he said, clear recognition that even as a regional firm employing more than 100 people at York and Leeds, Garbutt & Elliott had "the flexibility and independence to undertake world-class work".

Updated: 11:48 Tuesday, April 06, 2004