The Financial Reporting Council (FRC) and the Public Company Accounting Oversight Board (PCAOB) have agreed to continue their cooperation agreement on cross-border supervision of audit firms.

The move follows recent European Commission Decisions that allow such agreements until 31 July 2016, and will enable the UK and US financial watchdogs to work jointly on audit inspections and exchange confidential information.

Paul George, the FRC's executive director of the conduct committee, said: 'The FRC and the PCAOB have developed an excellent working relationship in recent years, which has provided the basis for increasing confidence in one another's regulation of major audit firms.'

Last week the PCAOB released its second inspection report on auditors of brokers and dealers which found deficiencies in the audits of all of the firms inspected, and in 95% of the individual audits selected for inspection, which the regulator described as 'troubling'. It raised particular concerns about auditor independence and professional scepticism.