The investment watchdog may soon be inspecting local companies on behalf of US regulators.

The Federal Government has passed legislation to allow the Australian Securities and Investments Commission (ASIC) to share otherwise confidential information with overseas agencies.

The American Public Company Accounting Oversight Board (PCAOB), which monitors all companies that raise capital in the US – as well as their auditors – is likely to be the first regulator to benefit from the change.

With Australian insurers developing businesses overseas, the implications of the move will be measured very carefully. Parliamentary Secretary to the Treasurer Chris Pearce says developing close links between Australian and US regulators is in the interest of both countries.

“The bill will provide a legislative framework to empower ASIC, with the consent of the minister, to enter into co-operative audit arrangements with foreign regulatory bodies,” he said.

It will also reduce compliance costs for businesses that operate under the two jurisdictions. “They will need to accommodate only one joint inspection, rather than two separate inspections by ASIC and the PCAOB.”

Under the bill, ASIC will expand the scope of its own inspections to include compliance with US control laws. Chairman Jeffrey Lucy says his staff will work closely with the PCAOB team, particularly during the initial stages.