Audit regulators have denied two firms permission to audit U.S. public companies—one a Deloitte affiliate in Guam and another firm in Germany—because they performed audit work in the United States before seeking permission.

Deloitte & Touche Guam applied in January 2012 for registration with the PCAOB. The board recently denied the registration request because the firm did not demonstrate the “degree of care” expected of a public accounting firm operating in U.S. capital markets, the PCAOB said. The firm audited financial statements for the Bank of Guam, a U.S. registrant, for six years before applying for registration, according to the order denying registration, violating the board's rule that the firm must be registered with the board before it can perform such audit work. The Bank of Guam says Deloitte & Touch Guam began serving as it independent auditor for its fiscal year ended Dec. 31, 2003, just as the Sarbanes-Oxley Act was taking effect, putting the regulation of audit firms into motion.

The second firm, Winfried Heide Wirtschaftspruefer & Steuerberater based in Germany, submitted a single audit report for GBS Enterprises Inc. in July 2011 before it applied for registration with the PCAOB. The board denied its registration request citing the same concern over the “degree of care” exercised by the firm under the circumstances.

The separate two-page orders denying registration both close by indicating the firms can re-apply—and if they do, the board will not call for a hearing specifically on the conduct that led to the denial before considering any new application. In Deloitte's case, the board makes that promise only if the application is submitted after Sept. 1, 2012. The board places no such date restriction on the German firm.

The Bank of Guam filed a form 8-K in December to indicate it was dismissing Deloitte & Touche Guam as its auditor after learning the firm was not properly registered with the PCAOB. In the 8-K, Bank of Guam says it faces action from the Federal Deposit Insurance Corp., which wants to know how the bank plans to remedy the issue. The bank said it was working on a plan to furnish freshly audited financial statements, if the FDIC would require it. Going forward, the bank said it retained Deloitte Singapore to review interim-period financial statements and would rely on Squar, Milner, Peterson, Miranda & Williamson for its 2011 financial statement audit.