EU's audit and accounting proposals: The full list

IT HAS BEEN one of the most dramatic weeks in the profession since the collapse of Andersen in 2002.

Accountancy Age revealed the details of three EU draft papers this week that outline major changes to the audit profession, plus accounting and reporting all the way from micro business to major listed companies.

The list of proposals include splitting the Big four into audit and non-audit businesses, while quarterly reporting for listed companies is also heading for the chop.

Here is the rundown of EU proposals to reform audit and accounting:

EU draft audit regulation:
To reduce the expectation gap, the scope of statutory audit should be clarified and specified;
To improve the information that the auditor provides to users and the audited clients, the audit report should be improved and expanded, and the communication between the auditor and the audit committee should be improved;
A regular dialogue between auditors and regulators is required;
Block firms from offering both audit and non-audit services;
Mandatory rotation of auditor every nine years;
Joint audits, between a larger and a smaller firm;
Ownership restrictions on ownership of accounting firms should be lifted;
National audit supervisory authorities be strengthened and an EU-wide co-operation set up with the European Securities and Markets Authority

EU draft accounting directive:
Reduce SME financial reporting disclosures;
Lack of endorsement for SME international accounting standards;
Increase creditor protection by revealing related party transactions
Increase the audit threshold;
Increase transparency around payments by companies in extractive or forestry industries to governments

EU draft transparency directive:
Abolish the obligation for listed companies to produce quarterly reports;
Heightened disclosure around the holding of shares and incentives;
More focus on narrative reporting for SMEs;
Improve access to listed company data

Further reading:

EU to propose audit-only firms and mandatory rotation

Quarterly reports could disappear under EU plans

EU outlines simpler SME accounting