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30 Nov 2011
MANDATORY JOINT AUDIT is nowhere to be seen in a raft of softer reform proposals unveiled today by the European Commission.
Initial plans could have forced the largest firms to hive off their audit practice, but the final proposals are less hard-line and might result in an effective extension of existing rules.
Further reading
Mandatory joint audit, long favoured by mid-tier firms for its competition-boosting potential, has also been shelved, although joint audits are "encouraged" by mandatory rotation rules.
In one of the few fortifications to the original proposals, the maximum engagement period has been reduced to six years from nine years. However, companies that opt for joint audit are allowed to keep their auditors for up to nine years.
Mandatory tendering remains, with the largest public-interest entities obliged to adopt an open, transparent process when selecting new auditors.
Internal markets commissioner Michel Barnier (pictured) has also rowed back on Europe-wide supervision of audit. Initially suggesting oversight should be consolidated in Brussels, he is now calling for the coordination of auditor supervision activities to be ensured within the framework of the European Markets and Securities Authority.
The proposal to create a single market for statutory audits remains, with the introduction of a European passport for the audit profession.
Barnier said: "Investor confidence in audit has been shaken by the crisis and I believe changes in this sector are necessary: we need to restore confidence in the financial statements of companies. Today's proposals address the current weaknesses in the EU audit market, by eliminating conflicts of interest, ensuring independence and robust supervision and by facilitating more diversity in what is an overly concentrated market, especially at the top-end."
Originally due to be released last week, mid-tier firms have suggested Big Four-inspired lobbying was behind the delay and subsequent softening of the reforms.
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Briefings
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Visitor comments Add your comment
weaker audit reforms
I expressing my view in very nut shell. The big firm (so called big fish)have thier own interest and they play various games to safeguard thier interest and to survive in the audit field . there fore game would be sorrounding over them and if some one want to enter they bounce by give various audit technical reasons, prudental law, and other relevant reasons. therefore, if u want to join in this lobby then u have change your self according to their requirements and reasonthereof.
that is all of today session
Good Bye
hameed s/o Hyderali
senior audit officer
THE AGA KHAN UNIVERSITY AND HOSPITAL KARACHI PAKISTAN
CELL 03002454082
Posted by: hameed.boolan, 30 Nov 2011 | 11:48
A strange reading
'Weaker proposals'; 'a raft of softer reform proposals'; 'less hard-line'?
This is a strange reading of the proposals, Rose. With the exception of mandatory joint audit (which is now incentivised through a relaxation to the madatory rotation timeframe), all the proposals are still there, including the creation of pure audit firms for the Big Four.
Posted by: Jeff, 30 Nov 2011 | 13:02
Pots & Kettles ????
Shouldn't priority be given to ensuring taxpayers' money is properly spent & accounted for by the EU before the culprits criticise & vacillate the practices in the private sector.
Posted by: Criss Roger, 30 Nov 2011 | 15:11
The Power of the Few
The medium size firms are correct, the only explanation for the weaker reforms is some kind of lobbying from the Big Four. This is yet another example of how the elite few have conrol over the markets and something needs to be done for the better of the many. My suggestion is that medium size firms should not give up hope, keep protesting and you stand a chance of getting justice. No?
Posted by: Jawad Akhtar, 05 Dec 2011 | 15:31