EUROPEAN PARLIAMENT today voted to reform the way audits are conducted imposing mandatory rotation.
Under reforms drafted by British MEP Sajjad Karim (pictured), companies will be obliged to change their auditor every 14 years – although this may be extended to 25 years by member states if they fulfil certain criteria.
MEPs voted to adopt a series of measures designed to improve the audit process and instil greater transparency and confidence in the way audits are conducted.
Speaking after the vote in the European Parliament Legal Affairs Committee (Juri), Karim said: “Reforming the audit sector is crucial to boost confidence in the financial markets, and to support growth and investment in European companies.
“We have consistently advocated an international approach, adopting global standards which promote audit quality. It is no surprise that regulators in the US and around the world are watching us closely and the vote this morning signals loud and clear that we are taking the right steps.”
Karim’s original proposal proposed a long back-stop period, of 25 years, in contrast to the European Commission’s plan to intervene in the market on a six year basis.
The report was voted through Juri with the support of MEPs from the European People’s Party and Alliance of Liberals and Democrats for Europe.
The reforms will go before the full European Parliament later this year.
Despite concerns over the viability of BHS, advisers including Grant Thornton were paid in the millions of pounds for their roles, according to the Work and Pensions and Business, Innovation and Skills Select Committees
Colin ponders how the Pokemon craze is permeating the world of accountancy
The UK’s decision to leave the EU has raised questions about whether the FRC's regulatory framework should change in the future
Following international accounting standards for leasing one battle too many for the MOD