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.
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.