BRUSSELS' AUDIT REFORM proposals were due to be presented in a press conference this week.

Internal markets commissioner Michel Barnier has led the charge, and his office told Accountancy Age more pressing matters had parliament otherwise engaged, delaying publication until 30 November.

Barnier's spokeswoman admitted it might be even longer, saying she "has not yet received final arrangements for next week".

The potential collapse of Greece, Portugal and other southern cousins is unlikely to be resolved in seven days, and all the time Barnier's radical agenda risks losing impetus.

Mid-tier firms have argued the delay has nothing to do with eurozone crisis, and everything to do with pressure from powerful anti-audit reformers.

BDO senior audit partner James Roberts said: "It's clearly a fabulous lobbying job. I think Brussels is pretty shocked and awed by the degree of lobbying."

Big Four voices suggested there has been substantial resistance from member states, claiming the far-reaching proposals have spurred politicians and big business into action.

Lobbying is really just another word for persuasion, and all interested parties have the right to reasonably influence the debate.

If the delay is simply down to Brussels' distraction by the foundering Euro, Barnier's supporters might have little to fear.

However, if the commissioner has met stalwart resistance to his plans and this is the reason for the postponement, change could be afoot.

When the draft reforms were revealed by Accountancy Age in September, experts' main observation was that all measures from Barnier's original proposal remained on the table.

At the time, Barnier's office suggested the draft was very close to the expected final version. However, yesterday a spokeswoman said: "We will probably see some changes. It's very normal in political debate to see some changes before proposals are finally adopted."

As Barnier stood by his reforms despite fierce early resistance, a climb-down now would still seem unlikely. There would have to be a lot of pushback to effect a u-turn at such a late stage.

If, as some experts maintain, Barnier has a personal vendetta against the Big Four, lobbying by them would probably fall upon deaf ears. Business interests are much more likely to be impacting events.

The UK Hundred Group of FTSE-leader finance directors has attacked Barnier's headline reforms, including pure audit firms, mandatory joint audits and mandatory rotation.

BusinessEurope, which represents 20 million companies across 35 countries, had equally trenchant things to say about the proposals, and their needling is likely to make MEPs sit up and take notice.

One person's lobbying is another person's participation in the political debate, and the fact that it has potentially been strong enough to push Barnier off course means his vision for audit reform is far from reality.

NOT EVEN HALFWAY through November, and already it is proving a tough month for high-profile firms.

PwC is really up against the wall, pilloried by negative press for not one but four unfortunate-looking audits.

It is hard to pick the most embarrassing. The high-profile collapse of MF Global uncovered suspicious handling of clients' funds, raising questions as to why PwC failed to flag up the problem.

Not new news, but headline-grabbing nonetheless, the Accountancy and Actuarial Discipline Board announced it will see PwC in court (the International Dispute Resolution Centre, to be exact) over alleged failings related to JP Morgan.

Unfortunately for PwC, those failings tally closely with MF Global-related accusations. The Financial Services Authority claims reports logged by the firm in respect of JP Morgan Securities' compliance with Client Asset Rules were sub-standard for the six years to 31 December 2008.

The Client Asset Rules draw strict lines between company and client money to prevent one bleeding into the other. A UK PwC spokesperson insisted procedures have been tightened up since the JP Morgan case, and pointed out MF Global is audited by the firm's US arm.

Nevertheless, it is an unfortunate concurrence that sharpens the focus on procedures and controls.

And we're not done there.

Sub-prime lender and former client Cattles is bringing action against PwC which could cost the UK number-one firm £840m, The Telegraph recently reported.

PwC was also recently forced to defend its audit of collapsed nightclub operator Luminar, saying: "Our opinion in Luminar's annual report for the year ended 26 February 2011 clearly highlighted the severe issues the company faced in relation to its ongoing business. We do not include emphasis of matter paragraphs lightly in audit opinions."

Not a stellar month by anyone's estimation.

But peers should not revel too much in PwC's discomfort, as the embarrassing public meltdown of camera maker Olympus has dragged Ernst & Young and KPMG's Japanese arms into its boiling wake.

Olympus has held up its hands to financial mismanagement, after its short-lived chief executive Michael Woodford asked questions about an unusually high consultancy fee paid during an acquisition, and was promptly sacked.

The company admitted that since the 1990s it has been "deferring the posting of losses on investment securities" and using advisors' fees and purchase funds set aside for acquisitions to smooth rough patches in its accounts.

Those in the accountancy-watching world have inevitably turned their gaze to the auditors, asking why no one flagged up Olympus's innovative use of funds.

KMPG Azsa, Olympus's auditor until June 2009, signed off its client's accounts in March of that year despite disagreements over the way it recorded the acquisition of medical equipment maker Gyrus, The Financial Times reported.

Tsuyoshi Kikukawa, then Olympus chairman, admitted in an email to Michael Woodford that Ernst & Young ShinNihon was engaged as a result of this dispute with KPMG, but E&Y also failed to flag up the problem.

The Japan Institute of Certified Accounts is to investigate the two firms' roles in the scandal.

Deloitte is the only Big Four player not to have hit the headlines for questionable work in recent weeks, but it shouldn't get too comfortable with its ephemeral halo.

The whole of Europe and the US have fixed their gaze on audit, and firms are facing an in-depth UK Competition Commission investigation, while waiting anxiously for the final audit reform paper from Brussels expected in late November.

It is not a good month to be accused of audit shortcomings, but at least the Big Four will have lots of practice fighting their corner.

RISK REPORTS must be kept "short, sharp and relevant", Financial Reporting Review Panel chief Bill Knight has insisted.

Talking at Meet the Experts, he illustrated his point using RBS's risk report from quarter-three 2008, which listed one of its major business threats as "the outbreak of a major pandemic".

Other generalities in the report included the revelation that bank performance is affected by "economic conditions particularly in the UK, US and Europe". Cue much derisive laughter.

Knight (pictured) has been chairman of the FRRP since 2004, but it is clear that the financial crisis has given him to confidence to get tough on poor reporters, at least in the relatively supportive environment of an accountancy conference.

Where was this tough talk three years ago?

BRUSSELS is pushing joint audit hard, and mid-tier firms agree the proposed reform would help break open the market, especially for large public-interest entities.

Detractors argue the costs would far outweigh the benefits, with audit quality threatened by issues falling through the gaps between two firms and fees climbing.

Architect of the proposals, internal markets commissioner Michel Barnier, said shared audit would have the advantage of "two pairs of eyes", and denied the process would lead to the doubling up of work.

Surely this is a contradiction in terms? Either two sets of auditors provide assurance on the same part of the audit, or they split the work to avoid duplication.

Barnier cannot have it both ways. If he is imagining two auditors survey certain key parts of the audit and divide the rest, this should be explicitly outlined. Which areas would merit two pairs of eyes, and who gets to decide?

More details please, Brussels.

THE EURO is in trouble, finance ministers are drowning in sovereign debt, and Brussels insiders say UK lobbyists have about as much credibility as a Greek bond. So why has the Department for Business stuck out its neck on audit reform?

A leaked BIS email called on European counterparts to lobby against the European Commission's proposed audit reforms and provided a draft briefing to coordinate member state complaints, the International Accounting Bulletin reported.

Big Four insiders said BIS has been "sympathetic and responsive" to their concerns about the proposals, which include mandatory auditor rotation and joint audits for the largest companies.

Frequent dialogue between BIS and accountancy's top dogs might explain the government's eagerness to ensure anti-audit reform voices carry weight in Brussels.

One Big Four insider said the firms "know everything" BIS is up to, and "have to be told in advance" if its activities will significantly affect their business.

However, the mid-tier is also confident of its rapport with BIS. One top-ten firm spokesperson agreed the leaked email was "not very helpful", but insisted their relationship with the government department remains "good".

The email is all the more surprising given recent developments, including the referral of the audit market to the Competition Commission.

Brussels has implied its reforms will reduce concentration at the top of the market, and recent government actions - including the House of Lords inquiry and subsequent Office of Fair Trading investigation - suggest the coalition shares Brussels' concerns.

So why the apparent volte-face? Could it be that government is happy with a little nip-tuck in the UK, but an EU-wide regulatory cudgel is a bit too scary?

BIS has "severe concerns" that some of the EC's proposals "do not support EU growth ... impose unnecessary regulation on business" and could damage audit quality.

Mandatory joint audit and pure audit firms are its biggest bugbears, and it fears auditor rotation will be expensive and unpalatable to clients on quality grounds.

One critic has suggested the email is a "misguided" civil servant effort rather than a political statement, arguing it does not reflect the UK's official stance.

However, the force of its message and presumed distribution list might suggest something else - that BIS thinks Brussels' reform is a load of rubbish, and is prepared to put its money where its mouth is.

Experts have criticised the European Commission's approach to audit reform, saying proposals bear no relation to supposed problems, and the whole shebang stems from internal markets commissioner Barnier's deep dislike of the Big Four.

Given the sensitivities around audit reform and the UK political backdrop - Cameron recently faced his biggest parliamentary revolt as 79 backbenchers called for a referendum on Europe - it seems BIS's dislike of Barnier's plans is too strong to be stifled.

ON FRIDAY, the Office of Fair Trading delivered the verdict we were all waiting for - a call for the powerful Competition Commission to investigate audit.

After a tumultuous year for the profession, the announcement didn't make quite as many ripples as it might have.

Audit has been in the spotlight since the dread financial crisis of 2008, possibly because slating accountants is a less scary prospect than tackling the banks.

In late 2010, the House of Lords turned its attention to audit competition and choice and the Big Four was up in arms about a possible referral to the OFT, denying claims of excessive concentration at the top of the market.

In April, chancellor George Osborne used the Budget to call for an end to banking covenants, saying the clauses - which force clients to choose a Big Four auditor - are bad for business.

So when the Lords finally unveiled their conclusions in late June, the Big Four had adopted more of a conciliatory stance, while the mid-tier were hopeful of dramatic recommendations

Sure enough, the Lords asked the OFT to take a look, and in came the barrage of comments, complaints and congratulations.

But last week's revelation that the OFT has called in its scarier big brother, the Competition Commission, has elicited little more than lacklustre murmuring.

Partly, this is because the referral was widely expected, and stakeholders have already made their positions clear.

In July, the OFT announced the preliminary conclusions of its inquiry into a possible Competition Commission referral, and all signs pointed to yes.

It then undertook a further six-week consultation, during which the Big Four expressed little hope of avoiding a referral and the mid-tier tried to be gracious in their jubilation.

So when a commission investigation was finally announced, nobody was very surprised.

However, there is a bigger reason the decision has provoked little reaction, and that is the spectre of Brussels' audit reform.

In September, Accountancy Age obtained the European Commission's draft audit reform paper, and the proposals it contained goaded stakeholders into furious commentary and debate.

Suddenly, the prospect of a UK-focused competition investigation seemed positively welcome to the Big Four, when set against the apparently unbounded radicalism of EC proposals.

Where before the Big Four bemoaned the Competition Commission's costly two-year investigation, now they praise the watchdog for its focus on evidence and empirical conclusions, comparing it favourably to Barnier's "personal crusade".

Mid-tier firms maintain their support for the OFT's referral, but their eyes too are focused on the bigger prize of EU-level measures, and their response to the Competition Commission announcement was consequently muted.

It seems that to push through controversial decisions, one need only have a bigger, scarier alternative on the horizon, encouraging stakeholders to welcome the first option with open arms.

EUROPEAN COMMISSION audit reform proposals could see major firms split down the middle, unable to perform both audit and non-audit services under the same umbrella.

Audit firms might also be prohibited from belonging to a network that provides non-audit functions, meaning, for the sake of argument, that PwC Audit Ltd would not be able to borrow consultants from PwC Business Services Ltd.

But what if auditors need friendly non-audit experts to help them along? What if risk managers and actuaries who currently lend a hand are no longer in the same firm, and close association between the two is forbidden?

PwC Audit Ltd might have to call on KPMG Business Services Ltd for help. But would KPMG be interested? If its consultants work on another firm's audit, independence rules might conflict them out of providing their own non-audit services to the company in question.

Such a situation would hog-tie the Big Four, and their clients probably wouldn't be too happy about it either.

WHAT IS GOING on at the Financial Reporting Council? Before the summer, we were told the regulator was to conduct a structural reshuffle, examining its form and function with the aim of emerging, butterfly-like and blinking, into a more streamlined and efficient dawn.

We're still waiting. A spokesman said a consultation document written in conjunction with the Department for Business, Innovation and Skills is due any day now. With so many government hoops to jump through, it is little wonder the watchdog is kicking its heels waiting for the nod from on high.

But what will the consultation document look like, and where does the FRC see itself in the future?

The main board and its six sub-bodies have grown organically from the organisation's inception in the early 1990s. For this reason, it seems logical to consider whether today's animal is functioning as efficiently as possible.

Communication - or lack of it - between the various arms has been mooted as one possible reason for the overhaul, and overlapping responsibilities must also be a concern.

The regulator has vigorously denied claims that the restructure is financially motivated, saying any such cost pruning would have taken place soon after the credit crisis knocked London on its back.

If no or few jobs are to go, it seems unlikely that entire boards will be cast adrift, and consolidation of the various arms appears the most probable scenario. Whether staff will want to stay once they have been shuffled like so many cards is another question.

If the boards are jumbled around, it is inevitable that responsibilities will also shift. No longer will there be any need for six chairmen leading separate teams. How will the former chiefs feel about a real or perceived demotion?

With better communication in focus and sub-bodies being amalgamated, it seems likely the main FRC board will see its powers strengthened. This would also fit with its ambition for deeper engagement on the European regulatory front, as evidenced by the roundtables it hosted during the Conservative and Liberal Democrat party conferences.

Being sleeker and more streamlined might help it to lobby and command respect in Brussels, something a European official yesterday warned will be the UK's greatest challenge in the future.

Some expert observers have suggested the Accounting Standards Board's days are numbered. With UK listed companies following international financial reporting standards and much of the world heading the same way, it is true that the ASB has a smaller role to play than before.

However, many of its members have gone on to join global equivalent the IASB, and UK standard setters are well regarded in the international arena. Will this protect the body from being subsumed to a more active board?

It is impossible to know. And whatever expectations the FRC might have for the consultation, they could be trumped by stakeholder views or high-level political pressure. All eyes are on chief executive Stephen Haddrill, (pictured) possibly the only one who really knows where the cards will fall.