The watchdog would act as a co-ordinating body to develop common principles for member state oversight systems, and has been greeted as a positive move, provided such an organisation doesn’t overstep its remit and become a European version of the US Public Company Accounting Oversight Board.
‘The important thing is that it is a coordination mechanism, and has not been described as an oversight board in the same way as the PCAOB,’ said Martyn Jones, audit technical partner at Deloitte & Touche. ‘There is great sense in having coordination and greater harmonisation in this area.’
The FEE proposal has raised concerns among some who believe it will lead to another level of bureaucracy and move power away from the oversight bodies of individual states.
However, others have dismissed such concerns, claiming the proposals are in no way intended to trigger such moves. ‘This is not an oversight body, not another level of bureaucracy,’ said Robert Hodgkinson, technical director at the ICAEW. ‘It will be a group of peer organisations working together and sharing experiences.’
There are also expectations that when such fundamental principles are formulated, it would mean little change to oversight in the UK. Indeed, many feel that such a group may look to the UK system when establishing such principles.
The sometimes-strained relationship between the European Commission and the PCAOB in the US over the registration requirements set out in Sarbanes-Oxley could also be eased by the formation of such an organisation.
‘It is a means of establishing efficient transatlantic dialogue on the issue of audit,’ said Hodgkinson. ‘It will also build a basic level of confidence that the principles will be adhered to on a European-wide basis.’
There are still some words of warning however over the establishment of such a body. Deloitte’s Jones said: ‘We need to avoid too much change just for the sake of change.’ – See opinion, page 16.
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