French challenge EC to court battle over audit rules

The French accounting regulator has refused to bring its audit rules into
line with EU law and looks set for a courtroom showdown with the European
Commission.

The regulator,
Haut Conseil
Du Commissariat aux Comptes, has not backed down on its rules despite an EC
demand that they change their rules or face a court case in the European Courts
of Justice. Instead it is arguing that its rules contravene no EU laws.

The
Internal Markets Commission assessed French audit rules, following
complaints from the top six firms who claim that France’s law restricts their
rights to offer advisory and assurance services in other territories.

French rules prevent accounting networks conducting non-audit work for a
company elsewhere in the world, if they have carried out an audit of the same
company in France.

Firms are also prevented from auditing a French company’s accounts if they
have provided advisory services to the company in the two years preceding a
proposed audit.

The rules contravene the Treaty of Rome, which originally set up the Common
Market in the 1950s.

A source close to the top six firms said this week that the French have given
an answer which amounts to thrashing the matter out in court.

‘The EC gave them two months to reply. The French have now effectively said,
“we’ll see you in court.” It seems they’re seeking to argue that their law is
consistent with European law,’ the source said.

A spokesman for the Internal Markets Commission, tasked with handling the
issue, confirmed that the French had responded but could not reveal the details
of their response.

‘No immediate decision has yet been taken on whether it will be going to
court.
‘Their response is still confidential at this time. Our lawyers are checking
through their response,’ the spokesman said.

This is the second time the French have refused to change their rules, after
firms in 2006 issued a court challenge but had it rejected by the Conseil
d’Etat, the French high court.

France
on collision course with Europe over audit rules

French
CFO attacks joint audit