FEE has warned that the advantages of the commission’s IAS plans will be undermined if audit reports only refer to national auditing standards. It expects its proposal to enhance audit quality and support the EC’s vision adoption of international accounting standards by all EU listed companies from 2005.
‘Currently, differences in member states’ national auditing standards are neither transparent nor clearly identifiable,’ according to the FEE paper on international standards on auditing in the EU.
‘As a result, users of audit reports have to invest extra resources to understand the precise nature of the assurance that is being given. This contributes to the fragmentation of Europe’s markets and raises the cost of doing business.
‘By enhancing cross-border confidence in audited financial statements, the proposal will better facilitate cross-border capital flows, and promote the internal market for goods and services across all sectors.’
FEE maintains international auditing standards could be adopted without new legislation based on coordination by a forum of European national auditing standard setters.
The FEE proposal was put to the European Commission’s Committee on Auditing and Robert Hodgkinson, vice-president and chairman of FEE’s Auditing Working Party, said: ‘Auditing standards have now become a major priority on the European internal market agenda. FEE has developed the discussion paper to provide a practical vision for the future of auditing standards in Europe.’
FEE is inviting reponses by the next EC Committee on Auditing meeting in March 2002. Written comments would be welcome by Friday 8 March, 2002.
For copies of the FEE discussion paper go to the FEE website