The European Commission has issued a list of 10 objectives and proposals for new EU laws that will radically overhaul and extend existing legislation, prevent conflicts of interest for auditors and enhance the EU’s protection against potential Enron-type scandals.
Short-term proposals include the strengthening of public monitoring of auditors at national and EU level, requiring ISAs (International Standards on Auditing) for all EU statutory audits from 2005 and the creation of an EU regulatory committee on audit. A new directive would replace and extend current EU legislation, the 8th Company Law Directive, covering the education, approval and registration of persons who can be approved by member countries to perform audits.
In the medium term, the commission will assess the frameworks for disciplinary sanctions that apply in each country and introduce an obligation to co-operate in cross-border cases. The single European capital market has 7,000 listed companies and some two million statutory audits are conducted annually in the EU.
Frits Bolkestein, the EC’s internal market commissioner, said: ‘The integration of European markets requires the quality of auditing to be reinforced. I want European solutions tailored to our needs, respectful of our different cultures with the full support of the European profession. I do not accept the imposition of US standards on our firms. The EU will regulate its own businesses.’
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