RegulationAccounting StandardsECJ challenge looms for French conduct rules

ECJ challenge looms for French conduct rules

Big Four fear new code of conduct could still become law

The Big Four in France may be forced to go to the European Court of Justice
(ECJ) in a bid to scrap potentially damaging legislation restricting audit
services.

The move follows a difficult campaign by the Big Four and Grant Thornton in
France to have the French Conseil d’Etat annul a 17 November 2005 decree that
brought a restrictive new code of deontology, or conduct rules, into law.

Although the Conseil, France’s highest court, agreed to annul the decree at
the end of March, the code itself is yet to be altered and could again be passed
into law. The Big Four have commented publicly that they cannot accept the code
as it stands, and hope that they can convince the government to change it before
a new decree is issued.

The key complaint is a ban on offering an audit if the client has received
other services from the Big Four network in the previous two years. The court
annulled the decree on the grounds that the code was retroactive, but not on the
claims of the accountants that it would damage their business.

Although the Big Four will confirm they are now in negotiation with the
government to rewrite the code, they have not yet officially stated their
intention to go to Brussels.

However, the French media is reporting that Big Four firms are already
looking at proving the incompatibility of the French code with current EU law
through an ECJ hearing in case the government refuses to cut the two year rule.

IFEC, one of the main professional bodies for accountants in France, said it
was pleased about the annulment, but added that it was still in favour of
“partial rewriting of the code’s text” and called on its members to campaign.

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