DTI consults on Europe-wide audit standard

Link: The Debate – Additional training for audit committees

The draft directive, revealed by industry minister Jacqui Smith, is the European response to Enron, WorldCom and Parmalat and ‘in particular the questions these have raised about the role of the auditor’.

The key proposals are:

  • uniform high level of audit quality through auditing standards common across Europe;
  • a new framework against which the statutory auditor can assess independence risks;
  • confirmation of the principles of auditor independence;
  • a new system subjecting statutory auditors to monitor and review in order to ensure consistent quality assurance; and
  • moves to encourage convergence and the development of common principles of public oversight of the audit profession while leaving the organisation this activity to individual Member States.

Smith said: ‘In many ways the proposals in this draft Directive reflect Britain’s own approach to improve standards in auditing and auditor independence since the scandals of Enron and WorldCom in the US.’

The deadline for replies to the consultation is 30 November 2004.

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