PracticeAuditParmalat sparks calls for auditor rotation

Parmalat sparks calls for auditor rotation

The European Parliament has called for laws forcing companies to rotate their audit partners as part of a long-term response to the Parmalat scandal.

Link: Parmalat special report

As part of a detailed resolution in response to the scandal at the bankrupt dairy company MEPs said they wanted laws to force companies to rotate their audit firm or responsible audit partner and ban auditors from providing other services to audit clients.

In the meantime, a ‘full and proper’ assessment of the Parmalat case was needed, MEPs said.

MEPs also voiced their concern that ‘neither the supervisors nor the regulatory authority nor the auditors nor the rating agencies’ had any idea that Parmalat funds were being embezzled.

They called for the creation of a single European Union authority for overseeing cross-border financial supervision in Europe and they also want EU legislation enhancing the individual responsibility of board members, ordering the inclusion of independent directors to guarantee better auditing.

Parliament has also called for employee representatives to be included on management or supervisory boards, to ‘safeguard their interests’.

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