EU eyes new regulation after Parmalat
The European Commission may be looking at new regulation to make auditors generally responsible for a company's accounts, as a result of the deepening Parmalat scandal.
Reports in a natioanl newspaper claim EC commissioner Frits Bolkestein is looking at the option as a result of circumstances arising from the Parmalat case.
Trouble in the company began at a subsidiary called Bonlat registered in the Cayman Islands audited by Grant Thornton SpA in Italy. However, the group accounts are audited by Deloitte SpA.
Deloitte is expecting to be questioned over its key audit by Italian authorities but its defence is likely to be that under Italian law at the time, an auditor representing a company would only have to verify 51% of the group’s overall assets and liabilities. Subsidiaries adding up to the remaining 49% would be the sole responsibility of their individual auditors.
Two senior figures from Grant Thornton in Italy have already been arrested by the investigating authorities.
It is unclear as yet whether Bolkestein wants to make group auditors responsible for the audits of subsidiaries carried out by seperate firms.
The Financial Times reports that Bolkestein might also be considered pushing further an earlier idea that each European state should have an accounting watchdog on the same model at the US’ Public Accounting Oversight Board.