EU rules on statutory audits finally approved

European Union (EU) rules on statutory audits have been approved by the EU
Council of Ministers, which has accepted all European Parliament amendments to a
proposed directive.

These had dealt with criticisms that the legislation would be
over-bureaucratic by insisting that all public companies have a separate audit
committee to deal with such work. MEPs killed this idea with exemptions, and now
the Council has buried it.

Ministers approved the final shape of the directive on Tuesday (25-4), making
no further changes to its text. It will, said a Council statement, ‘reinforce
the reliability of company financial statements by establishing minimum
requirements for statutory audit of annual accounts and consolidated accounts’.

Many reforms to be introduced via the directive have been designed to
guarantee the independence of auditors and avoid conflict-of-interest scandals.

The legislation says, for instance that each EU statutory auditor and audit
firm must be identified in a regularly-updated electronic public register.

Entries must name audit firm owners and managers, and note information on any
network membership. The directive also insists that a statutory auditor or an
audit firm must be independent from their audit clients. Also, statutory
auditors and audit firms must be subjected to independent quality assurance.

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