The European Commission is considering proposals to force accountancy firms to disclose consultancy fees in a move some fear is a first step to preventing firms from providing audit and consulting services to the same client.
At a meeting of the Committee of Auditing in The Hague last week, Italian delegates said firms should be prevented from offering the two services to the same client. Consob, the Italian stock market regulator, already bans firms from offering any sort of consultancy work to audit clients.
A Brussels-based Big Five partner said after the meeting that while Italy had raised the issue of more legislation, other member states had declined to add their weight to the argument.
He expected the imminent release of an EC communication on the matter of fee disclosure as a ‘half-way house’ to satisfying the wishes of tougher member states like Italy.
Another audit expert who attended the meeting said that since UK firms have to disclose consultancy fees in the annual reports of audit clients, they would not be affected by any change.
‘Many of the members do not like the amount of judgement necessary in an audit and there is a trend towards more rules. The ethics debate has only just started,’ he said.
The concerns surfaced during a debate on a new paper on independence and objectivity from European accounting body FEE.
Other matters discussed at the meeting included the provision of minimum quality standards for European audit firms and the harmonisation of auditing standards throughout the member states.
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