PracticeConsultingEurope – Commission mulls audit conflict rules

Europe - Commission mulls audit conflict rules

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.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer