Europe set to reveal audit reform

Michael Power will be appearing before the Lords economic affairs committee

A report on the reform of the audit profession is due to be published
tomorrow with observers expecting proposals that could transform the market for
big audits.

The green paper will come from the EU’s internal markets Michel Barnier.
There has been widespread speculation that the paper could propose joint audits.

Auditors are also braced for proposals on how the European Commission could
formalise a much greater role in the regulation of audit.

In a statement earlier this year Barnier said: “Governments have so far
focused their attention on the urgent measures necessary to stabilise the
markets.

“Now we are entering a less reactive phase and I am convinced that it is the
right time to launch a real debate at European level on the subject of audit.

“This conviction is reinforced by the questions recently raised in the
context of the audit of the accounts of the American bank Lehman Brothers.”

Today will also see the start of a House of Lords inquiry into the role of
auditors in the financial crisis and the concentration of the audit market.

First to appear before the Lords’ economic affairs committee is Prof Stella
Fearnley of Bournemouth University. Prof Michael Power of the London School of
Economics and Prof Vivien Beattie, of Glasgow University.

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