Originally posted on 19 Dec 2013
On 18 December 2013, the Member States approved the compromise text regarding the Proposals for a new Regulation and for amendments of Directive of the European Parliament and of the Council on EU audit market reform.
Under the compromise text, the Member States agreed to introduce more stringent rules for auditors and audit firms. In particular, the rules are aimed at strengthening the independence of auditors of public interest entities (PIEs) as well as at assuring greater diversity into the current highly-concentrated audit market. Also, the reform aims for a more coordinated approach to the supervision of auditors in the EU that will be leaded by the Committee of European Audit Oversight Bodies (CEAOB)”, said Lithuanian Finance Minister Rimantas Šadžius.
Also agreed are:
· the mandatory rotation of statutory auditors and audit firms of PIEs. The agreement includes the 10 years basic period after which member State may allow the auditor or audit firm to continue audit of the same PIEs up to the maximum duration of 20 years where a public tendering is conducted and up to 24 years in case of a joint audit.
· non-audit services for audited PIEs will be prohibited, but Member States will have the right to allow some tax and valuation services to be provided if they are immaterial and have no direct effect on the audited financial statements.
There’s a 70% cap for the fees from non-audit services provided by the audit firm for audited undertaking, and the agreement on the framework for audit oversight cooperation, which shall be leaded by the CEAOB, but which will use also the experience of the European Securities and Markets Authority (ESMA) in the sphere of international cooperation between Member States and third countries in this area of audit oversight.
If you’re an audit firm, how do you think these changes will affect you?
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