Brussels, 21/01/2014 (Agence Europe) - The interinstitutional political agreement on reform of European rules governing the audit market was endorsed by the legal affairs committee of the European Parliament on Tuesday 21 January.
In order to open up the EU audit market to competition, a bank, an insurance company and a listed company should introduce a “mandatory rotation” rule whereby an auditor can inspect a company's books for a maximum of ten years. This may be increased by a further ten years if new tenders are carried out, and by up to 14 additional years in the case of joint audits (see EUROPE 10986). As a general rule, an auditor will no longer be authorised to provide services such as tax advisory services that directly affect the company's financial statements.
“This draft legislation will have positive ramifications, not just for the audit market but for the financial sector as a whole. We are rebuilding confidence, one step at a time”, Sajjad Karim (ECR, UK), the EP rapporteur, was pleased to point out. Speaking on behalf of the S&D Group, Antonio Masip Hidalgo of Spain said the “agreement goes against the spirit of the EU Commission's original proposals” in that “it ignores the necessary reforms to promote joint audits and relies on companies' audit committees to define the blacklist of non-audit services”. (MB/transl.jl)