Brussels, 03/04/2014 (Agence Europe) - MEPs, on Thursday 3 April, approved the inter-institutional compromise setting out new rules for the audit market from 2016.
In order to open up a very closed market to other players, the legislative package bans contractual clauses demanding that the audit be reserved to one of the four major audit firms which dominate the market (see EUROPE 11001). Banks, insurers and listed companies will be required to go through a tendering process in selecting their new auditors. A system of obligatory rotation of auditors after a maximum of ten years has been introduced. This length of time may be extended by ten further years if the company audited launches a call for tenders, or indeed fourteen years in cases of joint audit.
At the plenary session vote, the legislative package was adopted by a slight majority (some 330 votes to 250 on both the regulation and the directive). All the amendments put down by the S&D Group were rejected, including a call for the extension for joint audits to be reduced to ten years.
The other measures in the legislative package include the introduction of a black list setting out the services affecting the financial statements that auditors will no longer be allowed to offer clients whose accounts they are auditing (for example, tax advice). A cap has also been introduced limiting the fees generated by auditors for related services provided to the audited entity.
Internal Market Commissioner Michel Barnier welcomed the conclusion of the legislative procedure, even though, in his opinion, “some of the measures are not as ambitious as in the Commission's proposals”. The Commission had argued for compulsory rotation of auditors every six years. (MB)