Brussels, 22/11/2000 (Agence Europe) - The European Commission has called on Member States to further ensure the independence of audit firms responsible for checking the financial situation of limited liability companies. In a recommendation published on Tuesday, it sets down a certain number of minimum requirements to be respected to improve the control of the statutory audits of accounts and harmonise the situation in the Union.
"The large audit firms offer a whole range of services to companies. The question therefore arises as to whether they are sufficiently independent when examining the accounts of a company which, moreover, helps them earn a lot of money", an expert explains. External quality assurance systems have developed as a means of checking whether the quality of statutory audits, that are mandatory on some three million limited liability companies under European Accountancy Directives, respond to certain rules, notably professional ethics. But European legislation remains silent on a number of aspects on the way the audits are handled, and in certain Member States there is no "quality control" (including in Austria, Greece, Luxembourg and Germany, that are planning to introduce them in January). The European Commission therefore aims to remedy this situation, ensuring that "all statutory auditors are covered by equivalent quality assurance systems with sufficient public oversight and published results".
The minimum requirements proposed leave Member States with a certain margin of manoeuvre, providing, for example, for the option of an audit by peers or by an institution, as long as appropriate safeguard measures are applied. These requirements concern the frequency (six year at most, less if earlier audits did not provide entire satisfaction), the field of application of the "quality control" (quality of the probing elements of the audit dossier, respect of auditing standards, respect of professional rules, and especially independence, etc.) and confidentiality. "The application of requirements concerning the right for public oversight and the presence of a majority of non-practitioners in the auditing structures, the publication of results and access for the competent authorities to the audit reports would strengthen existing systems in almost all Member States", commented the Commissioner responsible for the Internal Market, Frtis Bolkestein.
The European Commission's recommendation is also aimed at encouraging the provision of reliable and comparable financial information, which is "essential for an efficient EU capital market because it encourages cross-border investment and promotes investor confidence", according to Bolkestein. This text does not have a compulsory nature for Member States. The European Executive, however, intends reviewing the situation after three years, and then study whether or not to legislate in the matter. The full text of the recommendation is available on the Commission's EUROPA site, at the following address: http: //europa.eu.int/comm/internal_market/en/whatsnew.htm