The EU is strengthening its audit requirements. On May 21 the Commission set out 10 auditing priorities to improve quality and protect investors. The objectives are intended to prevent conflicts of interest and Enron-type scandals.
The short-term plans include strengthening public oversight of audits at member state and EU level, ensuring that international standards on auditing have been used for all EU statutory audits from 2005 onwards and creating an EU Regulatory Committee on Audit. The audit reforms are intended to go with an action plan on company law and corporate governance released the same day.
"I do not accept the imposition of US standards on our firms and that is why the European Union strongly opposes registration of EU audit firms with the US Public Company Accounting Oversight Board. The EU will regulate its own businesses," said the European Commission's Internal Market and Taxation Commissioner, Frits Bolkestein.
Under the revisions, the EU's existing auditing committee will be renamed the Audit Advisory Committee. Medium-term priorities include making audit firms and their networks more transparent with disclosure requirements for audit firms and reinforcing auditor independence with the aim of obtaining US recognition of the equivalence of the EU approach.
The European Federation of Accountants (FEE) is backing the EU's proposals and recommending that they progress as quickly as possible. David Devlin, the President of FEE said: "Despite recent convergence, differences in European national auditing standards are neither transparent nor clearly identifiable. This contributes to the fragmentation of Europe's markets and raises the cost of doing business."
