EU Audit Reform Delays
A controversial EU report on plans to make radical reforms to the auditing industry which was scheduled to be published on Wednesday, has been delayed for a week and is likely to undergo significant change.
Michel Barnier, Europe’s internal market commissioner, will now unveil his proposals, which are designed to limit the influence of the Big Four firms on listed company auditing, on 30 November.
The report’s proposals include forcing companies to appoint joint auditors in an effort to dilute the power of the Big Four, according to the Daily Telegraph.
The leading firms are arguing that this will add cost and regulatory complexity at a time of major financial upheaval and could result in financial problems ‘falling between the cracks’.
The Financial Times says at least 10 commissioner’s representatives have also voiced concerns over some of the most radical provisions in the report. These include forcing audit firms to give up non-audit consultancy work, the requirement to share listed company audit work with smaller firms and ‘mandatory rotation’ rules that impose a nine-year time limit on working for a big company.
The paper says the ‘joint audit’ reform is the most likely one to be dropped. Proposals in a draft version of the report suggested big companies would be forced to hire two firms on an audit, including at least one fr om outside the Big Four.
Commissioners from Denmark and Sweden, wh ere similar initiatives on joint audit were dropped in the past, are said to be against this idea.
Mid-tier firms have expressed concern at the delays and possible changes to the EU reform plans. Martin van Roekel, BDO’s global chief executive, told the Financial Timesthat: ‘It would be very, very unfortunate if they would back off at this moment in time.’