EU Audit Reform
The European Union (EU) Audit Reform legislation that came into effect on 17 June 2016 introduced new audit rules for large companies. Their audit committees are not only required to rotate their audit firm periodically; there are now restrictions on which non-audit services an auditor can provide to its audit clients. Whilst the legislation is primarily about audit matters, the restrictions placed on auditors’ other activities (e.g. much tax and consulting work) are substantial and companies may find their broader relationships with professional service firms (PSFs) need reviewing and subsequent action taken.
Orderly functioning of markets
Audit firms are entrusted by law to conduct statutory audits of large companies with a view to enhancing the degree of confidence of investors and other stakeholders in the annual and consolidated financial statements. The financial crisis highlighted weaknesses in statutory auditing, especially with regard to public interest entities (PIEs). The EU Audit Reform’s main goal is to contribute to the orderly functioning of markets by enhancing the integrity and efficiency of financial statements.
Improving auditing quality
In the public interest EU legislators have sought to improve the quality of auditing. In this section of our website we have detailed the most significant changes introduced by the EU Audit Reform, which you can access via the tabs above. Please note that while the EU legislation provides the general framework for the new rules, national legislation and/or local regulators’ practices may result in stricter application of the rules and/or additional requirements in your local jurisdiction.
For more information on how the EU Audit Reform impacts you or a company in your local jurisdiction contact us today.