EU Audit Reform
The European Union Audit Reform legislation came into effect on 17 June 2016. It introduced new rules for large companies regarding audit. Audit committees now need to rotate their audit firm periodically and need to approve non-audit services, which are therefore limited when provided by the auditor. Whilst the legislation is primarily about audit matters, the restrictions now placed on auditors’ other activities is substantial and companies may find their broader relationships with professional services firms need review and actions taken.
Audit firms are entrusted by law to conduct statutory audits of large companies with a view to enhancing the degree of confidence of the investors and other stakeholders in the annual and consolidated financial statements. The financial crisis highlighted weaknesses in statutory audit especially with regard to Public Interest Entities (PIEs). The EU Audit Reform main goal is to contribute to the orderly functioning of markets by enhancing the integrity and efficiency of financial statements.
In view of the public interest, better audit quality has been sought by the legislators in the European Union. On this site we have detailed the most significant changes introduced by the EU Audit Reform and you can navigate to these using the tabs above. Please also note that the EU legislation provides the general framework for the new rules and national legislation and/or local regulators’ practices may mean stricter application of the rules and/or additional requirements in your local jurisdiction.
For more information on how the EU Audit Reform impacts a company in your local jurisdiction contact us today.