How does the EU Audit Reform impact non EU companies?
The EU Audit Regulation does not directly apply to any undertakings located outside the EU. As a result, such entities – no matter whether they are the parent or subsidiary of EU undertakings – are not bound by the new EU requirements on tendering and audit firm rotation or the restrictions on the services that can be provided by the auditor (non-audit services).
However, for practical reasons, some groups of companies who undertake business in the EU and would normally procure non-audit services at a group level might well choose to change their service providers for their parent and subsidiaries located outside the EU as part of the same appointment process.
In addition, some groups of companies may decide to change their auditor and carry out a tendering procedure at a group level, even though there is no requirement to do so. Recent discussions in the EU and at global level on good corporate governance practices might well be an additional motive for adopting this practice.
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