• Register
Return to: Home > News > EU audit reform creates potential for regulatory divergence: IFAC

EU audit reform creates potential for regulatory divergence: IFAC

The International Federation of Accountants (IFAC) has predicted that certain aspects of the EU audit reform voted through the European Parliament last week could potentially cause regulatory divergence and fragmentation.

Although the reforms imposed a number of rules, member states were give some flexibility in terms of implementation. For example states will be able to introduce shorter tendering and rotation periods, and lower the cap on fees earned for non-audit services to audit clients.

Commenting on the reform, IFAC chief executive officer Fayez Choudbury said that by providing individual member states with options, the reform will create a patchwork of regulation across the EU.

IFAC suggested that these options were "perhaps ones introduced in order to ensure its successful passage."

Choudbury added "failure to decide a consistent approach to audit regulation within Europe does not auger well for the chances of agreement among the global community."

Speaking to The Accountant for the 2014 World Survey, IFAC president Warren Allen said the push for mandatory rotation in the reforms would create a "mishmash" amongst the international community.

"The US won't escape it totally because its multinational corporations operating in Europe will have to comply with those EU reforms. Convergence of regulatory activity around the world was initially on the G20 agenda but dropped off. A coordinated approach to regulation needs to be taken," he said.

IFAC said other areas of the reforms provided a more globally consistent approach, and Choudbury said IFAC supported this.

Although the reform has now passed the European Parliament, it still needs EU Council approval before coming into force.

Related stories

European Parliament votes in favour of audit reform

TA World Survey 2014: The quest for transparency

Top Content

    Brazil: regulation and technology form basis for recovery

    Opportunities in the capital markets and the ever-growing influence of technology are expected to have a significant impact on the Brazilian accounting profession over the next 12 months, writes Paul Golden.

    read more

    Mentoring support and the opportunity to delegate

    Jon Lisby will be known to many from his former role as CEO of Kreston International. Here, he explains the background to his new venture, Global Alliance Advisory Services (GAAS), and how he aims to offer support to alliance CEOs.

    read more

    Global by name, global by nature

    Stephen Heathcote became chief executive officer of PrimeGlobal on 1 June 2019. Robin Amlôt met him to discuss the various new challenges that he has taken on, and his ambitions for the association.

    read more

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    CORONAVIRUS TIMELINE: REACTIONS FROM THE ACCOUNTANCY PROFESSION

    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.