Big Four lobbyists have come under fire at the
first public hearing of EU Parliament legal affairs committee on
the EC’s audit reform.
Although the aim of the hearing was to discuss
the EC proposals, such as mandatory rotation and audit-only firms,
plenty of scorn was directed at the intense lobbying efforts of the
four largest firms, PwC, Deloitte, KPMG and Ernst & Young.
EC deputy head of auditing unit Arvind Wadhera
said Big Four lobbying has been excessive and is “becoming
counterproductive”.
Another committee member said: “The message
has to go out to the Big Four that we can not let this oligopoly to
continue.”
The European Group of International Accounting
Networks and Associations (EGIAN), which represents the interest of
mid-tier firms, also chimed into the lobbying debate.
EGIAN director Andrew Brown called on the EU
parliament to “rise above the unacceptable lobbying by some of the
larger firms”.
European MEP Sajjad Karim, who is leading the
committee’s debate on audit reform, said the parliament is open to
as many views but called for constructive dialogue.
“I want to assure everyone of the independence
of the committee and offer a hand of co-operation to all interest
groups in order to break the existing status quo, which is not an
option,” Karim said.
EC proposals unpopular
Stakeholder groups and the majority of the
witnesses expressed little support for the EC’s proposed measures
such as mandatory audit firm rotation, pure audit firms and banning
certain non-audit services.
Federation of European Accountants chairman
Philip Johnson told the committee there is room for improvement of
audit quality but some of the EC’s proposals are detrimental.
“Pure audit firms, mandatory rotation,
restricting non-audit services will isolate EU on the global stage
and reduce the level of expertise with in audit firma and make the
profession less attractive,” he said.
Speaking on the behalf of investors, UK
Corporate Governance and Reporting, Investment Management
Association director Liz Murrall said investors are against
mandatory rotation and banning non-audit services.
“We find non-audit services proposal as a step
too far,” she said.
Brown said the EU parliament should consider
any measures as a package.
“Single measures as they are being looked at
now on their own won’t work,” he said.
Theo Siegert, managing partner of Haen
Carstanjen & Söhne and member of several German audit
committees said German DAX audit committee chairs are against
non-audit services restrictions.
All of the witnesses called forward spoke of
the importance to improve corporate governance and audit quality
but not through the EC’s proposals.
Karim said the committee plans to engage
further with stakeholder as it debates “the most challenging
dossier of his 20 year career so far”.
