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November 28, 2011

Concessions could be made to EC audit reforms

The European Commission’s audit reform package, set to be announced tomorrow, could be trimmed from its leaked draft form with concessions on non-audit services and mandatory firm rotation, International Accounting Bulletin understands.

An industry source told this publication that instead of an outright ban on non-audit services to audit clients there could be a cap, restricting the amount of non-audit work can bring in to 10% of audit fees.

The two other proposals that have received the strongest resistance in Brussels are mandatory firm rotation every nine years and join audits.

It is understood EC internal markets services commissioner Michel Barnier is keen to push through both proposals in some form but may extend the mandatory rotation period to 12 years, under certain circumstances, if companies choose to have a joint audit. If this is the case it would appear that joint audits may be optional.

Barnier’s audit reform package announcement has already been delayed by a week as it had received stiff resistance from commissioners. It is believed a strong voice against some of the proposals is Germany’s Günther Oettinger, the EC’s Commissioner for energy. It is still not 100% clear if the audit reform package be unveiled, as planned, although the EC’s media office said an announcement will be made tomorrow at midday.

The International Accounting Bulletin will have comprehensive coverage of the EC audit reform announcement from 11 GMT, including a live blog.

Coverage will include any announcements as well as the views of leading industry figures from the Big Four and mid-tier firms.


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