British MEP Sajjad Karim warned the EU
Parliaments Committee on Legal Affairs (JURI) that pure audit firms
proposal “goes too far”.

“There might be other solutions in the reform
that will improve independence and there is no need to go that
far,” Karim said as the rapporteur of the JURI at its meeting in

The MEP said he was sceptic of the European
Commission’s proposals on joint audit because they “bring a lot of
negatives, which don’t necessarily out way the benefits” and
mandatory re-tendering because six year’s is “too short a period
for rotation”.

Karim stated he seconds the findings of the
report by the parliament’s Impact Assessment Unit (IA), which
questioned the evidence base for the proposals.

The IA report issued earlier this week found
the audit reform proposals lacked sufficient drivers and evidence
for any proposed policy change.

Karim called for audit committees to be
strengthened across the EU member states and for the parliament to
keep an eye on the outcome of the UK’s Competition Commission
findings into audit market concentration and the US Public Company
Accounting Oversight Board (PCAOB) investigation into mandatory
audit firm rotation.

Big Four lobbying

Karim’s findings were challenged by Spanish
MEP Antonio Masip Hidalgo, who said his biggest fears have come
true with the Big Four influencing the process: “they have
especially in my colleagues Karim’s findings”.

“The market is completely manipulated and the
Big Four must admit they are manipulating the market,” he said.

Hidalgo also criticised the IA and said it is
“clearly political”.

Karim appeared to disregard Hidalgo’s concerns
and called for further discussion among colleagues on the proposals
and other solution’s.

“At the end of this not everyone will be
happy, but we need to find a solution that works,” Karim said.

The JURI plans to issue a report together with
the Economic and Monetary Affairs Committee in September. A vote in
parliament is expected at the end of the year.