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September 26, 2012

EU committee gives recommendations to Juri

The EU Parliament committee on Industry,
Research and Energy (Itre)  rapporteur  Jurgen Creutzmann
has suggested enforcing a time limit on audit engagements and
strict measures aimed at strengthening audit committees in its
draft legislation submitted to the Committee on Legal Affairs
(Juri).

Juri is the lead committee on the audit reform legislation; however
Itre’s views could be included in the final legislation
document.

 Juri is not legally bound to incorporate Itre’s views.

Creutzmann ‘s  believes external rotation might increase
auditor independence, but it also pose further risks to market
concentration, reduced choice of audit firms and lower quality
audits in the first years following rotation.

Creutzmann said a public tender procedure for the auditor selection
should be conducted every seven years, which would allow all
interested auditors or audit firms to offer their services,
“thereby rendering the selection process more transparent and
giving the audit committee a broader choice to select from and the
possibility to choose the best qualified firm”.

The draft report also calls to reconsider the limits on auditors
providing non-audit services as suggested by the European
Commission’s initial document.

Creutzmann said audit-related services and assurance services
should be subject to prior approval of the audit committee in order
to “avoid any threats to independence and take appropriate
safeguards”.

Itre MEP’s are now to submit their amendments to the rapporteur’s
document and the vote on a final text, which will be submitted to
Juri will take place in November.

JEarlier this month Juri rapporteur  Sajjad Karim issued his
draft report on the reform scraping measures such asaudit-only
firms and mandatory rotation.

Juri MEP’s are to submit their amendments by 7 November.

The remaining committee to give its views is the Economic Affairs
committee (Econ). Econ is expected to issue its report in the next
few days.

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