RSM International has expressed strong support for reforming the audit profession in a recent letter to European Commission (EC) president José Barroso and EC commissioner Michel Barnier.
RSM International feels Barnier’s proposals will ensure more competition in the industry if the extent of external auditor concentration at the top of listed company markets is reduced.
Barnier’s green paper has recommended mandatory audit firm rotation for large public – interest entities (PIEs), the separation of audit from non-audit services, joint audits for the statutory audit and the strengthening of audit companies.
Additionally, the draft proposed creating an EU audit passport allowing cross-border audits, the prohibition of Big Four contractual clauses, annual transparency reports for large PIEs and the development of a European Quality Certificate.
The network said more action than the above is actually needed suggesting this include reducing the market share of dominant audit networks and regular, fair and transparent tendering as well as joint audits to include non-Big Four participants.
RSM International states a regulatory reform programme should be growth-orientated without damaging smaller private companies.
“It is our conviction that the audit profession should also work together to bring leadership and confidence to the financial markets so as to ensure the necessary changes are brought in as professionally and smoothly as possible for the benefit of all stakeholders,” RSM International chief executive Jean Stephens said.