FRC calls for Audit Quality across Europe
News types: Policy Statements, Response
Published: 10 December 2010
The Financial Reporting Council (FRC) today publishes its submission to the European Commission’s Green Paper consultation, Audit Policy: Lessons from the Crisis (PDF).
The FRC’s response outlines measures to promote high quality audits across the EU and proposes ways of reducing the systemic risk associated with the level of audit market concentration. The FRC also believes that improved engagement between audit committees and investors would play a key role in enhancing audit quality.
With respect to specific proposals outlined in the Green Paper the FRC supports:
- Efforts to reduce the risks associated with audit market concentration;
- Improved transparency of the audit process;
- The adoption of ISAs in Europe;
- The tightening of auditor independence rules;
- The establishment of a European Audit Authority; and
- Measures to increase the flexibility of firms to operate within different member states.
The FRC does not support the following proposals:
- A wholesale ban on the provision of non-audit services to audit clients;
- The forcible creation of audit-only firms; and
- The mandatory use of joint audits.
Stephen Haddrill, Chief Executive of the Financial Reporting Council, said:
“The FRC’s overall objective is to preserve and enhance audit quality which, in turn, helps investors to make sound judgements and supports efficient capital markets.
“Our dialogue with policymakers in Brussels and other EU member states has shown how important it is for a more effective system of international co-operation to be introduced between regulators on audit quality issues and we hope this will be a key outcome of the consultation.
“The Commission now has the difficult task of building consensus across Europe, taking into account the distinctions that exist between national jurisdictions across the EU. I hope that a clear strategy will emerge around which agreement can be forged that will both enhance audit quality and promote more competition in the marketplace.”
Notes to Editors