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Strengthening of the audit profession in EU
January 24, 2005

The recent spate of scandals in the US and the EU have emphasized that the statutory audit is an important element in ensuring the credibility and reliability of companies’ financial statements. They also confirm the urgency and the need to modernize the law on auditing.

The audit profession has therefore welcomed the initiatives of the European Commission to modernize the law of auditing. The proposed EU Audit Directive broadens considerably the scope of the former Eighth Council Directorate.

  • By clarifying the duties of statutory auditors, their independence and ethics;
  • By introducing a requirement for external quality assurance;
  • By ensuring robust public oversight over the audit profession; and
  • By improving co-operation between oversight bodies in the EU and third countries such as the US Public Company Accounting Oversight Board (PCAOB)

At the same time the audit profession expressed concerns about a number of issues such as the auditors’ liability and the rotation of audit firms as more fully explained below:

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