Audit – a time for change
February 14, 2010
Audit – a time for change.
Jon Lisby and Sue Almond attend European Commission Conference, Brussels.
The European Commission recently hosted a high level conference on audit, at which Kreston International Executive Director Jon Lisby and Director of Quality and Professional Standards Sue Almond were participants.
This conference follows on from the EC Green Paper issued last year, which attracted more comment than any other consultation by the Internal Market group, including comment by many bodies outside the EU given the potential global impact of the proposals. Kreston International responded to the Green Paper, and was heavily involved in shaping the response by EGIAN, the European grouping of non-big 4 networks and associations.
In his opening speech to the conference, EC Commissioner Michel Barnier made some very clear comments about concentration in the audit market and concluded: “The status quo is not an option for the auditing world. It’s not about changing for the sake of change, but to reply to very real needs which we can no longer ignore.”
Options that are being considered by the EC to increase competition in the audit market include:
- limiting the share of the audit market that any firm can have
- joint audits of listed companies where one auditor is a non-big 4 firm
- mandatory rotation of audit firms and
- a ‘European passport’ for auditors.
The conference included panel sessions involving a wide range of stakeholders, including investors, regulators, banks, academics and audit firms. The topics covered were extremely wide-ranging:
- the role of the audit
- are the Big 4 ‘too big to fail’
- transparency of audit firms
Jon Lisby said:
“There is a very realistic opportunity to increase competition in the audit market, which will undoubtedly benefit the clients Kreston International seek to serve. Kreston International member firms have the international capability, quality and desire to service a broad range of clients.”
The EC will now begin working on detailed proposals, with a view to publishing them in November.
Sue Almond commented:
“The challenge over the coming months is to make sure that the proposals are workable and do not have unintended consequences – for example damaging the SME market that is so critical to the economy. The EC is likely to turn to EGIAN for help in developing their proposals, and we will be delighted to draw on the experience of our member firms in providing input that is practical and realistic in achieving the EC’s goals.”
The profession worldwide will be monitoring how this project progresses. It really is a once-in-a-lifetime opportunity for change.