17 December 2025 — Publication
Discussion paper
In this paper, Accountancy Europe sets out principles and good practices to support more effective and coherent audit supervision in the EU, particularly for PIE and cross-border audits where multiple national authorities are involved.
While national approaches differ due to local legal, governance, reporting and market frameworks, many systems work well, particularly for non-PIE audits, where supervision should remain primarily national. The paper therefore focuses on where cooperation and consistency can add value within the current EU framework.
The Audit Directive 2014/56/EU and the PIE Audit Regulation 537/2014 provide an effective EU framework to strengthen audit quality, independence and oversight. Member States have established effective public oversight systems, including EU-level cooperation. Audit supervision has developed well in a decentralised way, though differences remain in inspection methods, enforcement, transparency and review frequency, highlighting the value of targeted cooperation and alignment.
A more consistent understanding of how ISAs are used as benchmarks in inspections could support greater clarity across the EU. This relates solely to the use of ISAs in supervisory work, not to the setting or modification of auditing standards, which must remain the responsibility of standard-setters.
Proportionate oversight based on engagement size and risk
Cross-border and PIE audits may benefit from more coordinated supervisory approaches, while non-PIE audits should remain subject to proportionate, locally focused oversight.
The Common Audit Inspection Methodology (CAIM) provides a foundation for greater consistency, but it is used unevenly across the EU. The paper suggests clarifying the core components of inspections, including the structure and depth of file reviews, the criteria for selecting engagements, and the way significant judgements are evaluated.
Transparency practices vary significantly among Member States. For PIE audits, a more individualised and structured publication of inspection outcomes could be considered, including clearer descriptions of deficiencies, themes emerging from inspections and supervisory expectations. For non-PIE audits, transparency should remain proportionate, relying on summarised findings or anonymised reports.
Differences in sanctioning powers, criteria and appeal rights affect consistency across the EU. Shared principles or indicative sanctioning guidelines could help promote greater convergence while respecting national legal traditions. Firms should also have access to robust procedural safeguards, including the right to be heard, the ability to appeal decisions, and the opportunity to lodge complaints through independent and impartial mechanisms.
A stronger focus on firm-wide quality management under ISQM 1 can improve oversight efficiency, particularly for firms operating across multiple jurisdictions.
The full oversight process from inspection planning to the issuance of the final report and any follow-up actions should be conducted within clear and reasonable timelines to be effective. Delays can also create operational uncertainty for audit firms. In a cross-border context, coordination of timelines among national oversight bodies can be helpful in certain cases, particularly where misaligned schedules would significantly limit the effectiveness of joint work.
Highlighting examples of good practices, whether in audit documentation, use of technology, sustainability assurance or internal quality control, can balance the predominantly deficiency-focused nature of oversight reporting.
Enforcement and sanctions remain necessary tools, but the primary purpose of audit oversight should be to raise and sustain audit quality. Oversight bodies can adopt a more constructive approach by integrating remediation plans, training initiatives, and regular dialogue with firms into their processes.
The paper gives a potential solution to improve the coordination of the inspection work on cross-border and PIE group audits which could be to establish “group inspections” in Member States. In such a model, the authority responsible for inspecting the group audit could have an enhanced role in coordinating with the authorities reviewing the audits of significant subsidiaries in other Member States, with the aim of meeting the overall objectives of the group audit inspection.
Thematic and risk-based reviews help identify emerging risks efficiently, and elements of cooperative compliance can encourage a more preventive supervisory approach.
NCAs currently do not carry out structured reviews of each other’s work. Without any form of comparison or external benchmarking, supervisory approaches can gradually diverge, even when NCAs are addressing the same risks or applying the same legislation.
The paper also sets out a number of recommendations to CEAOB that could help promote greater consistency in audit supervision across the EU while respecting national frameworks. These recommendations are linked to the principles and best practices mentioned above.
Read the full paper here.
