Defining a public interest entity

Introduction

This publication highlights how differently 30 European countries define a public interest entity (PIE). This is relevant as certain EU laws only apply to PIEs, including EU PIE audit and related rules for companies and audit firms. The wide diversity in national PIE definitions results in these EU rules for PIEs having a different scope across countries. To create a level playing field in Europe, we propose to further streamline the countries’ PIE definitions.

With this paper, we aim to inform policymakers in the context of the European Commission’s ongoing initiative on corporate reporting. Accountancy Europe will continue exploring this matter to contribute to the debate.

Context

Identifying PIEs and therefore the PIE definition in each country are crucial to determine which companies and their audits fall in the scope of legislation for PIEs. PIEs and their audits have to comply with specific and more demanding requirements. The European Union (EU) 2013 Accounting Directive established today’s definition of a PIE. This Directive also includes additional reporting requirements for PIEs. The 2014 EU Audit Regulation applies only to audits and auditors of PIEs. These have to comply with specific requirements such as:

• mandatory audit firm rotation
• auditor’s provision of non-audit services to audit clients, including cap and prohibition of certain of these services
• oversight requirements for PIE audits CONTEXT

The 2013 EU Accounting Directive and 2014 EU Audit Directive define the following entity categories as a PIE 1 :

• a listed entity
• a credit institution
• an insurance undertaking Member States may decide to designate additional entities as PIEs at national level.

Find out more in our publication!