This independent committee (established by the Dutch Minister of Finance Hoekstra) investigated the quality of audits and how it can be sustainably improved. A government response to the report by the Minister (to the House) is planned for the end of March 2020.
The report notes that to improve the quality there is no “silver bullet”, the desired quality improvement can only be achieved with a combination of measures. According to the report, it is the result of a complex process whereby all parties in the chain must take their responsibility.
The recommendations of the committee aim to improve quality with an integrated approach at three levels: the level of the individual control process, of the assurance of the quality within audit firms and other factors such as culture which influence the quality of the statutory audit.
Discussions are continuing on setting up a permanent subcommittee on taxation in the European Parliament. Reportedly, the political groups have agreed that the Committee should be chaired by the S&D Group and would be made up of around 30 MEPs from the ECON Committee.
The Parliament’s Conference of Presidents is currently expected to give a final decision on setting up the Committee in March. If confirmed, the new Committee could start its work in May.
In previous years, the European Parliament’s tax Committees have looked into the role of accountants and auditors in tax planning.
Two MEPs have raised concerns about potential conflict of interests in audit firms that provide both audit and consultancy services, and about the market concentration of the audit sector.
As a reaction to the Luanda Leaks, MEP Sven Giegold (Greens-EFA/Germany) called on the Commission to end self-regulation of the accountancy profession and to split the audit and consultancy wings of audit firms. Read more
Furthermore, Finnish MEP and former finance minister Eero Heinäluoma (S&D/Finland) tabled an amendment (nr. 274) to a draft annual report on EU competition policy. He calls on the Commission to consider the UK CMA recommendations for the separation of audit from consulting services, and mandatory ‘joint audit’. The report is not legally binding; its impact is mainly political. The ECON Committee will vote on all amendments on 18 February. A final vote in the EP plenary is scheduled for 9 March. Read more
The International Ethics Standards Board for Accountants (IESBA) released three exposure drafts (ED) for public comment. These propose significant revisions to the provisions of the IESBA Code of Ethics.
1- ED on Non-Assurance Services (NAS): The proposals introduce several new requirements that expressly prohibit firms and network firms from providing certain types of NAS to their audit clients. There are also new requirements to strengthen firm communication with those charged with governance Read more
2- ED on Fees: The proposals articulate and address the issue of threats to independence created when fees are negotiated with and paid by the audit or assurance client. The revision also aims to enhance transparency with regard to fee-related information for PIE audit clients Read more
3- ED on Engagement Quality Reviewers: The IESBA is proposing new application material to explain the different types of threat to objectivity that might be created in circumstances where an individual is being considered for appointment as an Engagement Quality Reviewer (EQR) for a particular engagement Read more
The International Federation of Accountants (IFAC) published its official position on achieving high quality audits. The “right” process, people, governance, regulation and measurement are described in this analysis. IFAC calls all participants in the audit and assurance ecosystem to action for improving audit quality. Read more
The International Forum of Independent Audit Regulators (IFIAR), a global membership organisation of 55 independent audit regulators, announced the results of an initiative begun in 2015 to measure the frequency of inspection findings.
The results indicate that there has been a 21% reduction between years 2015 and 2019 in the frequency of audits inspected with findings.
IFIAR conducts annual surveys about the findings from its members’ individual inspections of audit firms. They plan to publish a comprehensive report on the 2019 survey in early 2020 Read more This curated content was brought to you by Harun Saki, Accountancy Europe Manager since 2019. You can send him tips by email and connect with him on LinkedIn.