As the summer is here, it is time also for the Audit Updates to go on a summer break.
We will continue to monitor developments related to audit throughout the summer and we will get back to you with the latest news in the autumn. The next edition will also cover any key audit developments that may occur in the summer months.
High-quality audits contribute to the extent to which we can trust financial information. As stakeholders demand more and more diverse corporate information, companies use experts, beyond accounting, for reporting this. Likewise, auditors depend on other experts, scientists, engineers, actuaries, to supplement their skills to provide the highest quality audit of financial statements. Such multidisciplinary teams aim to meet the demands of a fast-changing and complex business environment.
Multidisciplinary models have been the subject of debate in Europe and beyond. We asked 18 people from practice, including regulators and audit committee chairs, how they view working with multidisciplinary teams. Based on their insight we conclude the following:
We have issued two new publications on the implementation of the 2014 EU Audit Directive and Regulation to present an updated state of play in 30 European countries. This includes 27 EU Member States, Iceland, Norway and the United Kingdom.
EU Member States’ deadline for implementation of the 2014 audit legislation was 17 June 2016. Iceland and Norway as European Economic Area (EEA) countries transpose EU legislation with a time lag. Now that the 2014 EU audit legislation became effective in Iceland as from January 2020 and Norway is expected to finalise the transposition by the end of the year, we have updated the following publications:
In this publication, we further analyse the countries’ decisions and visualise the outcomes for the key options regarding:
This survey provides an overview of how the public oversight is organised in each country and presents the impact of the 2014 EU audit legislation.
On 23 June, the Renew Europe and Green Groups of the European Parliament (EP) issued a statement calling on the European Commission (EC) to reform EU audit rules in reaction to the Wirecard case in Germany.
In their joint statement, MEPs Sven Giegold (Greens-EFA/Germany) and Luis Garicano (RE/Spain) call for the following:
The EP Plenary is currently scheduled to hold a public hearing on Wirecard on 14 September.
The Committee of European Auditing Oversight Bodies (CEAOB) has elected Mr Patrick Parent from the French Haut Conseil du Commissariat aux Comptes (H3C) as new Chair of the CEAOB. His term will be four years and starts on 12 July 2020.
The International Auditing and Assurance Standards Board (IAASB) released COVID-19 pandemic-related guidance on review engagements on interim financial information. This guidance highlights key areas of focus when undertaking a review of interim financial information in accordance with International Standard on Review Engagements 2410.
The Financial Reporting Council (FRC) has issued principles for the operational separation of the audit units of the Big 4 companies in the UK. The principles’ main objectives are to improve audit quality and audit market resilience.
The firms have to outline their plans on implementing the principles by the end of October. The separation of the audit practices has to be completed by June 2024. The FRC’s new principles require: