This new regime will help promote high-quality audits throughout the EU and will enhance investor trust in the financial information of companies, thereby supporting the conditions for cross-border investment and economic growth in the Union.
These rules consist of an amended Directive setting out the framework for all statutory audits and a Regulation setting out specific requirements for statutory audits of public-interest entities (PIEs), such as listed companies, banks and insurance undertakings.
The European Parliament and Council already adopted the new rules in April 2014. In the last two years, the Commission has worked closely with Member States, national audit supervisors and stakeholders to smooth the path to implementation and facilitate the transition to the new regime.
The new rules will enhance the transparency of companies’ financial information, by providing investors with a more informative audit report, as well as providing an additional report to the audit committees of PIEs.
Auditors will now also have a strong mandate to be independent and to exert professional scepticism regarding the management of the audited company. For example, in the case of PIEs, auditors will rotate on a regular basis and will no longer be allowed to provide certain non-audit services to their audit clients. In addition, the new rules will help foster diversity and drive innovation in audit and non-audit markets via the new rotation system combined with the restriction to provide certain non-audit services to PIEs.
Finally, the new rules will strengthen the coordination of audit supervision throughout the Union, with the establishment of the Committee of European Auditing Oversight Bodies (CEAOB). The CEAOB, whose members include national supervisors and the European Securities and Markets Authority (ESMA), will help drive supervisory convergence and promote high-quality audits in the Union.
- On the new audit rules, please refer to the full MEMO.
- Additional information on the practical application of the new EU audit rules