• Register
Return to: Home > News > Regulation > EU audit reform a test for regulators: Haddrill

EU audit reform a test for regulators: Haddrill

Speaking at the Federation of European Accountants (FEE) audit conference, UK Financial Reporting Council (FRC) CEO Stephen Haddrill highlighted the implications for regulators of implementing the EU audit reform and why a homogeneous implementation is difficult.

Haddrill warned that the complexity of the legislation and the interaction of member state options will generate problems in practice that need to be sorted out with goodwill.

"As regulators we must remember that we are implementing single market legislation and achieve as much coherence and convergence as possible," he said. "And if it is not possible initially, we must stand ready with the Commission to address problems as they arise."

According to him implementation of the reform in a homogenous way is difficult as even within member states there is not necessarily a consensus. The consultation in the UK on the issue of non-audit services to audit clients is a good example of why a one-size-fits-all approach does not command consensus, he said.

"Some in the profession have called for us not to go beyond the requirements of the legislation in terms of the items on the black list. On the other hand investors have called on us not to reduce current UK requirements which do go beyond the EU legislation."

Equally, he continued, there have been mixed views on the FRC's suggestion of a white list to provide certainty on what services can be sold. "Some have welcomed this, others argue that it will in effect stultify the exercise of discretion by audit committees."

In the absence of clear responses to the consultation, the FRC have not yet reached a view on these points, Haddrill announced.

Impact on audit inspections
He said that the FRC currently inspects the largest ten firms on a regular basis and with a much less frequent scrutiny of some other mid-tier firm. However the new legislation requires regulators to inspect all firms who undertake Public Interest Entities (PIEs) audits.

"The list of auditors may approach 100. Many will have only one or two PIE audits and the risk to the public interest is minimal compared to the audits of major banks and insurers," he said.

"We must be proportionate in our approach to inspection and coordinate with the professional bodies who do a perfectly good job of inspecting such firms already."

The implementation of the directive is not just about new regulation of the profession, Haddrill concluded. "It should also be a moment when we test how well we go about our job as regulators. We should not adopt new powers that challenge those we regulate without challenging ourselves."

 

Top Content

    2018 Digital Accountancy forum and awards: Digital transformation

    The Accountant presents highlights from The Digital Accountancy Forum & Awards 2018 panel discussions

    read more

    2018 Digital Accountancy Forum and Awards: Tech deep dive

    The second panel session of the day saw experts discuss how new technologies should not just be seen as a threat, and could be used to improve accounting.

    read more

    Digital Accountancy Forum and Awards: The power of data

    The third panel discussion of the day saw panellists discuss some of the worries their clients have had, how to overcome them, and how data and technology are providing real business opportunities.

    read more

    Digital Accountancy Forum and Awards: The next generation

    With young people more mobile, and technology changing the industry rapidly, the final panel session of the Digital Accountancy Forum looked at how firms would need to adapt to the new reality

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.