• Register
Return to: Home > News > Professional Bodies > Netherlands’ regulator faces criticism after courts overrule sanctions

Netherlands’ regulator faces criticism after courts overrule sanctions

The Dutch regulator, the Authority for the Financial Markets (AFM), must change its oversight of the profession as its investigations are not thorough enough, according to the District Court of Rotterdam which has decided on 20 December to cancel fines imposed on EY and PwC.

According to the AFM, the auditors from PwC and EY did not have sufficient or suitable information in their audit files but the court said that the AFM did not present enough facts that the auditors had undoubtedly violated their duty of care. The court stated that the auditors shortcomings are not are not sufficient reasons to conclude the audit firm does not fulfil duty of care, without further investigation.

Therefore the court cancelled the administrative fines of €2.2m (US$2.6m) for EY and €845,000 for PwC which had been issued last year for 2011 and 2012 audits. Deloitte and KPMG also received fines of €1.8m and €1.25m respectively for a similar offence, but they accepted the penalties and have yet to confirm if they will appeal in future.

The court believes that change to the AFM’s oversight arrangements is fundamental, and the ruling could have major consequences on the duties and legislation of the regulator. The AFM is considering to appeal against the ruling.

Additionally, the European Securities and Markets Authority (ESMA) also strongly criticised the supervision method of the AFM on 5 December arguing that it fails to comply with European guidelines.

AFM director Gerben Everts informed Dutch publication De Telegraaf that the AFM will not fundamentally change its approach because bringing individual accountants in front of the disciplinary court is not very effective.

“The judge is taking a big step back in time. We do not aim to impose fines, but to lift the sector to a higher level,” Everts said. “Complaints and penalties for individual accountants do not change anything in the industry.”

Corporate governance forum Eumedion director Rients Abma said to the FD, a financial publication from the Netherlands, that the audit firm must remain responsible for a failing accountant. “Otherwise, the penalty tool becomes powerless,” he argued.

Top Content

    Addressing tax challenges and the digitisation of the economy

    As the economy becomes even more globalised through digital sources, the tax systems currently in place need to be scrutinised to examine whether they are still fit for current and emerging business models. Joe Pickard reports on the OECD’s approach to this issue.

    read more

    Primary financial statements: a game changer in reporting?

    International Accounting Standards Board chair Hans Hoogervorst delivered a speech at the Seminario International sobre NIIF y NIF, organised by the Consejo Mexicano de Normas de Información Financiera in Mexico. The Accountant presents the highlights.

    read more

    FASB readies standards for the netflix generation

    The US Financial Accounting Standards Board (FASB) has updated its accounting standard for entertainment, with a specific eye on keeping up to date with how episodic content, such as television programmes, is consumed in the modern world. Jonathan Minter reports.

    read more

    Brexit: why it takes two to tango

    Former TA editor Vincent Huck, now editor of Insurance Asset Risk, looks at why Brexit might unleash geopolitical intrigue in Europe’s accounting standard-setting scene – and why IFRS 17 will be an incredible source of opportunity for firms in the coming years.

    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.