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EU audit in song

Sue Almond, ACCA technical director

By Sue Almond

Listening to a 1980's compilation track on the plane home from my last trip of the year, I reflected on my 'soundtrack for the year'.

Having relived my youth at the excellent David Bowie exhibition in London earlier this year, 'Changes' was of course on the list for a year that has been dominated by the ongoing audit debate in Europe. But this gets wheeled out year after year at various conferences, so was dismissed as too cheesy. And it really doesn't highlight the special nature of this year.

As a big George Michael fan, I had really hoped that 'Careless Whisper' could feature but, while there have been ups and downs of the negotiations in the closing stages, they appear to have ultimately been concluded behind genuinely closed doors. At the time of writing, we know that agreement has been reached between the negotiating parties, but it is not yet clear exactly what that agreement is. I think the principles though are clear, and we must expect mandatory audit firm rotation and a clearer list of banned non-audit services.

Of course, the whole audit package was introduced under Commissioner Michel Barnier, and I was reminded of a line for The Look's 'I am the Beat' - 'All around the world the people know my name'. This is certainly true and he has been referred to in almost every audit event worldwide that I have attended this year. But I wasn't sure he would be so keen on the next line 'In heaven and hell they know me too'. I think the objective of all the audit changes has to be to stay on the side of the angels.

So I settled on another song to summarise this year - M's Pop Musik. Despite its 1979 release, it was on the airline's compilation on my return from New York and pretty much summed up the previous few weeks for me. IAASB in New York, where the comment period for the proposed audit period changes has just closed and the 130-plus responses mean that my Christmas reading is now sorted.

Events with the FRC in London and Brussels to support the IAASB consultation on auditor reporting and some of the broader EU audit proposals. The French Professional body CNCC's annual audit conference in Paris where a panel considered the impact in different EU countries. And in Frankfurt a meeting of EGIAN, the European Group of International Accounting Networks and Associations, where topics such as rotation and non-audit services were high on the agenda.

So not quite the 'New York, London, Paris, Munich' of Pop Musik, but pretty close. And most certainly 'everybody's talking about.....' -audit. And while much of the debate has focused on a limited number of controversial topics, we should reflect on some important achievements - such as progress on the adoption of a single set of international standards - whether for financial reporting, audit or ethics - which is critical for businesses operating in a global environment.

But it is fair to say that the feedback on audit has not always been positive. The challenge for the audit profession is to move on from the detailed debate and to implement the changes in a way that helps restore public confidence in the audit, and in auditors. The debate was initiated on an 'audit quality' mandate but was largely hijacked by competition debate. Let's get back to articulating audit quality and the value of audit. Audit plays a critical role in supporting global business and it is important that we do not overlook its value.

And a challenge for auditors, investors and business is to maintain the 'trilogue' that is so crucial in shaping the audit in a way that is relevant for the future. Which brings me to the final song for 2013 - the Rembrandts' 'I'll be there for you'. Partly to reflect the need for us all to collaborate going forward, but primarily to recognise David Schwimmer of Friends fame, my travel companion on the flight from New York.

Agreement on EU audit and celeb spotting all to the sound of the 80s. What a trip!

Sue's previous blog post
Shades of Grey - or What's in a name?


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