• Register
Return to: Home > Comments > Editor's letter: Things will change, so things stay as they are...?

Editor's letter: Things will change, so things stay as they are...?

The profession faced momentous change last year in the form of regulation agreed by the EU institutions. Successful adaptation to regulatory changes, though, is a duty that comes with the job and accountants shouldn't fear it, any more than pilots should fear flying.

Finally, in 2014, EU audit reform will be a reality. The profession in Europe must come to terms with the idea of compulsory rotation of audit firms every 10 years - renewable thereafter for another 10, or 14 years if it's a joint audit engagement.

The debate on the audit reform has rumbled along for almost the whole of the current European Parliament's (EP) five-year term.

December's agreement on the legislative package between the EU co-lawmakers arrived just in time, only months before the EP is dissolved in the run-up for elections in May this year.

A plenary vote of the EP, expected in April, will be the last slope along a steep and stony path for the profession, which started with the initial six-year mandatory audit rotation proposal by the European Commissioner for internal market and services Michel Barnier.

Whether the EU reform has found an appropriate balance depends very much on the observer. For the Big Four, with long-standing audit clients, seems like an imposed burden for the profession, which is doomed to failure.

For die-hard supporters of mandatory rotation the 10+10 solution is a pale reflection of the original goal proposed by the European Commission to open up competition across the European audit market.

However, as the Association of Chartered Certified Accountants technical director Sue Almond has pointed out, the EU reform was intended to restore confidence in audit services. According to Almond, the debate, initially framed in terms of audit quality and corporate reporting, has been "hijacked" by the competition agenda, while developments made to International Standards on Auditing (ISAs) have passed unnoticed.

Indeed, in the aftermath of the global financial crisis it's important to keep perspective and remember that some that were "too big to fail" did so - despite their accounts being given clean bills of health by their respective auditors. At least, that's the perception of the general public, including investors.

For the wider range of stakeholders, mandatory rotation means that no audit is forever. Nonetheless, many within the accountancy profession argue, it would only resemble a game of musical chairs, but with only Big Four participating.

"If we want things to stay as they are, things will have to change," says Tancredi Falconeri in Giuseppe Tomasi di Lampedusa's masterpiece The Leopard. The novel depicts upheaval during the nineteenth century in Italy.

In the face of Garibaldi's revolution to unite the country, noblemen struggle to retain the status quo. Differences aside, in the context of EU audit reform, how relevant Tancredi's famous lines seem for today's profession? Things will change, so will everything stay the same?

Carlos Martin Tornero
carlos.tornero@uk.timetric.com

Top Content

    Accountancy Europe: the winner takes it all

    Jonathan Minter spoke to Olivier Boutellis-Taft, chief executive officer at Accountancy Europe, about how technology could change the industry, and how training needs to keep up to enable the profession to develop

    read more

    Embracing global technology trends

    Accountancy Europe’s Digital Day 2018 found the European accounting profession looking to tackle the challenges presented by new technologies head on. Jonathan Minter reports from the day

    read more

    IMA Conference: automation of the audit

    At the annual conference of the Institute of Management Accountants (IMA) in Indianapolis, Deloitte partner Alex Smith gave a presentation on digital transformation in the profession. Joe Pickard spoke to Smith following the presentation to find out more about his views on the future of audit

    read more

    IMA Conference: technology and the human effect

    The annual conference of the Institute of Management Accountants (IMA) took place in Indianapolis this year. Members of the profession gathered to hear the latest from the institute and other market players, covering some of the challenges and opportunities the profession faces.

    read more

    The Caribbean: a digital paradise

    The ICAC hosted its 36th annual conference in June this year – very much looking to the future following a tough 2017 for the Caribbean. Jonathan Minter spoke with chief executive officer Misha Lobban Clarke

    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.