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July 26, 2009

Ireland moves closer to audit directive implementation

Ireland has released draft regulations aimed at transposing the EC’s Statutory Audit Directive less than a month after the commission announced plans to refer the country to the European Court of Justice over non-implementation of the directive into national law.

The primary purpose of the directive is to establish minimum requirements for the regulation of statutory auditors throughout the EU.

The directive aims to increase the quality of audits in Europe following past corporate scandals. Specifically, it requires that each member state establishes systems of external quality assurance and public oversight of the audit profession.

It also provides for measures to improve co-operation between regulatory authorities in the EU and sets out a number of ethical principles to ensure the independence and objectivity of statutory auditors and clarifies their duties. The transposition deadline was 29 June last year.

The Institute of Chartered Accountants in Ireland (ICAI) has welcomed the publication by the Department of Enterprise, Trade and Employment of the new draft regulations.

ICAI director of technical policy Aidan Lambe pointed out that Ireland has had many of the provisions outlined by the directive in place as the local Companies (Auditing and Accounting) Act 2003 established an organisation to oversee the regulation of the auditing profession.

“The basic architecture envisaged by the directive is already in place,” Lambe said. “However, the measures contained in the [statutory audit directive] will not just impact the auditing profession; it also contains new proposals as regards the establishment and functions of audit committees by public interest entities and measures aimed at safeguarding auditor independence.”

The EC is also referring Austria, Italy and Spain to the European Court of Justice over non-implementation of the statutory audit directive.

Belgium, Ireland, Greece, Luxembourg, Poland and Portugal have also been sent formal requests by the EC regarding their failure to fully implement into national law the latest directive in the field of accounting.

The transposition deadline was 5 September 2008.

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