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December 14, 2007

McCreevy unveils EC audit package

McCreevy unveils EC audit package

The EC has set timelines for consultations and recommendations on six key audit issues. European Commissioner for Internal Market and Services Charlie McCreevy outlined the audit package before the European Parliament’s Committee on Legal Affairs. It includes timeframes for EC activity on auditor liability, audit firm ownership restrictions, audit quality and inspections, the implementation of the Statutory Audit Directive by member states, International Standards on Auditing (ISAs) and co-operation with third countries.


McCreevy said he intends to put forward, in the first quarter of 2008, a recommendation to member states asking them to limit auditor liability. “I do not intend to impose the means by which liability is limited. This will be for each member state to decide,” he said. “Existing solutions such as a liability cap, proportionate liability or indeed a contractual arrangement between the auditor and the audited firm would all seem adequate means to deal with this issue.”

Strengthening independence

The commissioner plans to launch a public consultation on the ownership restrictions in audit firms and issue a recommendation on the independence of inspections of audit firms that are engaged in the auditing of listed companies.

“In substance, this recommendation will give more responsibilities to the public oversight bodies, strengthen the independence of inspectors and provide more transparency on the outcome of inspections,” McCreevy said.

McCreevy said he intends to present a scoreboard of the implementation of the 8th Directive in spring 2008, describing where member states stand in regards to independent public auditor oversight. It is aimed at naming and shaming member states.

McCreevy said the EC also needs to decide what will happen with the audits of third country companies listed in the EU when the Statutory Audit Directive becomes effective. In terms of ISAs, McCreevy said it is too early to decide whether they should be applied in the EU.

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