The Dutch Government plans to cast the final vote on a bill requiring mandatory rotation for audit firms and a restriction on non-audit services.
The bill, which is in anticipation of the European Commissions (EC) planned reform on the audit market, has so far been passed by the Dutch Lower Parliament and will restrict the scope of auditors forcing them to rotate every eight years and banning them from providing non-audit services to the company it audits.
Auditors will be allowed to work on the audit engagement only after a two year cooling-off period while non-audit services may still be provided as part of contractual obligations up until two years after the bill becomes effective.
These amendments will be discussed and voted by the first chamber later this year, but if approved are expected to become effective from January 2014, bringing forward the impact of the EC audit reform proposals issued in December 2011.
The EC’s audit reform is still at an early stage of the approval process and is currently with the EC Council and Parliament who are making their assessment. It is still not known if and when the proposals will become law.
The EC proposals include mandatory audit firm rotation every six years, extended to nine years in the case of a joint-audit, the banning of non-audit services, banning of ‘Big Four-only’ clauses and an EU audit passport.