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
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.