Proposed new standards:

• Proposed ISA 402 (Revised and Redrafted), Audit Considerations Relating to an Entity Using a Third Party Service Organization. Addresses the auditor's responsibilities to obtain audit evidence when an entity uses one or more service organizations. This may include obtaining reports prepared by the auditors of those organizations. Comments due 30 April 2008.
• Proposed International Standard on Assurance Engagements (ISAE) 3402 Assurance Reports on Controls at a Third Party Service Organization. Complements proposed ISA 402 (Revised and Redrafted) in that reports prepared in accordance with proposed ISAE 3402 will be capable of providing appropriate audit evidence under the proposed ISA. It is intended to ensure that reports issued in one country are likely to meet the requirements of the auditors of user entities in other countries. Comments due 31 May 2008.
• Proposed ISA 265 Communicating Deficiencies in Internal Control. Deals with the auditor's responsibility to communicate to management and those charged with governance deficiencies in internal control that have been identified by the auditor. Comments due 30 April 2008.

• ISA 501 (Redrafted) Audit Evidence Regarding Specific Financial Statement Account Balances and Disclosures. Comments due 31 March 2008.
• ISA 520 (Redrafted) Analytical Procedures. Comments due 31 March 2008.

Accounting

On November 15, the US Securities and Exchange Commission took the major decision to allow foreign issuers to file accounts under IFRS without reconciliation to US standards. We have always wanted this. All EU companies listed in the US will benefit. One estimate puts the savings at €2.5bn – and this just for EU companies. This is clear evidence of the benefits of international regulatory dialogues! We must continually make sure that new standards reflect the real needs of stakeholders. We need to continue to press for improvements in the IASB standard setting process. To avoid unwanted or even unexpected consequences. That means more transparency. Better consultations. Impact analysis at an early stage. Thorough field-testing of any new standards. And rigorous management. We need standards only when they are necessary.

We also need to strengthen further the public accountability of the IASB. That is why last month we issued a statement together with the US SEC, the Japanese Financial Services Authority and IOSCO on key issues where action is needed.

Next year it will be the EU's turn to take the decision to accept US GAAP – and other well developed third country GAAPs. We are working hard together with European securities regulators to determine whether those GAAPs are equivalent to IFRS. We will make a serious and balanced decision – taking into account the competitiveness and attractiveness of our capital markets. As regulators we must help financial markets to function as friction-free as possible.

Commissioner McCreevy announced his plans regarding the 8th Directive in six areas:

• Auditor liability. Recommendation in first quarter 2008 asking Member States to limit auditor liability. Each Member State would decide the means by which liability is limited – for instance, a liability cap, proportionate liability, or contractual arrangements between the auditor and the audited firm. Liability would not be limited in cases involving wilful misconduct by auditors.
• Restrictions on ownership of audit firms. Public consultation will be launched in the first quarter of 2008.
• Audit quality and inspections. Independent inspections of audit firms that audit listed companies are needed. However, before this could be required, more independent inspectors with sufficient expertise are needed. Meanwhile, the EU should give more responsibilities to the public oversight bodies and, for a transitional period, allow professional bodies and practitioners to take part in the inspection process, with a limited role under the supervision of independent inspectors.
• Implementation of the Statutory Audit Directive. Publish a 'scoreboard' in Spring 2008 showing where Member States stand in implementing the 8th Directive, particularly as regards the establishment of independent public auditor oversight.
• International Standards on Auditing (ISAs). Article 26 of the Statutory Audit Directive allows the Commission to make ISAs mandatory for the European Union. However, the Commissioner's intention is not to make a decision on ISAs at this stage but to look at this issue again towards the end of 2008 – following completion of the IAASB's Clarity Project and studies that the EU will undertake.
• Co-operation with 'third countries'. Under the 8th Directive, Member States are required to register all auditors from outside the EU that audit companies listed in EU markets and to subject them to their systems for overseeing domestic audit firms. However, the Directive allows Member States to exempt auditors from non-EU countries whose oversight system is considered equivalent to the EU system. In January 2008, Commissioner McCreevy will propose transitional measures to allow audit firms from such non-EU countries to continue without registration until 1 January 2011. By then, the EU will complete equivalency assessments of these non-EU oversight systems.

There will probably never be a global securities regulator, and we probably wouldn't want one. But strong national regulators working closely together is an exceptionally positive development. It will require relationship building, and a willingness as national regulators to take a different look at common issues and to be open to considering the approaches of others. All of us have got to recognize that there is not just one way to effectively regulate markets. So long as our commitment to protecting investors and maintaining the integrity of markets remains strong, then new regulatory partnerships will undoubtedly continue to flourish, to the everlasting benefit of investors all around the world.