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Governance in brief — European Parliament approves EU audit legislation

Published on: 09 Apr 2014

This publication from Deloitte discusses the key areas of EU audit reform which were approved by the European Parliament in a plenary vote in Brussels.  The new rules will be in the form of a Directive amending the Statutory Audit Directive (Directive 2006/43/EC) (link to Europa website) and a Regulation on specific requirements regarding the statutory audit of public-interest entities (PIEs).  All European public interest entities (ie EU incorporated entities with debt or equity traded on an EU regulated market) as well as banks, building societies and insurance companies will be impacted.

Under the new rules: 

  • All EU public interest entities are required to rotate their auditors after ten years, with a Member State option to extend this period to 20 years if there is a tender at the ten year point.
  • There are restrictions on the nature and extent of non-audit services.

The legislation will come into effect in mid 2016, following Member State decisions on options, giving companies time to plan ahead.

With the EU position now settled, the way in which the Competition Commission’s proposals will be taken forward can now be clarified, allowing audit committees to finalise tendering timetables and policies

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