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Governance in brief — EU position on auditor rotation goes further than UK rules

Published on: 24 Jan 2014

This publication from Deloitte discusses the European Union's (EU's) proposals for auditor rotation which were preliminary agreed by the Lithuanian EU Council Presidency and the European Parliament  in December 2013 and further agreed by the Legal Affairs Committee (JURI) of the European Parliament in January 2014

  • The EU's proposals go further than the Financial Reporting Council's (FRC's) UK Corporate Governance Code changes (link to FRC website) and Competition Commission proposed Orders which apply to FTSE 350 companies only.
  • All EU public interest entities are required to rotate their auditors after ten years.
  • Member States do have the option to extend this period to 20 years if there is a tender at the ten year point.
  • The legislation will also introduce new restrictions around the provision of non-audit services.
  • The EU requirements will apply to all public interest entities and will therefore apply to all listed companies on regulated stock exchanges as well as banks and insurance companies authorised by EU member state authorities.   In the UK this means AIM is excluded. 

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