The EU Audit Directive - 17 June 2016

The new EU Audit Directive will come into force on 17 June 2016 bringing with it significant effects on audit and advisory firms. The Directive aims to improve auditor independence, quality of audit reporting and the level of competition in the audit market. However, the impact on the firms and their relationships with Public Interest Entities (PIEs) means that companies will have to be very careful in their choices of audit and non-audit service providers. PIEs will have to put out their audits to tender every decade and change their auditors every two decades. Fee caps and service blacklists will be introduced as well as restrictions to non-audit services that can be provided to them.
 

The Directive should help to restore public confidence in the sector and the role played by statutory auditors, as well as improve reporting and auditor independence. Although evidence of this will not be apparent for a few years, it is important that companies re-evaluate both reporting and their service companies so as to plan for their future and prepare for the effects of the Directive.

For more information on the Directive, you can read the City AM article here.

 

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