European audit reforms watered down

THE PROPOSED OVERHAUL of rules governing company auditors have been watered down in a draft report published by European parliament’s legal affair committee.

The draft report published by British MEP Sajjad Karim, who is steering the reform through parliament, suggested ditching key elements of the European Commission’s radical plans to inject more competition into the market for large company audits.

The EC tabled proposals that would require companies to change their auditor every six years, and introduce caps on market share that would force the Big Four accountancy firms – PwC, Ernst & Young, KPMG and Deloitte – to split the provision of audit and non-audit services.

Karim’s report, published on the assembly’s website last week, said that auditor rotation should only have to take place every 25 years, while share caps should be scrapped entirely.

Karim is due to outline his proposals on 17/18 September.

The Competition Commission is due to reveal the findings of its own probe into the UK audit market in October.