EU to tighten auditor rules

THE European Commission is to propose that only one auditor be responsible for the overseeing of company accounts under new rules for statutory auditors to be released in March.

At present, only Italy and Spain and the US allow for more than one auditor to be responsible for audited reports in relation to the consolidated accounts of a group of companies.

Internal Market Commissioner Frits Bolkestein told finance ministers yesterday he is finalising proposals to revise the 8th Company Law Directive.

This will tighten the oversight of auditors at the level of member States to:

Introduce the principle of a single group auditor; establish rules on audit quality assurance; specify rules on independence of auditors and on ethics; impose the use of high-quality auditing standards for all statutory audits; ensure independent audit committees in all listed companies; strengthen sanctions for malpractice; Enhance co-operation of oversight bodies at European level and with third country regulators.

Mr Bolkestein said that this enhanced co-operation of oversight bodies' proposal was essential in order to detect fraudulent operations covering several jurisdictions a key feature of the Parmalat case.

The commission has been working on proposals to improve auditing and corporate governance in Europe since May 2003 and is in a position to take account of possible lessons from the Parmalat case, he said.