EU Cuts Red Tape For Audit Firms From Third Countries

by Ulrika Lomas, for LawAndTax-News.com, Brussels

04 August 2008

The European Commission on Monday adopted a decision granting a transitional period for the registration requirements for audit firms from 30 non-EU countries.

The decision clarifies how the competent authorities in Member States should deal with third country audit firms under the Statutory Audit Directive.

In the context of its work on monitoring the implementation of the Statutory Audit Directive, the Commission published a scoreboard on where the 27 Member States stand with their implementation of the Statutory Audit Directive, which had to be transposed into national law by 29th June, 2008.

Internal Market and Services Commissioner Charlie McCreevy commented:

"The implementation and enforcement (of the) Statutory Audit Directive is particularly important at a time when financial markets face a difficult period and need to rely on robust audits of financial statements."

"I feel encouraged that the public oversight bodies in Europe are working together so that third country audit firms have a clear idea what it is expected from them when they audit companies listed on European capital markets."

The decision adopted by the EC on Monday ensures the proper implementation of Article 46 of the Statutory Audit Directive, which allows Member States to modify or not apply the registration requirements for third country auditors set out in Article 45 of the Directive only if such auditors fulfil certain conditions.

The Decision allows 30 third country audit firms to continue their audit activities regarding third country companies listed on European markets by granting the audit firms concerned a transitional period in respect to registration requirements until 1st July 2010.

However, transition will only be granted if third country audit firms comply with the minimum information requirements necessary for investors in Europe.

Audit firms from third countries that do not fall under the transitional regime will be subject to full registration and oversight by the competent EU Member State.

With regard to the practical application of the regime for all third countries, the audit regulators in the European Group of Auditors' Oversight Bodies worked out arrangements for a common approach on common application forms for the registration of third country auditors and audit firms.

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