EU is moving closer to imposing mandatory auditor rotation
THE EUROPEAN UNION may impose a mandatory rotation on auditors following an agreement by member states to open talks with the European Parliament.
Last week ambassadors of EU member states supported measures to cap non-audit fees and having companies switch auditors every 20 years.
According to a report by Reuters, it will be necessary for banks and other systemically important companies to change their auditors at least once every 15 years.
For all other companies they will have to rotate every 20 years.
Member states also agreed to cap the fees accountants can earn from providing non-audit services to their audit clients at 70% of the audit fees.
Another source suggested that member states and parliament “are not a million miles away” from getting a deal.
If passed, the final law will mark a significant dilution from original proposals laid down by internal market commissioner Michel Barnier that had called for a six year rotation period.
Currently within the UK the FRC already requiring companies put their audits up for tender every ten years.
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