Auditors left in the dark as to what exactly will be on list of banned non-audit work
The EU member states have preliminarily agreed the EU audit reform but this will mean auditors will be banned from offering certain non-audit services to their clients.
EU member states preliminarily agreed the EU audit reform on Tuesday. Read more about this in our previous blog Preliminarily agreement reached on the EU audit reform
The member states have voted in favour of the audit reform meaning listed companied will have to tender their audit every 10 years and change auditors every 20 years. On top of this auditors have been banned from offering certain non-audit services to their clients.
It is the area of non-audit work that remains unclear. Non-audit work such as tax advice and services linked to financial and investment strategies have been completely banned. But auditors have been left in the dark as to what exactly will be on list of banned work.
Firms will see a fall in their income because they will no longer be able to offer their clients non-audit services.
Details are expected later this week on the list of banned non-audit services. The list will likely include tax services such as tax computations, payroll and indirect costs, while services linked to financial and investment strategy might include legal services, valuation services and advice around internal controls and risk management.
Recently Unilever, which under Anglo-Dutch listing rules was forced to replace PwC as its auditor. KPMG won the bid, but, more importantly, EY did not pitch for the audit work because it is already a strategic supplier to the business. Read more about this in our previous blog Unilever appoints audit firm KPMG as new auditor
Could this be happening more and more if this list of banned services is introduced?
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