Talks over the EU 10 year audit rotation have been put on hold
Talks on the European Union imposing mandatory audit rotation on auditors have been put on hold by British MEP, Sajjad Karim. The negotiations are to get companies to change their auditors every ten years. These negotiations have now been placed on hold because of disagreements over the package of legislative measures.
The proposed changes are intended to improve the competition between audit companies, encourage rivalry between audit firms, and to reduce the concentration of the audit services being provided by the Big Four accountancy firms of PwC, KPMG, Deloitte and EY. Many feel that the Big 4 firms dominate the audit sector.
The proposed changes have been the subject of aggressive lobbying. Some are warning the audit rotation would be disruptive and damaging while others are and calling for longer transition periods, stating that the rotation of auditors could costs more than €16bn.
The recent planned meeting was cancelled by Sajjad Karim because member states failed to agree to compromises put forward by parliament. However, according to EU sources cited by Reuters, the process has been delayed because of disputes over issues such as banning accountancy firms from giving tax advice to companies whose books they were already auditing.
Karim said he would wait for new compromises from member states before restarting negotiations.
The EU needs to reach a deal by the spring to avoid a prolonged delay as European parliamentary elections are held and a new commission is appointed.
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