European audit reform proposal moving forward

BY KEN TYSIAC

April is the forecasted date for a vote of the full European Parliament on European Union audit market reforms, which took another step in the legislative process this week.

The EU Legal Affairs Committee voted 13–8, with one abstention, on Tuesday to approve a draft agreement between Parliament and the European Council. The draft agreement includes a requirement for public-interest entities to rotate audit firms every 10 years, with some exceptions.

Public-interest entities include listed companies, banks, and insurance firms. Engagements may be allowed to continue for a maximum of 20 years if the audit engagement is put out for bid, and for 24 years in cases where multiple audit firms share the engagement.

The draft agreement also would prohibit EU audit firms from providing certain nonaudit services to the public-interest entities they audit, including tax advisory services that directly affect the company’s financial statements. Another requirement would limit fees from permitted nonaudit services to an audit client to 70% of the audit fees.

The next step for the draft agreement is a vote by the full Parliament, which a Parliament news release said is likely to occur in April.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

COLUMN

Deflecting clients’ requests for defense and indemnity

Client requests for defense and indemnity by the CPA firm are on the rise. Requests for such clauses are unnecessary and unfair, and, in some cases, are unenforceable.