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12 October 2006

Speech McCreevy on EU audit regulation and international cooperation

On the occasion of the FEE Conference on Audit Regulation in Brussels Commissioner McCreevy outlined that the successful implementation of the Directive on statutory audit will be a key priority for the next two years. “Half of EU Member States have an oversight body” the Commissioner said, “The other Member States should do so quickly and at the very latest by mid 2008.”

With regard to the cooperation with third countries McCreevy said that “we are on good track now to get rid of costly reconciliation requirements for EU companies in the US by 2009.” “We want to get to the point where we can have registration and inspection carried out by authorities in those non-EU jurisdictions – and as fast as possible”, he continued.

On auditors liability and the audit market McCreevy referred to the latest study which analyses the structure of the auditing market and its possible developments in the future. “The result of the study underlines a concern I have had for some time” he said. “There is an increasing trend for litigation against auditors, while at the same time international audit networks are faced with a lack of available commercial insurance.”

“There is a real risk that at some point one of the 'Big four' auditing firms might be faced with a claim that would threaten its existence. Companies would have difficulties obtaining audits, investor confidence could be undermined and trust in the markets might be weakened generally” He said. “A limitation of auditors' liability could reduce this risk – without reducing incentives for audit quality. It might also contribute to lowering the barriers to entry into the international audit market.

The Commission will come forward with a report on auditors' liability later this year which will outline a number of policy options. Also, in autumn, the Commission will launch a study on ownership rules applying to audit firms, and the consequences these rules have on audit market concentration.

Full speech

© European Commission

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