EurActive is reporting that tomorrow, Internal Affairs Commissioner Michel Barnier will present a proposal affecting audit firms in the EU:
1. Big 4 to be audit-only firms
2. Maximum tenure of 9 years
3. Two audit firms per client company, a maximum of one Big 4 firm.
Barnier has been floating his idea for the past six months, and apparently has the support needed to push it through.
This proposal reflects compromises that have been made. The tenure of nine years is fairly long, and much longer than the American proposal of five years. That smaller firms are to be included in the audit reflects a compromise of not breaking up the Big 4.
The American PCAOB is considering mandatory auditor rotation after five years, but most comment letters to the proposal are opposed to the idea. If EU is successful in forcing auditing rotation, pressure will be put on the Americans to go along.
Tune in tomorrow for the latest developments
Debit and credit – – David Albrecht