EU audit directive

The European Commission has decided against an outright ban on statutory auditors carrying out additional work for client companies, although tabled reforms to EU auditing rules insist that auditors avoid conflicts of interest. A proposed directive orders auditors or audit firms to be “independent from the audited entity and not in any way involved in management decisions.” Furthermore they should not conduct audits if any relationship or additional services “might compromise (their) independence.” The proposed legislation, published in the wake of Parmalat, insists that the auditors of a multinational group’s consolidated accounts take full responsibility for audits of national branches and subsidiaries.