EC publishes audit reform legislation

Listed companies will have to re-tender their audit contract every 10 years after politicians in the European Parliament published legislation to reform European audit rules.

Companies will have to rotate their auditor every 20 years and there will be an expanded list of consultancy services that auditors are banned from offering, under the planned rules. There will also be a cap on how big a proportion of the audit fee can be made from offering non-audit services.

The reforms are intended to increase competition for audit services and prevent conflicts of interest between companies and their auditors.

The draft rules, which have been discussed for about three-and-a-half years, are less stringent than the ones first proposed by the European Commission. The accountancy profession, which lobbied against tougher proposals for new audit rules...

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