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EU statutory audit rules approved. By Dan Martin

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27th Apr 2006
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The EU Council of Ministers has approved new European regulations on statutory audits.

Aimed at reinforcing the reliability of company financial statements and reigniting public confidence following accounting scandals like Enron, the EU directive establishes minimum requirements for statutory audit of annual accounts.

In its approval of the scheme the Council accepted amendments put forward by the European Parliament after criticism that the original proposals' insistence that all public companies have a separate audit committee was too bureaucratic.

In a statement, the Council said: "The directive broadens the scope of application of existing EU legislation by specifying the duties of statutory auditors, their independence and ethics, introducing requirements for external quality assurance, in particular with a view to ensuring better public oversight over the audit profession and improving co-operation between oversight bodies in the EU."

Among the measures, member states are required to ensure that each statutory auditor and audit firm is identified in an electronic public register and that both are kept independent from the audited organisation.

All statutory auditors and audit firms are also to be subject to quality assurance standards.

David Devlin, president of the European Federation of Accountants (FEE), said: "FEE particularly welcomes the proposals on key issues such as application of international standards on auditing, quality assurance and new arrangements for public oversight of the profession.

"These reforms are a clear commitment by the EU to underpin investor confidence in Europe and will drive the further harmonisation of audit practice."

EU countries are required to comply with the new directive within two years.

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