Update

Audit Policy

 Cannot read this email? Open in your browser.July 2020 
 

Audit Policy Update

July

 
 
 
 

Coronavirus resources for European accountants

 
 
 

Our online hub gathers resources and initiatives on coronavirus across the EU.

 
 
 
 
 

How is the European accountancy profession organised?

 
 
 

We surveyed 51 professional bodies to see how the profession is organised & published the results.

 
 
 
 

Highlights

 
 
 
 
  • Publication: How do multidisciplinary teams contribute to audit quality?
  • Implementation of the 2014 EU audit legislation across Europe: 2020 update
  • Greens and Liberals call for a new EU audit reform amid Wirecard case
  • New CEAOB Chair
  • UK: Big 4 firms told to outline plans for audit split by October
  • IAASB corona-related guidance for review engagements on interim financial information
 
 
 
 
 

Message to readers

 
 
 
 

Audit Updates going on summer holidays, back in September!

Dear readers,

As the summer is here, it is time also for the Audit Updates to go on a summer break.

We will continue to monitor developments related to audit throughout the summer and we will get back to you with the latest news in the autumn. The next edition will also cover any key audit developments that may occur in the summer months.

Kind regards,

Júlia

 
 
 
 
 

Feature story

 
 
 
 

Publication: How do multidisciplinary teams contribute to audit quality?

High-quality audits contribute to the extent to which we can trust financial information. As stakeholders demand more and more diverse corporate information, companies use experts, beyond accounting, for reporting this. Likewise, auditors depend on other experts, scientists, engineers, actuaries, to supplement their skills to provide the highest quality audit of financial statements. Such multidisciplinary teams aim to meet the demands of a fast-changing and complex business environment.

Multidisciplinary models have been the subject of debate in Europe and beyond. We asked 18 people from practice, including regulators and audit committee chairs, how they view working with multidisciplinary teams. Based on their insight we conclude the following:

  • multidisciplinary audit teams contribute to high-quality audits
  • auditors benefit from experts’ input, especially from internal ones
  • firms should further develop their capability to work with internal experts
  • firms should stay multidisciplinary to meet evolving expectations from the audit
  • auditors’ priorities remain audit quality, the public interest, independence and ethics

Read more

 
 
 
 
 

Our other work

 
 
 
 

Implementation of the 2014 EU audit legislation across Europe: 2020 update

We have issued two new publications on the implementation of the 2014 EU Audit Directive and Regulation to present an updated state of play in 30 European countries. This includes 27 EU Member States, Iceland, Norway and the United Kingdom.

EU Member States’ deadline for implementation of the 2014 audit legislation was 17 June 2016. Iceland and Norway as European Economic Area (EEA) countries transpose EU legislation with a time lag. Now that the 2014 EU audit legislation became effective in Iceland as from January 2020 and Norway is expected to finalise the transposition by the end of the year, we have updated the following publications:

Implementation of the 2014 EU Audit Directive and Regulation in 30 European countries

In this publication, we further analyse the countries’ decisions and visualise the outcomes for the key options regarding:

  • providing of non-audit services
  • mandatory audit firm rotation
  • organisation of public oversight

Organisation of the public oversight of the audit profession in 30 European countries

This survey provides an overview of how the public oversight is organised in each country and presents the impact of the 2014 EU audit legislation.

 
 
 
 
 

EU Developments

 
 
 
 

Greens and Liberals call for a new EU audit reform amid Wirecard case

On 23 June, the Renew Europe and Green Groups of the European Parliament (EP) issued a statement calling on the European Commission (EC) to reform EU audit rules in reaction to the Wirecard case in Germany.

In their joint statement, MEPs Sven Giegold (Greens-EFA/Germany) and Luis Garicano (RE/Spain) call for the following:

  • organisation of an EP public hearing on the Wirecard case
  • EC to review the Statutory Audit Directive as soon as possible to address ‘inherent wrong incentives in statutory auditing’
  • EC to investigate whether ‘oligopolistic structures’ in the statutory audit market hamper effective exercise of control

The EP Plenary is currently scheduled to hold a public hearing on Wirecard on 14 September.

Read more

New CEAOB Chair

The Committee of European Auditing Oversight Bodies (CEAOB) has elected Mr Patrick Parent from the French Haut Conseil du Commissariat aux Comptes (H3C) as new Chair of the CEAOB. His term will be four years and starts on 12 July 2020.

Read more

 
 
 
 
 

International Developments

 
 
 
 

The IAASB issued coronavirus-related guidance for review engagements on interim financial information

The International Auditing and Assurance Standards Board (IAASB) released COVID-19 pandemic-related guidance on review engagements on interim financial information. This guidance highlights key areas of focus when undertaking a review of interim financial information in accordance with International Standard on Review Engagements 2410.

Read more

 
 
 
 
 

National Developments

 
 
 
 

UK: Big 4 firms told to outline plans for audit split by October

The Financial Reporting Council (FRC) has issued principles for the operational separation of the audit units of the Big 4 companies in the UK. The principles’ main objectives are to improve audit quality and audit market resilience.

The firms have to outline their plans on implementing the principles by the end of October. The separation of the audit practices has to be completed by June 2024. The FRC’s new principles require:

  • auditors to be paid in line with the profits of audit
  • finances of the audit division to be ringfenced with a separate profit and loss account
  • an independent audit board to be introduced to oversee the practice

Read more

 
 
 
 
 

Other news

 
 
Financial Times
 
Wirecard: the timeline
 
 
 

Events

 
 
09/07/2020 16/07/2020 23/07/2020
 
IFAC webinars on Practical Audit Quality Considerations for Auditing in the Pandemic Environment
 

This curated content was brought to you by Júlia Bodnárová, Accountancy Europe Senior Advisor since 2017. You can send her tips by email and connect with her on LinkedIn.

 
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