Audit Policy

 Cannot read this email? Open in your browser.December 2021 

Audit Policy Update



Audit facts: What you need to know on audit, auditors and supervision


In these FAQs, we provide answers to frequently asked questions on auditors, audit and oversight to inform the European policy debate. Read it here.


Event recording: A Global Solution for Auditing Less Complex Entities


Watch the recording of our joint event with EFAA on the proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE).




  • Financial transparency: Creating single EU access point for company information
  • Auditors in scope of DORA following European Parliament’s ECON vote
  • Dutch and UK studies on joint audit bring differing conclusions


EU Developments


Financial transparency: Creating a single EU access point for company information

The European Commission (EC) has proposed that by the end of 2024, the European Securities and Markets Authority (ESMA) sets up a European Single Access Point (ESAP). The EC is inviting feedback on this by early 2022.

ESAP will centralise on a single platform all the regulatory information on activities and products that financial players must provide to supervisors. It will also allow non-listed entities, including SMEs, to make available information on a voluntary basis.

The aim of this initiative is to centralise and present information in an easy to compare digital format. This will enable investors, financial analysts and intermediaries, public authorities, and civil society to have a better understanding of the capital market and make informed decisions.

ESAP does not introduce new reporting obligations but builds on the disclosure requirements in the current EU financial legislation, including audit legislation.

There are proposals, for example, for the following information to become accessible via ESAP in regard to auditors (from 2026):

  • Public register of auditors
  • Sanctions imposed by the competent authorities
  • Transparency reports

In addition, large undertakings might be asked to submit, for example, their financial statements, management report and audit report to a national collection body to make them accessible via ESAP (from 2025).

Auditors in scope of DORA following European Parliament’s ECON vote

The Digital Operational Resilience Act (DORA) was adopted on 1 December 2021 in the European Parliament’s Committee on Economic and Monetary Affairs (ECON) with 44 in favour, 5 against and 5 abstentions.

Almost all political groups voted in favour of the compromise amendment to keep auditors in the scope but with an exemption for certain smaller audit practices.

Next step is for the European Parliament to negotiate with the Council (which proposes to exclude auditors completely) to find a mutually agreeable compromise.

Read more (adopted ECON position on DORA)


National Developments


New German government agreement hints at national audit rules revamp

Olaf Scholz from the German social-democratic party was sworn in as Chancellor on 8 December. He will lead a coalition government which also comprises the green party as well as the liberal FDP.

The coalition agreement indicates potential audit reform plans of the new government, stating that the government seeks to “further strengthen the independence of auditors and counter the high level of concentration in the audit market with appropriate measures, for example in public procurement”.

Read more

Dutch AFM positive about how the PIE audit firms designed their IQRs

The Dutch Authority for the Financial Markets (AFM) has compared the Internal Quality Reviews (IQRs) by the relevant audit firms with its own review into the quality of 18 statutory audits for year 2020. For the majority (15) of the statutory audits reviewed, the IQR resulted in a similar assessment as that of the AFM. The AFM and the Public Interest Entity (PIE) audit firms therefore increasingly apply the same quality standards. The review has also identified opportunities to reinforce and renew the IQRs.

With IQRs, PIE audit firms retrospectively review the quality of a small part of their statutory audits. Each statutory auditor is selected at least once every three years. The performance and findings of the IQRs help audit firms to continue learning.

Read more

Read also this article (in Dutch)

Dutch and UK studies on joint audit bring differing conclusions

A new Dutch study Effects of and experiences with joint audit has looked into a system for auditing annual accounts with two auditors from separate audit firms, the so-called joint audit model. It concludes that the model’s benefits are limited. The study was carried out in the context of the ongoing audit reform in the Netherlands.

These research results on the joint audit model show that it does not appear to improve audit quality but may lead to higher costs. In addition, national and international regulators do not seem convinced of the benefits and stakeholders have no strong desire to introduce the model.

Conversely, another recent study from the UK, Joint audit and audit quality, argues that joint audits can contribute to enhancing audit quality. This is thanks to factors such as higher scepticism, bias mitigation, cross-review of each other’s work by auditors and, overall, higher joint expertise.

The UK study’s author recently presented these conclusions during the ‘Joint Audit Day’ event organised by the French regulator H3C. The recording of the event is available here.


Other news

Financial Times
Deutsche Bahn’s auditor not fully informed on whistleblower complaint
Financial Times
KPMG expects auditors back in UK offices four days a week in the future
Board Agenda
Sir Donald Brydon on audit reform, career NEDs and board relationships
Wirecard's insolvency administrator prepares a lawsuit against EY
Financial Times
EY files criminal complaint over leaking of classified Wirecard report
Financial Times
HSBC faces struggle to attract bids from Big Four auditors
Technology focused FAQ: How to plan an audit?
Supervisory Boards have impact, but differences between audit firms exist

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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