22 March 2002

FEE Discussion Paper on International Standards on Auditing

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The Fédération des Experts Comptables Européens (FEE) is leading the debate about the future of auditing standards in Europe with its current paper published in December 2001. The discussion paper provides clear evidence of the European accounting profession’s commitment to harmonised auditing standards for all audits.

Currently, differences in Member States’ national auditing standards are neither transparent nor clearly identifiable. As a result, users of audit reports have to invest extra resources to understand the precise nature of the assurance that is being given. This contributes to the fragmentation of Europe's markets and raises the cost of doing business. By enhancing cross-border confidence in audited financial statements, the proposal will better facilitate cross-border capital flows, and promote the internal market for goods and services across all sectors.

FEE proposes that by 2005 national auditing standards in the European Union should require auditors of financial statements to:

perform audit procedures that comply with International Standards on Auditing (ISAs);

report on financial statements in accordance with ISAs; and

perform additional audit procedures and report on additional matters in response to specific legal, regulatory or other needs established at a national level.

This proposal to enhance audit quality also supports the Lamfalussy Report's vision for the swift integration of European capital markets and the adoption of International Accounting Standards, or IAS, by all EU listed companies from 2005.

It is envisaged that implementation of this proposal on International Standards on Auditing (ISAs) in the EU will be possible without new legislation. It could be co-ordinated by a forum of European national auditing standard setters. Such a forum would allow key stakeholders to provide input.

See full
http://www.frc.org.uk/APB/publications/isa.cfm',WIDTH, 300, SHADOW, true, FADEIN, 300, FADEOUT, 300, STICKY, 1,DURATION,3500)" onmouseout="UnTip()");">ISA in the EU.pdf' target='_blank'>discussion paper

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