20 October 2005

Speech McCreevy on statutory audit

In his address to the Global Public Policy Symposium in London Commissioner McCreevy outlined the European and global dimensions of the 8th Company Law Directive and on how the EU can best contribute to global efforts on audit, both through International Standards on Audit and by promoting wider convergence and co-operation between regulators and oversight bodies.

On the European dimension the Commissioner referred to the fear that the next corporate scandal would reduce the Big Four to the Big Three. Therefore, the Commission will issue a report before the end of 2006. “As a first step, we will carry out a study on the economic impact of the alternative liability regimes, the competition in the market and the availability of the insurance”, McCreevy noted. The results will be available in the autumn 2006. Furthermore, a Forum will be created which will work in parallel, to obtain opinion of market experts, including investors, on the overall regulatory issue of limiting financial burdens for auditors.

On the global dimension he noted that the Commission has an agreement with the SEC with the objective of removing the burdensome US GAAP reconciliation requirement for EU issuers in the US, as early as 2007, but no later than 2009. “I would like to stress that convergence is not an invitation to standard-setters to try and advance the theoretical frontiers of accounting” McCreevy said. “I will not take on board any revolutionary new standards” he added.

“With regard to the International Accounting Standards the EU will have to determine whether the current governance structure of the International Auditing and Assurance Standards Board (IAASB) is adequate, both in terms of standard setting and public oversight” the Commissioner said.

Full speech

© European Commission