The Netherlands has been pushing ahead with a speedy rewrite of audit regulation even though the EU is still finalising its own reforms, the subject of lengthy consultation.
The European Commission wants leading companies to change auditor at least once every six to 12 years but its wishes may be diluted in horse-trading likely to last for many months.
The accounts of leading listed companies can be audited by the same firm for decades, prompting claims that auditors are too cosy with those they are vetting. The Dutch crackdown is part of a broad push for financial reform in the Netherlands. The Netherlands is even dealing with the question of further restrictions on the amount of extra advisory work an auditor can carry out for a company while performing an audit.
Roland van Vliet, an MP for the far-right Freedom Party who sponsored the auditor rotation proposal, said the chances of the Senate rejecting the measures were slim. A Senate vote has not yet been scheduled.
Mr van Vliet said tougher regulation was justified by the failure of auditors to warn of disasters such as the collapse of DSB Bank, as well as the 2003 financial scandal at Ahold, the food retailer. Yet Berry Wammes, executive director of the Netherlands Institute of Chartered Accountants, said there was no link between such mishaps and length of auditor tenure. He said more than 1,300 companies would be hit by the rotation plan.
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