FEE proposal for successful implementation of Prospectus Regime

24 October 2005

The European Federation of Accountants (FEE) issued a analysis warning that the Prospectus Directive could undermine the benefits for investors and other market participants if it is not followed up with tighter rules on auditor liability. The Directive requires the involvement of the auditor in historical, prospective and pro forma information. The analysis provides guidance on the implementation of the single European passport and the related role of the auditor.

FEE proposes among others the inclusion of the audit report together with the related previously audited financial statements. The Prospectus Regulation permits it to be reproduced independently. If adjustments or additional information are necessary, a new audit report or a specific opinion on the additional information should be produced. Furthermore, a prospective financial information and pro forma financial information needs to be prepared on the basis of a recognised and preferably international framework.

FEE urges the IASB to define and develop suitable criteria in the context of profit forecast/ estimate, and the IAASB, the international audit standard setter, to consider the development of a specific standard on assurance engagements in relation to reporting on other than historical financial information in prospectuses.

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