Audit regulator warns EU over auditing plans

Reporting by Huw Jones; Editing by Will Waterman for Reuters, December 10th, 2010.

Radical European Union proposals to shake up auditing and corporate governance could destroy a cornerstone of the successful capital market, a regulator said on Thursday.

EU Internal Market Commissioner Michel Barnier wants to inject more competition into auditing, a sector dominated by just four companies.

Brussels is mulling compulsory rotation of audit partners who check a company’s accounts, and making it easier for local auditors to work alongside the “Big Four” who dominate the global sector. “We are likely to see some fairly challenging proposals from Europe at the outset, but they will be subject to debate,” Richard Fleck, a director at the Financial Reporting Council, told an accountancy conference.

“My hope is that we don’t end up with Europe taking a damaging approach to some of the good things that go on in financial reporting in a reaction to the Anglo-American model, and secondly in an attempt to advance a number of self interests including some of the more regional firms,” Fleck said.

Barnier, who will be grilled by MPs about his regulation plans next Monday, also wants tougher corporate governance so that independent board directors are more questioning and all shareholders have a strong voice. (continue reading… )


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