Wednesday 26th April, 2006: The Council of the European Union has adopted a Directive updating, and introducing additional EU rules on the audit of company accounts, aimed at reinforcing the reliability of company financial statements by establishing minimum requirements for statutory audit of annual accounts and consolidated accounts. The Directive broadens the scope of application of existing EU legislation by specifying the duties of statutory auditors, their independence and ethics, introducing requirements for external quality assurance, in particular with a view to ensuring better public oversight over the audit profession and improving co-operation between oversight bodies. The new measures are intended to help improve quality audits within the EU and hence underpin confidence in the functioning of EU capital markets. They will also provide a basis for co-operation with oversight bodies of third countries to take account of globally interconnected capital markets.
It is expected that, after signature by the Presidents of both the Council and European Parliament, the Directive will be published in the Official Journal of the European Community in late May/early June. It will enter into force 20 days thereafter and Member States will then have a period of two years to transpose it into domestic legislation. The text of the Directive can be accessed here
The Irish Auditing & Accounting Supervisory Authority (IAASA) is a member of the European Group of Auditor Oversight Bodies (EGAOB), a high level expert group established by the EU Commission to provide advice and assistance to the Commission in preparing for the coming into effect of the Directive.