The directive amends the current Statutory Audit Directive, applying to all statutory audits. A final directive would need to be implemented by European Union (EU) member states into national law.
The regulation contains requirements regarding statutory audits of public interest entities (PIEs). An EU regulation would apply directly throughout the EU without any member states adopting or tailoring.
The EC's proposals have two main thrusts; to reduce concentration in the market for audits through new requirements around audit tendering and auditor appointment, and to address perceived threats to auditor independence by audit firm rotation and limits on non-audit services.
The key measures outlined in the proposals include:
- Mandatory audit firm rotation
- Mandatory tendering for appointing auditors
- Restrictions on non-audit services
- Audit-only firms for the largest networks
- Greater requirements and responsibilities for Audit committees
Read KPMG's overview of the proposals:
View the European Commission's proposals in full
View the appraisal (PDF 230 KB) by the EP Impact Assessment Unit of the Commission proposals for a Directive and a Regulation released 10 July 2012.
In the course of 2012 the proposals have moved from the European Commission to the legislature within the European Parliament and discussions within the working group of the Council of Ministers of the Member States.
The procedure within the European Parliament is for the proposals to be considered by those committees having the relevant competencies – in this case primarily the Legal Affairs Committee (known as JURI) supported by the Economic Affairs Committee (ECON).
To start that process of consideration the JURI committee produced a draft report which was formally presented to the JURI Committee on 18 September, on both the Regulation (PDF 512 KB) and the Directive (PDF 204 KB).