ACCA is aware of the widespread speculation concerning the forthcoming announcement by the European Commission of its future legislative proposal on statutory audit.
However, while ACCA will not make any formal public comment on the Commission's proposals until they are actually made, we have, during the process of consultation which has already taken place, made clear our position regarding the future of audit policy in Europe.
'We agree with the Commission that the time is right for all parties with an interest in audit to re-examine the role of statutory audit in the light of our collective experience of the financial crisis. We support the Commission's project to review all aspects of existing law and regulatory practice with the aim of learning lessons from that experience. While we accept that there are lessons to be learned, our position is that we continue to believe strongly in the value of audit as a tool which can provide material benefits to companies and their various stakeholders and are keen to ensure that the value of audit is maintained and enhanced in the years to come', says John Davies, head of Technical at ACCA.
ACCA accepts that maintaining and enhancing the value of audit may mean making significant changes to how audits are currently conducted and regulated. We have ourselves promoted the idea that the scope of audit needs to be expanded so as to take on more responsibilities which are likely to make a real difference to shareholders and regulators, such as reporting on how companies manage their strategic risks.
John Davies explains: 'We share the Commission's concerns about concentration in the listed company audit market and believe that changes should be made to the audit environment to encourage greater involvement on the part of smaller firms in listed company audit work. We also fully endorse the Commission's goal of improving audit quality and accept that integral to that goal must be to address issues relating to independence, objectivity and professional scepticism.'
'In pursuing these ambitions, however, we believe it is important to ensure that we do not resort to inflexible and bureaucratic measures which risk creating practical problems within the corporate sector and which could even prove counter-productive in terms of their effects on audit quality. Crucially, whatever arrangements are eventually adopted to replace the current Directive should, in our view, focus on outcomes as much as procedures', he adds.
'ACCA looks forward to the publication of the European Commission's plans in November and to engaging in a constructive dialogue on them, both with the EU executive and the co-legislators. With this in mind, ACCA is organising a round table meeting on the issue in Brussels in early December', John Davies concludes.