Michel Barnier, EU Internal Market Commissioner, has announced that new rules are likely to be introduced to clarify the auditor’s role following the financial crisis. The potential areas the new rules would focus on are:
- ensuring the independence of auditors. This could be achieved through restricting the extent to which firms can combine audit and non-audit roles; rotating audit firms working with one company; introducing competitive tendering for work and a greater role for audit committees in selecting audit firms.
- enhancing the competition within the audit market through the introduction of more choice. This could involve capping the total market shares for listed companies and joint auditing where the work is shared between a Big Four firm and a non-Big Four firm.
- addressing the role of auditors and the extent to which the role should extend beyond a narrow duty to the company being audited, to a broader audience of clients, employees and regulators.