In June, the European Confederation of Directors Associations (ecoDa) and PWC in the UK published Guidance on Audit Committees which focuses on the Corporate Governance implications of EU Audit legislation, adopted in 2014. The Guidance is addressed to boards and audit committees of public interest entities (PIEs) in the EU.
The EU legislation comprises a Directive which applies to all statutory audits of annual financial statements, and a Regulation which only applies to the statutory audit of PIEs. The provisions of the legislation will apply from the first financial year starting on or after 17 June 2016.
The legislation aims to improve audit quality and to restore investor confidence in financial information, by:
- Reinforcing the independence of the statutory auditor
- Contributing to a more dynamic audit market in the EU
- Reinforcing the role and competences of the audit committee (AC)
The Guidance addresses the following areas:
- Governance of audit committees
- Appointment of the auditor
- Independence of the auditor