MICHEL Barnier, the EU markets commissioner, stepped up efforts yesterday to extend scrutiny of auditors beyond the borders of the European Union.
In a bid to ensure EU states access to more information about the audits done on major companies, the internal market and services commissioner has added ten non-EU states, including China, Switzerland and the US, to a list of countries that will cooperate with EU members on oversight of auditors. The move is designed to tighten the net over audit practices in the wake of the financial crisis, in which financial institutions and companies given a clean bill by their auditors subsequently failed.
“With auditing now moving beyond national borders, there is a need for effective global auditor oversight,” the markets commissioner’s office said.
Barnier said the decision was taken against a backdrop of improvements to the audit market.
“International cooperation on auditor oversight is crucial to avoiding the overburdening of audit firms and duplicating supervisory work, and above all, to promoting a high degree of investor protection by ensuring high quality audits,” he said.
The ten countries joining the 27 EU states were selected because their audit oversight systems are at a comparable level. These are Australia, Canada, China, Croatia, Japan, Singapore, South Africa, South Korea, Switzerland and the US.
The commission has also identified a further 20 states that are taking steps to reach an equivalent level and could be included in the information sharing agreement in future. These include Abu Dhabi, Egypt, India, Russia and Thailand.