Further audit rules planned

AUDITORS’ work came under fresh scrutiny yesterday by EU and UK regulators.

EU internal market commissioner Michel Barnier told a Brussels conference he was preparing a directive for November to overhaul audit oversight.

He said auditors should be more accountable to wider economic stakeholders – investors, stock exchanges, clients and suppliers – and auditors’ independence should be reasserted.

Conflicts of interest that have “tarnished” the profession, such as when auditors supply extra non-audit services to clients, could be prohibited under new rules, he said.

“The status quo is not an option for the auditing world,” he said.

Barnier said EU authorities would also consider making firms change auditor regularly and would encourage new market entrants.

Separately, the Bank of England and Financial Services Authority issued a draft code of practice for auditors to ensure they coordinate their work better with regulators.

Richard Thorpe, FSA auditing and accounting sector leader, said: “The FSA and its successor organisations, as supervisors, need to have confidence in audited financial information to ensure that we are making informed judgements and the right decisions.”