Investors want tough EU rules for audit firms

Marion Dakers
A GROUP of top investors has called on the European Commission to push ahead with tough new rules for auditors that could see some companies broken up.

More than a dozen institutional investors and trade bodies have signed a paper seen by City A.M. urging politicians in Europe to continue shaking up the audit industry in the wake of the 2008 banking crisis.

The European Commission set out rules last year that would force companies to change auditor at least once every six years, but the European Parliament will consider relaxing this rule today.

The legislators will discuss a report by British MEP Sajjad Karim, which recommends that Brussels waters down the proposals.

The Commission also wants a ban on firms doing non-audit work for their audit clients - an area of business that generates 15 per cent of PwC's revenues, the firm said in its annual results today.

Investors from across Europe including the Universities Superannuation Scheme and Legal & General are calling on Brussels to limit non-audit work to a maximum of 50 per cent of audit fees.

They have also demanded greater transparency from auditors.