Outraged City hits back on EU audit plan

Tim Wallace
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PWC BOSS Ian Powell has lead the charge against the European Commission’s (EC) proposed shake-up of the accounting industry.

Writing in City A.M. today, Powell says the proposed creation of audit-only firms could “create severe disruption and undermine quality and confidence”, and calls for more input from UK firms in shaping the final reforms.

Other big four accountants and the City’s MP entered the fray yesterday.

The proposals could be “detrimental to audit quality”, said a Deloitte spokesman. “We do not support certain matters that have been discussed such as joint audits, mandatory rotation and tendering, and a complete ban on non-audit services.”

An industry source told City A.M. that “these proposals ride roughshod over the measures discussed by the European Parliament on 13 September. That said, it is not entirely a surprise – we always knew the EC might do something like this.

“This risks undermining our ability to carry out quality audits, does nothing to help the Europe’s financial problems and is just an EU response when any changes have to be implemented globally.”

City of London MP Mark Field criticised the proposals as an unnecessary assault on some of the UK’s most successful businesses.

“This betrays some confused thinking from the EC – we should be encouraging the City’s best businesses to diversify. Size alone has never been the problem and we should favour innovation,” he told City A.M.

The final proposals will be unveiled later this year. “It is important that the final proposals support growth, ensure that audit quality is not reduced and do not impose unnecessary regulation on business,” said a source at the Department for Business, Innovation and Skills.