Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


European audit market reforms should filter through to NZ

Media Release

4 April 2014

European audit market reforms should filter through to New Zealand

FOR IMMEDIATE RELEASE

The European Parliament has passed law to address investor concerns over the excessive volume of non-audit services, long tenure of audit relationships and the quality of audit communication and this is likely to impact New Zealand subsidiaries and branch operations of these EU companies.

Key aspects of the new European auditing law that was passed on 3 April 2014, directed primarily at public interest entities (PIEs) include:

• capping, at 70% of the audit fee, the level on non-audit services that a PIE can obtain from its auditor

• restricting some of the tax and advisory services that a company may obtain from its auditor

• making null and void any restrictions on a company’s choice of auditor (commonly known as “Big-4 clauses”) and requiring audit rotation at 10 years unless EU Member States provide the option to extend it up to 24 years, and

• requiring more informative audit reports, and reports by the auditor to the audit committee.

Grant Thornton New Zealand’s National Technical Director, Mark Hucklesby said: “While passing this law helps European investors, we anticipate that these measures will also have long-term, meaningful impact around the world, including New Zealand.

“It’s not a case of if the law in New Zealand will be changed, but simply when.

“Investors are the ultimate customer of the audit product. They want to be sure that the provision of significant levels of non-audit services by the auditor does not compromise audit quality via compromised independence or reduced professional skepticism.”

In 2013 the estimated global advisory market was assessed at $208 billion, with the aggregate Big-4 advisory income component being $39 billion.

“The 70% capping limit for non-audit services, averaged over three years, that has been passed will come fully into effect in 2016. It is difficult to see how this decision made by the European Parliament will not change the thinking of company directors when they come to deciding who should be providing future consulting services” said Hucklesby.

“It should also be noted that audit reform discussions are not restricted to the EU. They are also taking place in the UK, the Netherlands, India and elsewhere in response to investor concerns. It is clear that some companies have noted these concerns and are reacting accordingly, but addressing these concerns in the law ensures that there will be change across the European market and that change will be permanent.

- ends -

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gordon Campbell: On Tiwai Point (And Saying “No” In Greece)

Its hard to see how Rio Tinto’s one month delay in announcing its intentions about the Tiwai Point aluminium smelter is a good sign for (a) the jobs of the workers affected or (b) for the New Zealand taxpayer. More>>

ALSO:

Half Empty: Dairy Product Prices Extend Slide To Six-Year Low

Dairy product prices continued their slide, paced by whole milk power, in the latest GlobalDairyTrade auction, weakening to the lowest level in six years. More>>

ALSO:

Copper Broadband: Regulator Set To Keep Chorus Pricing Largely Unchanged

The Commerce Commission looks likely to settle on a price close to its original decision on what telecommunications network operator Chorus can charge its customers, though it probably won’t backdate any update. More>>

ALSO:

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news