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

 

Our Fresh Water: Monitoring Report Confirms Serious Challenges For Rivers

• nitrogen levels are getting worse at 55 percent and getting better at 28 percent of monitored river sites across New Zealand • phosphorus levels are getting better at 42 percent and getting worse at 25 percent of monitored river sites across New Zealand More>>

ALSO:

Stats: Wind And Geothermal Emerge As Significant Sources Of Energy

Geothermal’s contribution to New Zealand’s total renewable energy generation increased from 11.5 percent in 2007 to 21 percent in 2015.... The value of wind jumped from $238 million (2 percent of total renewable energy generation) in 2007 to $884 million (6 percent) in 2015. More>>

Errors Found: Electricity Authority Dumps Transmission Pricing Modelling

The Electricity Authority is ditching the cost-benefit analysis at the heart of its controversial attempt to find a new way to divide up costs for the national grid after finding an expanding range of serious computational errors in the work by Australian consultancy Oakley Greenwood. More>>

ALSO:

New Record: Migrant Arrivals At 129,500 A Year

Annual net migration has been steadily increasing since 2012. "This was mainly due to the rising number of migrant arrivals to New Zealand," population statistics senior manager Peter Dolan said. "Fewer migrant departures also contributed to the increase in net migration." More>>

ALSO:

Launched: NASA's Super Pressure Balloon Takes Flight From NZ

NASA successfully launched its football-stadium-sized, heavy-lift super pressure balloon (SPB) from Wanaka, New Zealand, at10:50 a.m. Tuesday, April 25 (6:50 p.m. April 24 in U.S. Eastern Time), on a mission designed to run 100 or more days floating at 110,000 feet (33.5 km) about the globe in the southern hemisphere's mid-latitude band. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news