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

 

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news