Future European Union audit legislation
Anticipating changes to the audit profession
All eyes are currently on the European Union (EU), as the European Parliament (JURI Committee) negotiators, the Lithuanian Council Presidency representing the 28 European Union Member States, and the European Commission (EC) has reached preliminary agreement on future EU audit legislation. Just how much change will result from this audit legislation remains to be seen as the terms preliminarily agreed to are still subject to the EU legislative process, including a plenary vote before the European Parliament and formal approval by the European Council shortly thereafter. Deloitte continues to follow this matter closely.
The preliminary agreement on future audit legislation is still subject to the European Parliament’s legislative process which will take some months to finalize. Regardless of whether the audit legislation passes, as written, we anticipate changes to the audit market and the working relationships between auditors and the entities they audit, including those entities’ audit committees.
If adopted, the new legislation will apply two years and 20 days after publication with certain transitional measures. As such, there is still time to plan and prepare for the challenges as well as opportunities that may come with change. There are available avenues to better understand the potential implications of change, whether it relates to requirements for rotating auditors, preparing for a new form of audit report, or searching for firms to provide non-audit services. Be ready; adapt to change on your terms. Wondering where to start?