BETA

43 Amendments of Wolf KLINZ related to 2011/0359(COD)

Proposal for a regulation
Recital 26

(26) The appointment of more than one statutory auditor or audit firm by the public-interest entities would reinforce the professional scepticism and contribute to increasing audit quality. Also, this measure combined with the presence of smaller audit firms would facilitate the development of the capacity of such firms, thus contributing to increasing the choice of statutory auditors and audit firms for public-interest entities. Therefore, the latter should be encouraged and incentivised to appoint more than one statutory auditor or audit firm to carry out the statutory audit.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Recital 27

(27) In order to address the familiarity threat and therefore reinforce the independence of auditors and audit firms, it is important to establish a ~~maximum duration of the audit engagement of a statutory auditor or audit firm in a particular audited entity. A~~n appropriate gradual rotation mechanism ~~should also be established~~ with regard to the ~~most senior~~key personnel involved in the statutory audit, including the key audit partners carrying out the statutory audit on behalf of the audit firm. It is also important to provide for an appropriate period within which such ~~statutory auditor or~~auditor on behalf of the audit firm may not carry out the statutory audit of the same entity. ~~In order to ensure a smooth transition, the former auditor should transfer a handover file with relevant information to the incoming auditor.~~

2012/10/29
Committee: ECON

Proposal for a regulation
Recital 31 a (new)

(31a) Authorities should set out common standards, best practices and enforcement activities for consistent enforcement of applicable accounting standards, especially impairment rules as different approaches of audited entities with regard to the impairment of Greek bonds were accepted by the same auditor in some Member States in 2011.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 2

2. When the statutory auditor or audit firm provides to the audited entity related financial audit services, as referred to in Article 10(2), the fees for such services shall be limited to no more than 10 % of the fees paid by the audited entity for the statutory audit.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 3

3. When the total fees received from a public-interest entity subject to the statutory audit represent either more than 20 % or, for two consecutive years, more than 15 % of the of the total annual fees received by the statutory auditor or audit firm carrying out the statutory audit, such auditor or firm shall disclose to the audit committee the fact that the total of such fees represents more than 20 % or 15 %, as appropriate, of the total fees received by the firm and the discussions referred to in Article 11(4)(d) shall be undertaken. The audit committee shall consider whether the audit engagement shall be subject to a quality control review by another statutory auditor or audit firm prior to the issuance of the audit report. When the total fees received from a public-interest entity subject to the statutory audit represent, for two consecutive years, 15 % or more of the total annual fees received by the statutory auditor or audit firm carrying out the statutory audit, the auditor or firm shall inform the competent authority referred to in Article 35(1) of such situation. The competent authority referred to in Article 35(1) shall decide on the basis of objective grounds provided by the statutory auditor or the audit firm whether the statutory auditor or audit firm of such entity may continue to carry out the statutory for an additional period which in any case shall not be longer than two years. Where the audited entity is exempted from the obligation to have an audit committee, the audited entity shall decide which body or organ of the entity shall engage with the statutory auditor or audit firm for the purposes of the obligations set out in this paragraph.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 3 – subparagraph 1

When the total fees received from a public-interest entity subject to the statutory audit represent either more than 20 % or, for two consecutive years, more than 15 % of the of the total annual fees received by the statutory auditor or audit firm carrying out the statutory audit, such auditor or firm shall disclose to the audit committee the fact that the total of such fees represents more than 20 % or 15 %, as appropriate, of the total fees received by the firm and the discussions referred to in Article 11(4)(d) shall be undertaken. The audit committee shall consider whether the audit engagement shall be subject to a quality control review by another statutory auditor or audit firm prior to the issuance of the audit report.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 3 – subparagraph 2

When the total fees received from a public-interest entity subject to the statutory audit represent, for two consecutive years, 15 % or more of the total annual fees received by the statutory auditor or audit firm carrying out the statutory audit, the auditor or firm shall inform the competent authority referred to in Article 35(1) of such situation. The competent authority referred to in Article 35(1) shall decide on the basis of objective grounds provided by the statutory auditor or the audit firm whether the statutory auditor or audit firm of such entity may continue to carry out the statutory for an additional period which in any case shall not be longer than two years.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 3 – subparagraph 3

Where the audited entity is exempted from the obligation to have an audit committee, the audited entity shall decide which body or organ of the entity shall engage with the statutory auditor or audit firm for the purposes of the obligations set out in this paragraph.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 2 a (new)

The audit committee shall be informed on a regular basis about all audit services and related audit services provided by the statutory auditor.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 2 – point e

(e) providing certification on compliance with tax requirements ~~where such attestation is required by national law~~;

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point i

~~(i) expert services unrelated to the audit, tax consultancy, general management and other advisory services;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point ii

~~(ii) bookkeeping and preparing accounting records and financial statements;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point iii

(iii) designing and implementing internal control or risk management procedure related to the preparation and/or control of financing information included in the financial statements and advice on risk;deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point iv

~~(iv) valuation services, providing fairness opinions or contribution-in-kind reports;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point v

~~(v) actuarial and legal services, including the resolution of litigation;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point vi

~~(vi) designing and implementing financial information technology systems for public-interest entities as referred to in Article 2(13)(b) to (j) of Directive 2006/43/EC;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b

(b) services which may entail conflict of interest: (i) human resources services, including recruiting senior management; (ii) providing comfort letters for investors in the context of the issuance of an undertaking's securities; (iii) designing and implementing financial information technology systems for public-interest entities as referred to in Article 2(13)(a) of Directive 2006/43/EC; (iv) due diligence services to the vendor or the buy side on potential mergers and acquisitions and providing assurance on the audited entity to other parties at a financial or corporate transaction.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b – point i

~~(i) human resources services, including recruiting senior management;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b – point ii

~~(ii) providing comfort letters for investors in the context of the issuance of an undertaking's securities;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b – point iii

~~(iii) designing and implementing financial information technology systems for public-interest entities as referred to in Article 2(13)(a) of Directive 2006/43/EC;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b – point iv

~~(iv) due diligence services to the vendor or the buy side on potential mergers and acquisitions and providing assurance on the audited entity to other parties at a financial or corporate transaction.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 4

By derogation from the first and second subparagraphs, the services mentioned in point (b)(iii) and (iv) may be provided by the statutory auditor or the audit firm, subject to prior approval by the competent authority referred to in Article 35(1).deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 5

By derogation from the first and second subparagraphs, the services mentioned in point (b)(i) and (ii) may be provided by the statutory auditor or the audit firm, subject to prior approval by the audit committee as referred to in Article 31 of this Regulation.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 4

~~The provision of the services referred to in points (i) and (iv) to (viii) of paragraph 3(a) shall be presumed to affect such independence.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 5

5. Where an audit firm generates more than one third of its annual audit revenues from large public-interest entities and belongs to a network whose members have combined annual audit revenues which exceed EUR 1 500 million within the European Union, it shall comply with the following conditions: (a) it shall not directly or indirectly provide to any public interest entity non- audit services; (b) it shall not belong to a network which provides non-audit services within the Union; (c) any entity which provides the services listed in paragraph 3 shall not directly or indirectly hold more than 5 % of the capital or of the voting rights in the audit firm; (d) the entities which provide the services listed in paragraph 3shall not directly or indirectly hold together more than 10 % of the capital or of the voting rights in the audit firm; (e) such audit firm shall not directly or indirectly hold more than 5 % of the capital or of the voting rights in any entity which provides the services listed in paragraph 3.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 6

6. The Commission shall be empowered to adopt delegated acts in accordance with Article 68 for the purpose of adapting the list of related financial audit services referred to in paragraph 2 ~~and the list of non-audit services referred to in paragraph 3 of this Article~~. When using such powers, the Commission shall take into account developments in auditing and the audit profession.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 11 – paragraph 4 – subparagraph 1 – point c

~~(c) request permission from the audit committee to provide the non-audit services referred to in Article 10(3)(b)(i) and (ii) to the audited entity;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 11 – paragraph 4 – subparagraph 1 – point d

~~(d) request permission from the competent authority referred to in Article 35(1) to provide the non-audit services referred to in Article 10(3)(b)(iii) and (iv) to the audited entity;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 16 – paragraph 5 – subparagraph 1 – point c

(c) an audit plan setting out the probable scope and method of the statutory audit; and, where more than one statutory auditor or audit firm have been appointed, the distribution of tasks among the appointed statutory auditors or audit firms;

2012/10/29
Committee: ECON

Proposal for a regulation
Article 24 – paragraph 1

The audit committee of the public-interest entity shall monitor the work of the statutory auditor(s) or audit firm(s) carrying out the statutory audit, and, where more than one statutory auditor or audit firm have been appointed, the distribution of tasks among the appointed statutory auditors or audit firms.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 2 – subparagraph 2

~~Unless it concerns the renewal of an audit engagement in accordance with the second subparagraph of Article 33(1), the~~ The recommendation shall contain at least two choices for the audit engagement and the audit committee shall express a duly justified preference for one of them.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 2 – subparagraph 3

When it concerns the renewal of an audit engagement in accordance with the second subparagraph of Article 33(1), the audit committee shall, for the preparation of its recommendation, take into consideration any findings and conclusions on the recommended statutory auditor or audit firm referred to in Article 40(6) and published by the competent authority pursuant to Article 44(d).deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – introductory part

~~Unless it concerns the renewal of an audit engagement in accordance with the second subparagraph of Article 33(1), t~~The recommendation of the audit committee referred to in paragraph 2 of this Article, shall be prepared following a selection procedure organized by the audited entity respecting the following criteria:

2012/10/29
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point a

(a) the audited entity shall be free to invite any statutory auditors or audit firms to submit proposals for the provision of the statutory audit service on the condition that Article 33(2) is respected and that at least one of the invited auditors or firms is not one who received more than 15% of the total audit fees from large public- interest entities in the Member State concerned in the previous calendar year;deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 2

~~The public-interest entity may renew this engagement only once.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 3

~~The maximum duration of the combined two engagements shall not exceed 6 years.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 4

Where throughout a continuous engagement of 6 years two statutory auditors or audit firms have been appointed, the maximum duration of the engagement of each statutory auditor or audit firm shall not exceed 9 years.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 2

2. After the expiry of the maximum duration of the engagement referred to in paragraph 1, the statutory auditor or audit firm or any members of its network within the Union, where applicable, shall not undertake the statutory audit of the public-interest entity concerned until a period of at least four years has elapsed.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 3

3. By way of derogation from paragraphs 1 and 2, on an exceptional basis the public-interest entity may request the competent authority referred to in Article 35(1) to grant an extension to re-appoint the statutory auditor or audit firm for an additional engagement. In case of appointment of two statutory auditors or audit firms, this third engagement shall not exceed three years. In case of appointment of one statutory auditor or audit firm, this third engagement shall not exceed two years.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 4 – subparagraph 1

The key audit partner(s) responsible for carrying out a statutory audit shall cease his, her or their participation in the statutory audit of the audited entity after a period of sefiven years from the date of appointment has elapsed. He, she or they may participate in the statutory audit of the audited entity again after a period of at least ~~thre~~five years.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 4 – subparagraph 2

The statutory auditor or audit firm shall establish an appropriate gradual rotation mechanism with regard to the ~~most senior~~key personnel involved in the statutory audit, including ~~at least~~but not limited to the persons who are registered as statutory auditors. The gradual rotation mechanism shall be undertaken in phases on the basis of individuals or~~ather than~~ of a complete team where appropriate. It shall be proportionate in view of the scale and the dimension of the activity of the statutory auditor or audit firm as well as the audited entity.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 46 – paragraph 3 – subparagraph 1 – point e

~~(e) common standards and best practices on the gradual rotation mechanism referred to in Article 33;~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 46 – paragraph 3 – subparagraph 1 – point g a (new)

(ga) common standards, best practices and enforcement activities for consistent enforcement of applicable accounting standards, especially impairment rules;

2012/10/29
Committee: ECON