Activities of Alexandra THEIN related to 2011/0359(COD)
Shadow reports (1)
REPORT on the proposal for a regulation of the European Parliament and of the Council on specific requirements regarding statutory audit of public-interest entities PDF (1 MB) DOC (1 MB)
Amendments (64)
Amendment 199 #
Proposal for a regulation
Title
Title
Amendment 201 #
Proposal for a regulation
Recital 8
Recital 8
(8) Adequate internal organisation of statutory auditors and audit firms should contribute to preventing any threats to their independence. Thus, owners or shareholders of an audit firm, as well as those managing it, should not intervene in the carrying out of a statutory audit in any way which jeopardises the independence and objectivity of the statutory auditor who carries out the statutory audit on behalf of the audit firm. Additionally, statutory auditors and audit firms should establish appropriate internal policies and procedures in relation to employees and other persons involved in the statutory audit activity within their organisations in order to ensure compliance with their statutory obligations. Those policies and procedures should in particular seek to prevent and address any threats to independence and ensure the quality, integrity and thoroughness of the statutory audit. Those policies and procedures should be proportionate in view of the scale and complexity of the business of the statutory auditor or audit firm and the audited entities.
Amendment 205 #
Proposal for a regulation
Recital 11
Recital 11
(11) The provision of services other than statutory audit to audited entities by statutory auditors, audit firms or members of their networks may compromise their independence. Therefore, it is appropriate to require the statutory auditor, the audit firm and the members of their network not to provide non-audit services to their audited entities. The provision ofsafeguards in the form of a prohibition of certain non- audit services by an audit firm to a company would prevent that audit firm from carrying out statutory audit of that company, thus resulting in a reduction of the audit firms available to provide statutory audit, in particular with regard to the audit of large public-interest entities where the market is concentrated. Asthe statutory auditor cannot perform to their audited entities, as well as result, in order to secure that a minimum number of audit firms is able to provide audit services to large public-interest entities, it is appropriate to request that audit firms of significant dimension focus their professional activity on the carrying out of statutory audit and are not allowed to undertake other services unconnected to their statutory audit function such as consultancy or advisory services- tendering, at the behest of the audit committee, of any non-audit service and financial audit related services above a 30% threshold.
Amendment 212 #
Proposal for a regulation
Recital 23
Recital 23
(23) Audit committees, or bodies performing an equivalent function within the audited entity, have a decisive role in contributing to high-quality statutory audit. It is particularly important to reinforce the independence and technical competence of the audit committee by requiring that a majority of its members is independent and that at least one member of the committee has competence in auditing and another one in auditing and/or accounting. Members of the audit committee should take part in skill enhancement programmes to ensure an appropriate level of technical knowledge to fulfil their roles. The Commission Recommendation of 15 February 2005 on the role of non- executive or supervisory directors of listed companies and on the committees of the (supervisory) board26 sets out how audit committees should be established and function. Considering, however, the dimension of boards in companies with reduced market capitalisation and in small and medium-sized public-interest entities, it would be appropriate that the functions assigned to the audit committee for those entities, or to a body performing equivalent functions within the audited entity, may be performed by the administrative or supervisory body as a whole. Public- interest entities which are UCITS or alternative investment funds should also be exempted from the obligation to have an audit committee. This exemption takes into account the fact that where those funds function merely for the purpose of pooling assets, the employment of an audit committee is not appropriate. UCITS and alternative investments funds, as well as their management companies, operate in a strictly defined regulatory environment and are subject to specific governance mechanisms such as controls exercised by their depositary.
Amendment 218 #
Proposal for a regulation
Recital 24
Recital 24
(24) It is also important that the role of the audit committee in the selection of a new statutory auditor or audit firm be reinforced, for the benefit of a more informed decision of the general meeting of shareholders or members of the audited entity. Hence, when making a proposal to the general meeting, the board should explain whether it follows the recommendation of the audit committee and, if not, why. The recommendation of the audit committee should include at least two possible choices for the audit engagement, a comprehensive assessment of both proposals, and a duly justified preference for one of them, so that the general meeting can make a real choice. In order to provide a fair and proper justification in its recommendation, the audit committee should use the results of a mandatory selectiontender procedure organised by the audited entity, under the responsibility of the audit committee. In such selectiona tender procedure, the audited entity should invite statutorypublish a call to auditors or audit firms, including smaller ones, to present proposals for the audit engagement. Tender documents should contain transparent and non- discriminatory selection criteria to be used for the evaluation of proposals. Considering, however, that this selection procedure could entail disproportionate costs for companies with reduced market capitalisation or small and medium-sized public-interest entities having regard to their dimension, it is appropriate to relieve such entities from this obligation.
Amendment 227 #
Proposal for a regulation
Recital 27
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. AFurthermore, a comprehensive, transparent and independent evaluation of audit quality should be regularly and appropriately documented. This comprehensive assessment should form the basis for the annual auditor selection by the general assembly. The purpose of mandatory tendering for the audit engagement is to not only evaluate the incumbent provider's performance but also the requirements of the audited entity. Furthermore, an appropriate gradual rotation mechanism should also be established with regard to the most senior 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 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.
Amendment 249 #
Proposal for a regulation
Article 3 – paragraph 1
Article 3 – paragraph 1
For the purposes of this Regulation, the definitions laid down in Article 2 of Directive 2006/43/EC shall apply, except for the definitions of 'audit report' and 'competent authority'.
Amendment 254 #
Proposal for a regulation
Article 6 – paragraph 1 – subparagraph 1 – point d
Article 6 – paragraph 1 – subparagraph 1 – point d
(d) a statutory auditor or an audit firm shall establish adequate policies and procedures to ensure that outsourcing of important audit functions is not undertaken in such a way as to impair the quality of the statutory auditor’s or audit firm’s internal control and the ability of the competent authoritbodies to supervise the statutory auditor's or audit firm's compliance with the obligations laid down in this Regulation;
Amendment 283 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1
Article 10 – paragraph 1 – subparagraph 1
A statutory auditor or an audit firm carrying out statutory audit of public- interest entities may provide to the audited entity, to its parent undertaking and to its controlled undertakings statutory audit services and, related financial audit services and other assurance services, subject to prior approval of the audit committee and as long as these services do not pose a threat to independence that cannot be reduced to an acceptable level by the application of safeguards.
Amendment 288 #
Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 2
Article 10 – paragraph 1 – subparagraph 2
Where the statutory auditor belongs to a network, a member of such network may provide to the audited entity, to its parent undertaking and to its controlled undertakings within the Union statutory audit services or, related financial audit services and other assurance services, subject to prior approval of the audit committee and as long as these services do not pose a threat to independence that cannot be reduced to an acceptable level by the application of safeguards.
Amendment 292 #
Proposal for a regulation
Article 10 – paragraph 2 – introductory part
Article 10 – paragraph 2 – introductory part
2. For the purposes of this Article, related financial audit services shall meanand other assurance services shall mean in particular:
Amendment 293 #
Proposal for a regulation
Article 10 – paragraph 2 – point e
Article 10 – paragraph 2 – point e
(e) providing certification on compliance with tax requirements where such attestation is required by national law, preparation of tax declarations, advice on indirect taxes, payroll tax, transfer prices, customs duties and public support measures, support regarding tax inspections and tax authority enquiries;
Amendment 295 #
Proposal for a regulation
Article 10 – paragraph 2 – point e a (new)
Article 10 – paragraph 2 – point e a (new)
(ea) auditing technology systems, 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;
Amendment 297 #
Proposal for a regulation
Article 10 – paragraph 2 – point e b (new)
Article 10 – paragraph 2 – point e b (new)
(eb) providing assurance on the implementation and further development of electronic data processing systems;
Amendment 298 #
Proposal for a regulation
Article 10 – paragraph 2 – point e c (new)
Article 10 – paragraph 2 – point e c (new)
(ec) audit of occupational pension schemes and pension obligations;
Amendment 300 #
Proposal for a regulation
Article 10 – paragraph 2 – point f
Article 10 – paragraph 2 – point f
(f) any other statutory duty related to audit work imposed by Union and/or national legislation to the statutory auditor or audit firm.;
Amendment 303 #
Proposal for a regulation
Article 10 – paragraph 2 – point f a (new)
Article 10 – paragraph 2 – point f a (new)
(fa) providing comfort letters for investors in the context of the issuance of an undertaking's securities and fairness opinions or contribution-in-kind reports.
Amendment 317 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – introductory part
Article 10 – paragraph 3 – subparagraph 3 – introductory part
For the purposes of this Article, non-audit services shall mean in particular:
Amendment 324 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point iii
Article 10 – paragraph 3 – subparagraph 3 – point a – point iii
(iii) designing andor implementing technology systems and 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;
Amendment 329 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point iv
Article 10 – paragraph 3 – subparagraph 3 – point a – point iv
(iv) valuation services, providing fairness opinions or contribution-in-kind reports;
Amendment 337 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point vi
Article 10 – paragraph 3 – subparagraph 3 – point a – point vi
(vi) designing andor implementing financial information technology systems for public- interest entities as referred to in Article 2(13)(b) to (j) of Directive 2006/43/EC;
Amendment 344 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point viii a (new)
Article 10 – paragraph 3 – subparagraph 3 – point a – point viii a (new)
(viiia) human resources services, including recruiting senior management;
Amendment 348 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a – point viii b (new)
Article 10 – paragraph 3 – subparagraph 3 – point a – point viii b (new)
(viiib) legal and tax services that go beyond the presentation of alternatives; tax services for natural persons;
Amendment 355 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b
Article 10 – paragraph 3 – subparagraph 3 – point b
Amendment 374 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 4
Article 10 – paragraph 3 – subparagraph 4
Amendment 381 #
Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 5
Article 10 – paragraph 3 – subparagraph 5
Amendment 388 #
Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 3
Article 10 – paragraph 4 – subparagraph 3
Being involved in the decision-taking of the audited entity and the provision of the services referred to in points (ii) and (iii) of paragraph 3(a)non- audit services shall be considered as affecting such independence in all cases.
Amendment 391 #
Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 4
Article 10 – paragraph 4 – subparagraph 4
Amendment 397 #
Proposal for a regulation
Article 10 – paragraph 5
Article 10 – paragraph 5
Amendment 398 #
Proposal for a regulation
Article 10 – paragraph 5
Article 10 – paragraph 5
Amendment 412 #
Proposal for a regulation
Article 10 – paragraph 6
Article 10 – paragraph 6
6. The Commission shall be empowered to adopt delegated acts in accordance with ArCompetent authorities may give noticle 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 professionof further services and/or activities which it considers impart a conflict of interest and shall notify ESMA, EIOPA, EBA, and where appropriate, the ESRB.
Amendment 456 #
Proposal for a regulation
Article 22 – paragraph 4
Article 22 – paragraph 4
Amendment 463 #
Proposal for a regulation
Article 23 – paragraph 1 – subparagraph 1 a (new)
Article 23 – paragraph 1 – subparagraph 1 a (new)
The statutory auditor(s) or the audit firm(s) carrying out statutory audit of credit institutions and insurance undertakings, in accordance with Article 16 of Regulation (EU) No 1093/2010 and of Regulation (EU) No 1094/2010, respectively shall also submit the additional report to the EBA, EIOPA and the ESRB.
Amendment 476 #
Proposal for a regulation
Article 23 – paragraph 2 – point e
Article 23 – paragraph 2 – point e
(e) describe the distribution of tasks among the statutory auditor(s)s and/or the audit firm(s) and include a description of the scope and timing of the audit and significant findings from the statutory audit conducted. This should include any significant deficiencies in the internal control system of the audited entity; how they addressed significant difficulties encountered during the audit and other matters arising from the statutory audit that in the statutory auditor's or audit firm's professional judgment are significant to the financial reporting process;
Amendment 500 #
Proposal for a regulation
Article 24 – paragraph 4
Article 24 – paragraph 4
In is the instance of the audited entity being 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 Article.
Amendment 520 #
Proposal for a regulation
Article 31 – paragraph 1 – subparagraph 3 a (new)
Article 31 – paragraph 1 – subparagraph 3 a (new)
Members of the audit committee shall take part in skill enhancement programmes in order to ensure an adequate technical knowledge level to fulfil their tasks.
Amendment 536 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – introductory part
Article 32 – paragraph 3 – subparagraph 1 – introductory part
Amendment 539 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point a
Article 32 – paragraph 3 – subparagraph 1 – point a
(a) the audited entity shall be free to invite any statutory auditors or audit firms is free 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;
Amendment 542 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point b
Article 32 – paragraph 3 – subparagraph 1 – point b
(b) the audited entity shall be free to choose the method to contact the invited statutory auditor(s) or audit firm(s) and shall not be required to committee shall publish a call for tenders in the Official Journal of the European Union, where necessary, and/or in national gazettes or newspapers;
Amendment 543 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point c
Article 32 – paragraph 3 – subparagraph 1 – point c
(c) the audited entity committee shall prepare tender documents to the intention of the invited statutory auditor(s) or audit firm(s). Those tender documents shall allow the audit firm to understand the business of the audited entity and the type of statutory audit that is to be carried out. The tender documents shall contain transparent and non- discriminatory selection criteria that shall be used by the audited entity committee to evaluate the proposals made by statutory auditors or audit firms;
Amendment 544 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point d
Article 32 – paragraph 3 – subparagraph 1 – point d
(d) the audited entity committee shall be free to define the selection procedure and may conduct direct negotiations with interested tenderers in the course of the procedure;
Amendment 545 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point f
Article 32 – paragraph 3 – subparagraph 1 – point f
(f) the audit committeed entity shall evaluateperform a comprehensive assessment of the proposals made by the statutory auditors or audit firms in accordance with the selection criteria predefined in the tender documents. The audited entity shall prepare a report on the conclusions of the selection procedure, which shall be validated by the audit committee. The audited entity and the audit committee shall take into consideration any inspection report on the applicant statutory auditor or audit firm referred to in Article 40(6) and published by the competent authority pursuant to Article 44(d);
Amendment 546 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 1 – point g
Article 32 – paragraph 3 – subparagraph 1 – point g
(g) the audited entity committee shall be able to demonstrate to the competent authority referred to in Article 35 that the selection procedure was conducted in a fair manner.
Amendment 547 #
Proposal for a regulation
Article 32 – paragraph 3 – subparagraph 2
Article 32 – paragraph 3 – subparagraph 2
Amendment 552 #
Proposal for a regulation
Article 32 – paragraph 5 – subparagraph 1
Article 32 – paragraph 5 – subparagraph 1
The proposal of the administrative or supervisory board to the general meeting of shareholders or members of the audited entity for the appointment of statutory auditors or audit firms shall include the recommendation made by the audit committee. The proposal to the general meeting shall be accompanied by the results of the comprehensive assessment referred to in Article 32 (2) and (3).
Amendment 572 #
Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 2
Article 33 – paragraph 1 – subparagraph 2
The public-interest entity may renew thise audit engagement only once, provided this is based on a proposal of the audit committee after a re-tendering process has taken place. Shareholders at the annual general meeting shall formally approve the statutory auditor(s) engagement.
Amendment 592 #
Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 4
Article 33 – paragraph 1 – subparagraph 4
Amendment 614 #
Proposal for a regulation
Article 33 – paragraph 3
Article 33 – paragraph 3
Amendment 620 #
Proposal for a regulation
Article 33 – paragraph 4 – subparagraph 2
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 personnel involved in the statutory audit, including at least the persons who are registered as statutory auditors. The gradual rotation mechanism shall be undertaken in phases on the basis of individuals rather than of a completethe entire engagement team. It shall be proportionate in view of the scale and the dimension of the activity of the statutory auditor or audit firm.
Amendment 623 #
Proposal for a regulation
Article 33 – paragraph 5 – subparagraph 2
Article 33 – paragraph 5 – subparagraph 2
The former statutory auditor or audit firm shall also grant access to the incoming statutory auditor(s) or audit firm(s) to the additional reports to the audit committee referred to in Article 23 of previous years and to any information transmitted to competent authorities pursuant to Articles 25 and 27.
Amendment 634 #
Proposal for a regulation
Title 4 – chapter 1 – title
Title 4 – chapter 1 – title
Amendment 635 #
Proposal for a regulation
Article 35
Article 35
Amendment 647 #
Proposal for a regulation
Article 35 a (new)
Article 35 a (new)
Article 35 a Article 35a Principles of public oversight With regard to public oversight over statutory auditors and audit firms for public-interest entities, the principles of public oversight under Directive 2006/43/EC of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, in particular Chapter VIII thereof, shall apply.
Amendment 648 #
Proposal for a regulation
Article 36
Article 36
Amendment 653 #
Proposal for a regulation
Article 37
Article 37
Amendment 655 #
Proposal for a regulation
Article 38
Article 38
Amendment 664 #
Proposal for a regulation
Article 39
Article 39
Amendment 699 #
Proposal for a regulation
Article 50
Article 50
Amendment 728 #
Proposal for a regulation
Article 68 – paragraph 2
Article 68 – paragraph 2
2. The power to adopt delegated acts referred to in Articles 10(6) and 50(4) shall be conferred on the Commission for an indeterminate period of time from [date of entry into force of this Regulation].
Amendment 729 #
Proposal for a regulation
Article 68 – paragraph 3
Article 68 – paragraph 3
3. The delegation of powers referred to in Articles 10(6) and 50(4) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.
Amendment 730 #
Proposal for a regulation
Article 68 – paragraph 5
Article 68 – paragraph 5
5. A delegated act adopted pursuant to Articles 10(6) and 50(4) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of [two2 months] of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by [two months] at the initiative of the European Parliament or of the Council.
Amendment 733 #
Proposal for a regulation
Article 69 a (new)
Article 69 a (new)
Article 69 a Report on ESMA The Commission shall by X X ( five years after the end of the transitional period) prepare a report on ESMA's current and future role. The Commission shall assess whether ESMA has enough resources to fulfil its tasks according to this Regulation.
Amendment 735 #
Proposal for a regulation
Article 70
Article 70
Amendment 739 #
Proposal for a regulation
Article 72 – paragraph 3
Article 72 – paragraph 3
However, Article 32(7) shall apply from […] [the date of the entry into force of the Regulation] and Article 10(5) shall apply from […] [3 years after the entry into force of the Regulation].