The Directorate General for Internal Market and Services, part of the European Commission, today publishes a consultation document on the regulation and oversight of third-country audit firms and co-operation with competent authorities from third countries.

The consultation will form the basis for the development of measures by the Commission to help Member States implement the related requirements in the new Directive on Statutory Audit (2006/43/EC).

To assist stakeholders in considering the Commission’s consultation, we have prepared a short overview of the provisions which are likely to have a greater impact in the UK than in most other member states.

Paul George, Director of the Oversight Board, said:

“This Directive introduces for the first time regulation of the auditors of non-EU companies listed in London. Due to the large number of companies affected and the significance of the provisions regarding third-country audit firms to UK regulated markets, it is important that UK stakeholders, including audit firms, financial advisers, investors, legal advisers, professional bodies, and the stock exchange, are fully aware of the issues covered by the Commission’s document and fully participate in the consultation.

In developing the ideas in the consultation document, the Commission has been mindful of the need to avoid overly burdensome or disproportionate implementation of these requirements. We welcome the practical approach reflected in the consultation and urge UK stakeholders to consider whether the Commission’s proposals enable the Directive to be implemented in an effective and proportionate manner.”

The closing date for the consultation is Monday 5 March 2007. Responses should be sent by e-mail to markt-F4-3rdcountries@ec.europa.eu.

The Professional Oversight Board is planning together with the Department of Trade & Industry to hold a series of roundtable meetings with UK stakeholders on the issues raised in the consultation and will be sending invitations to interested parties. Any stakeholder who would like to register an interest in attending a roundtable discussion should e-mail Christina Trickett (c.trickett@frc-pob.org.uk).

1. The revised EU 8th Company Law Directive on audit regulation came into effect on 29 June 2006. Member states must have the necessary implementing measures in place by 29 June 2008. Articles 45 to 47 set out requirements for third-country audit firms and co-operation with third-country competent authorities.
2. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy Investigation and Discipline Board) and by the Council. The Committee on Corporate Governance, whose members are drawn from the Council, assists it in its work on corporate governance.
3. The Professional Oversight Board contributes to the achievement of the Financial Reporting Council’s own fundamental aim of promoting confidence in corporate reporting and governance. It has four main responsibilities:
   • a statutory obligation to oversee the regulation of auditors by the recognised accountancy bodies;
     
   • the monitoring of the quality of the auditing function in relation to economically significant entities;
     
   • independent oversight of the regulation of the accountancy profession by the professional accountancy bodies.
     
   • independent oversight of the regulation of the actuarial profession by the professional actuarial bodies.
     
     
4. The Chairman of the Professional Oversight Board is Sir John Bourn. He is the Comptroller and Auditor General. 
5. The Professional Oversight Board is independent of the accountancy and actuarial professions. Its members have wide experience of business and the professions, the public sector, accountancy, auditing and actuarial work.
6. All press enquiries should be directed to Paul George, Director of the Professional Oversight Board, telephone 020 7492 2340.