Bolkestein lanceert richtlijn voor striktere boekhouding Europese bedrijven (en)

Following recent major financial scandals with companies such as the Italian dairy giant Parmalat, the European Commission has proposed stricter EU-wide auditing rules.

Under a new directive proposed yesterday (March 16) by Internal Market Commissioner Frits Bolkestein, tough auditing quality standards would be introduced throughout the EU.

Under the proposed rules, it would be compulsory for audited companies to set up an independent audit committee which would select the auditing firm and oversee the auditing process.

The directive also suggests stronger co-operation between the relevant authorities in the EU member states. It proposes the creation of an audit regulatory committee consisting of representatives of member states, as well as EU procedures for the exchange of information.

Crooks who cook books

Internal Market Commissioner Frits Bolkestein explained that improving auditing practices in the EU is the best way to avoid further cases of massive financial fraud such as with the food giant Parmalat.

Parmalat was declared insolvent in December after it came to light that millions of euro in assets that the company claimed to have in reserve, did not in fact exist.

Mr Bolkestein said "auditors are our major line of defence against crooks who want to cook the books. Parmalat was a reminder of what happens when that defence fails".

EU and US still divided

Another important objective of the Commission initiative is to counter the tough auditing regulations in the United States which European audit firms have to comply with.

US audit firms would have to comply with the new rules.

Even though the EU and the US may now have moved closer on auditing legislation, one international standard for auditing is still far away as the proposed EU directive differs in important aspects from its US equivalent, the Sarbanes-Oxley accounting law.

Less red tape

Mr Bolkestein, who has frequently accused his own institution of a tendency to "over-regulate", stressed that the directive was meant to reduce the administrative burden for audit firms rather than to worsen it.

The Commissioner said that his proposals would remove some unnecessary restrictions on ownership and management of EU audit firms as well as limit "red tape" for European audit firms working outside the EU.

The proposals have to be agreed by the European Parliament and member states.