Bolkestein concerned over audit standards in new EU ten

Date: 08/05/03

THE standard of company audits in the EU's ten prospective member states urgently needs to improve, Frits Bolkestein, the internal market commissioner, has warned.

Bolkestein is battling for the EU to be exempt from America's Sarbanes-Oxley Act, which requires US and non-US based audit firms to register with the authorities and meet stringent rules brought in after a string of corporate collapses.

The Dutch commissioner believes Sarbanes-Oxley (named after the two Congressmen who initiated the law) should not be applied to firms based in the current 15 member states because equivalent safeguards are already in place.

But he insists new states set to join the Union next May will have to improve auditing standards if they are to benefit from any exemption that he negotiates.

"We must make sure [they improve]. It is a concern," he told European Voice. "If we are to obtain an exemption as far as auditors are concerned then we must show equivalence."

Experts say the problems are more to do with effective oversight by public authorities than the quality of audit firms, many of which are branches of the "big four" - KPMG, Ernst&Young, PricewaterhouseCoopers and Deloitte and Touche.

Bolkestein has not decided what retaliation he might order if the EU fails to win an exemption from the Act. Accounting firms have warned that any retaliation would harm their businesses.

The standard of company audits in the EU's ten prospective Member States urgently needs to improve, Frits Bolkestein, the Internal Market Commissioner, has warned.