Spain-Portugal shun auditing standards

Date: 19/05/05

Spain and Portugal are holding out against the implementation of international standards on auditing across the EU, European Voice has learned.

International Standards on Auditing (ISAs) would become mandatory under the revised 8th company law directive to ensure all audits are carried to the same standards anywhere in the EU. But the European Commission is having trouble convincing those member states with different systems to sign up.

"There are some member states that want more scrutiny and even those that want carve-outs," said a Commission official. "The Commission favours approving the standards in a block but is still negotiating." Sources say that certain ISAs run contrary to Spain's national audit laws and as a result it is looking for exemptions.

But experts warn that failure to endorse the standards in full could erode investor confidence in EU audits."If ISAs are approved with carve-outs, it would become questionable how audits are being carried out in any part of Europe," says Jim Sylph of the International Federation of Accountants, which draws up the ISAs. Sylph argues, that ISAs are inter-related and therefore any exception would lead to incomplete audits.

Sources say that the Commission is keen to depart from the procedure followed for international accounting standards, which came into force this year, of an endorsement committee. But the Commission has yet to decide how to proceeed.

Article reports on opposition from Spain and Portugal against the implementation of International Standards on Auditing (ISAs) which would become mandatory under the revised 8th company law directive. ISAs which are to ensure all audits are carried to the same standards anywhere in the EU, were thought to be contrary to Spain's and Portugal's national law in some cases.

• Primary Source