A4-0373/97

Resolution on the Commission Green Paper on the role, the position and the liability of the statutory auditor within the European Union (COM(96)0338 - C4- 0451/96)

The European Parliament,

- having regard to the constituent treaties as amended by the EU Treaty and, in particular, Article 6 of the EC Treaty,

- having regard to the Commission Green Paper (COM(96)0338 - C4-0451/96),

- having regard to the Commission Communication entitled 'Accounting harmonization: a new strategy vis-à-vis international harmonization' (COM(95)0508 - C4-0537/95),

- having regard to the First Council Directive 68/151/EEC of 9 March 1968 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States or companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community ((OJ L 65, 14.3.1968, p. 41.)),

- having regard to the Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on annual accounts of certain types of company ((OJ L 222, 14.8.1978, p.11.)),

- having regard to the Eighth Council Directive 84/253/EEC of 10 April 1984 based on Article 54(3)(g) of the Treaty on the approval of persons responsible for carrying out the statutory audits of accounting documents ((OJ L 126, 12.5.1984, p. 20.)),

- having regard to Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of high-education diplomas awarded on completion of professional education and training of at least three years' duration ((OJ L 19, 24.1.1989, p. 16.)),

- having regard to the report of the Committee on Legal Affairs and Citizens' Rights and the opinion of the Committee on Budgets (A4-0373/97),

1. Calls on the Commission to take into consideration the general comments contained in this report;

2. Notes the various issues raised in the Green Paper; considers, however, that the Commission should specify its short- and medium-term objectives with a view to the establishment and operation of an internal market in auditing, and also the timetable and the measures it intends to propose and, where appropriate, those it considers should be rejected;

3. Notes also the provisional conclusions of the conference held earlier on the subject of the Green Paper and reserves the right to carry out a thorough analysis of those conclusions when the Commission forwards the relevant communication;

4. Considers that, as an initial step, a technical subcommittee should be set up within the contact committee on the accountancy Directives for the purpose of considering certain matters relating to compatibility between European auditing standards and existing international standards, the independence of auditors and the application of quality control in the Member States, provided that Parliament can through legislative channels give its opinion on the composition and the powers of this subcommittee, and considers that, as regards its composition, the subcommittee should involve the widest possible range of categories of audit report users;

5. Calls on the Commission to consider in particular whether or not to propose legislation to harmonize the minimum content of audit reports and to examine the technical problems inherent in such legislation, as provided for by the Commission when it presented the eighth company law directive, and the compatibility thereof with existing Community law and with the subsidiarity principle;

6. Considers that rules must be drawn up at Community level concerning the independence of the statutory auditor so as to avoid any confusion which the absence of Community rules could cause for third parties;

7. Considers that, in this context, it is essential to define the services which are separate from the audit itself;

8. Notes the matters raised by the Commission in its Green Paper with a view to improving the internal control systems of companies and, although it does not at the moment consider that binding rules need to be adopted for this purpose, calls on the Commission to study the implications of internal auditing, in particular vis-à-vis external auditing, when assessing the roles played by the various bodies within a company in corporate governance;

9. On this subject, supports the Commission's idea of submitting a draft recommendation with a view to improving corporate governance in the Member States and calls on the Commission to study, in particular, possible ways of improving channels of communication between auditors and the bodies within a company which are competent to receive information in accordance with the relevant national law; as regards preparatory work, calls for workers' representatives to be involved as well as representatives of the company and of the auditing profession;

10. Also notes the analysis contained in the Green Paper regarding the impact of the various national laws on the auditing services sector as regards civil liability, in respect of which the Commission has carried out an in- depth study; calls on the Commission to submit this study to Parliament in the form of a communication and reserves the right to express its views on this issue when the communication is forwarded to Parliament;

11. Takes the view, however, that, with an eye to future legislation to supplement or amend the Community provisions applicable to auditors' and auditing companies' freedom of establishment and freedom to provide cross- border services, the Commission should insist that all auditors have a minimum level of compulsory insurance (equivalent in all Member States) and be required to join a guarantee fund;

12. Welcomes the fact that the contact committee on the accountancy Directives is considering the most appropriate ways of abolishing the restrictions incorporated by the Member States into their laws transposing the Eighth Directive as regards the involvement of auditors from one Member State in the management and ownership of auditing companies in other Member States;

13. Takes the view that the global concentration of accountancy firms calls for individual guarantees of the independence and confirmation of the professional skills of auditors at a level over and above the EU level;

14. Takes the view that the Member States should strengthen the guarantees relating to the exercise of the profession of auditor, by removing as necessary existing legal barriers in national legislation that constitute obstacles to the exercise of the profession and by ensuring in particular that Article 51 of the Fourth Directive (78/660/EEC) on the annual accounts of certain types of companies is correctly transposed;

15. Encourages the Commission, however, to submit legislative proposals with a view to removing legislative obstacles and gradually introducing greater flexibility in the provision of services by, and the arrangements for the free establishment of, individual auditors and auditing companies in other Member States; calls in particular on the Commission to consider the following possibilities:

(a) the implications of ECJ case law as regards the freedom to provide services and also the establishment of an auditor, approved as such in one Member State, in another Member State, and the scope of the effective conditions needed to ensure that professional standards are respected and quality control is applied in the host Member State;

(b) the general conditions for the provision, in another Member State, of services by auditors approved in one Member State on the basis of the qualifications obtained in the Member State of origin;

(c) the establishment of a system for cooperation and an exchange of information between the Member States' authorities which are responsible for approving auditors and enforcing professional or deontological standards;

(d) consideration of the scope for abolishing existing national restrictions which prevent auditing companies from setting up a subsidiary in another Member State under the same legal form;

16. Believes that there should be a general requirement in the European Union to submit for auditing the financial statements of large charitable organizations, whether or not they are established in the form of a company;

17. Believes, like the Commission Green Paper, that it makes sense to continue to allow Member States to exempt small businesses from the requirement to have their accounts audited;

18. Instructs its President to forward this resolution to the Commission and, for information, to the Council.