WRITTEN QUESTION P-1472/03 by Wolfgang Ilgenfritz (NI) to the Commission. Peer review of auditors in the EU.
Date: 2003-04-23
Institutions: European Parliament, Provisional data
Subjects: Austria, EC Directive, EC recommendation, EU Member State, European Commission, accountant, national implementing measure, professional qualifications, qualitative analysis, type of business

C 51 E/96

Official Journal of the European Union

EN

26.2.2004

status that would entitle them to immunity from prosecution for many acts committed during war. The US
Administration contends that the prisoners are ‘unlawful combatants’, placing them in legal limbo.

Human rights organisations and some countries have criticised the US for not allowing prisoners access to
a civilian court.

What action is the European Union taking to ensure that its captured citizens in Guantanamo Bay enjoy
the right to be defended in court?

Does the European Union accept the prisoners’ new status as ‘unlawful combatants’ in the light of the
Geneva Convention?

Does the EU recognise any circumstances under which the use of unlawful methods, such as detaining
people in prisons for an unlimited period of time, is justified as part of the war against terrorism?

Reply

(29 September 2003)

The protection of the rights and interests of Member States’ nationals abroad pursuant to the Vienna
Convention on Consular Relations is the responsibility of the individual Member States concerned.

taken any position on the issue of whether the status of

‘unlawful
The European Union has not
combatants’
is a valid one. It has, however, always insisted on the importance of every detainee in
Guantanamo Bay being treated humanely in accordance with general standards of international law. It has
moreover recalled on a number of occasions that Geneva Convention III regarding the treatment of
prisoners of war stipulates that in case of doubt, a detainee must be awarded the protection of the
Convention until such time that a competent tribunal could determine his status. In the meantime,
detainees are to be treated humanely, and receive proper medical care, clothing and food. The detaining
power is entitled however to take such measures as are necessary to ensure the security of the facility and
the detainees.

Given the EU’s clear stance on the need for full respect of human rights and the rule of law in the fight
against terrorism, it follows that it would recognise no circumstances which could justify non-respect for
human rights or the rule of law in that fight.

(2004/C 51 E/108)

WRITTEN QUESTION P-1472/03

by Wolfgang Ilgenfritz (NI) to the Commission

(23 April 2003)

Subject: Peer review of auditors in the EU

In Austria, pursuant to the Directive governing the exercise of the profession of auditor published in
Volume I/02 of the Official Journal of the Chamber of Certified Public Accountants, all auditors must
undergo a peer review even if they are not involved in auditing companies’ annual accounts. This is
stipulated in §14, in conjunction with §16(1), of the above Directive:

§14: All auditors, accountants and auditing and accounting firms must undergo an external peer review in
accordance with the following provisions.

§16(1): Auditors, accountants and auditing and accounting firms must undergo an external peer review at
least once every four years. As part of this review, the relevant quality control measures must be assessed.

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Official Journal of the European Union

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§20 of the above Directive lays down the following transitional provisions:

1. The external peer review shall be introduced in stages.

2. As from 2002, all auditors, accountants and auditing and accounting firms which audit undertakings,
credit institutes or insurance companies which are quoted on the stock market shall be required to
undergo an external peer review.

3. As from 2003, this requirement shall apply to all auditors, accountants and auditing and accounting
firms which carry out statutory end-of-year audits of the accounts of major corporations within the
meaning of §221 of the Commercial Code and partnerships treated as equivalent to such corporations.

On the basis of the stipulation in §14 of the Directive governing the exercise of the profession of auditor
that ‘all’ auditors, etc. are required to undergo an external peer review, the transitional provision laid down
in §20 is incomplete and is now to be amplified. As a result, ‘all’ auditors, etc. will be required to undergo
an external peer review every four years, even if they carry out no auditing work.

Are there EU Member States other than Austria in which auditors are subject to peer review even if

1.
they do not audit companies’ annual accounts?

2. Would it be consistent with the recommendation issued by the European Commission on
15 November 2000 (minimum requirements governing quality control systems in connection with
auditing in the EU) if Austria were to lay down a 10-year peer review cycle for auditors, accountants and
auditing and accounting firms which audit only the annual accounts of small, low-risk undertakings, if
they carry out such work at all, and were to apply that rule to auditors, etc. which audit only medium-
sized corporations (§221(2) of the Commercial Code) (text of the relevant provision attached)?

Answer given by Mr Bolkestein on behalf of the Commission

(26 May 2003)

The Commission recommendation of 15 November 2000 relating to minimum requirements governing
quality control systems in connection with statutory auditing stipulates that, after three years, Member
States must carry out a review.

This review will be carried out in 2003. The arrangements for this forthcoming exercise were already
discussed in November 2002 by the European Committee on Auditing, which adopted other implementing
measures in March 2003. Here all Member States were requested to report in writing to the Commission
by 31 May 2003 on the situation as regards the implementation of the recommendation. The review will
undoubtedly also address the question of whether all accountants, including those who do not generally
carry out auditing work, are fully subject to quality control measures.

Quality control
is the main instrument available to the profession to show the general public and
supervisory authorities that the work of auditing and accounting firms meets the requirements of auditing
standards and professional ethics. The review also encourages the profession to improve quality.

The recommendation, as such, is not binding on the Member States. It is thus for each one of them to
regulate quality control of statutory auditing as it sees fit in accordance with the recommendation and to
take the measures it deems necessary. The recommendation states that all persons who carry out statutory
audits must be subject to quality control procedures, but nevertheless, it lays down that the Member State
can, in the case of auditors whose clients do not include bodies of general interest clients, relax the rules
with regard to certain aspects, in particular, the frequency of reviews, which can be just once every ten
years.