WRITTEN QUESTION E-0187/04 by Brice Hortefeux (PPE-DE) to the Commission. Auditing of company accounts.
Date: 2004-01-29
Institutions: European Parliament, Provisional data
Subjects: audit, auditing, business ethics, business management, company law, economic offence, financial legislation

8.4.2004

EN

Official Journal of the European Union

C 88 E/171

Is the Commission of the opinion that European CEOs earn exorbitantly high salaries, given the poor

1.
performance of their businesses and the forced redundancies that this entails?

2.
Does the Commission view a ‘kleptocrat tax’ as an effective means of stemming the current tide, and
is it prepared to call for some coordination with a view to such an approach being taken in several EU
Member States?

Does the Commission also envisage a role for itself in this process? What measures could the

3.
Commission take?

Answer given by Mr Bolkestein on behalf of the Commission

(12 March 2004)

1.
The Commission considers that the structure and amount of directors’ remuneration is a matter that
must primarily be left to the decision of each company and its shareholders. It considers, however, that
shareholders should be able to appreciate fully the relation between the performance of the company and
the level of remuneration of directors and that they should be able to make decisions on the remuneration
items linked to the share price. An appropriate regime of disclosure and appropriate governance controls
is necessary in this respect.

2.
As the Commission stated in its Communication of May 2001 on a comprehensive strategy for the
EU’s future tax policy (1), there are many tax fields for which harmonisation is neither necessary nor
desirable in view of the widely differing characteristics of Member States’ tax systems and different national
preferences in areas such as public expenditure. Taxes on personal income are one area which, in the
Commission’s view, should be left to Member States even when the European Union achieves a higher
level of integration than at present. Co-ordination of personal taxes at EU level is only appropriate to
prevent cross-border discrimination or obstacles to the exercise of the four freedoms, as well as in some
cases to avoid double taxation or unintentional non-taxation in cross-border situations and to tackle cross-
border evasion.

3.
The Commission announced, in its Communication on modernising Company Law and Enhancing
Corporate Governance in the EU of 21 May 2003 (2), its intention to adopt a Recommendation to foster an
appropriate regime for the remuneration of directors. Such a regime should be composed of four key
items: disclosure of the remuneration policy in the annual accounts, disclosure of details of remuneration
of individual directors in the annual accounts, prior approval by the shareholder meeting of share and
share option schemes in which directors participate and proper recognition in the annual accounts of the
costs of such schemes for the company. The Commission intends to adopt the Recommendation in 2004.

(1) OJ C 284, 10.10.2001.
(2) COM(2003) 284 final.

(2004/C 88 E/0179)

WRITTEN QUESTION E-0187/04

by Brice Hortefeux (PPE-DE) to the Commission

(29 January 2004)

Subject: Auditing of company accounts

In the light of the most recent scandal to date, which lifted the lid on a EUR 7 billion deficit covered up by
Parmalat, the issue of auditing company accounts has returned to the table with particular force.

With tax havens, disguised financial losses, falsified documents and balance sheets, this case has all the
ingredients that have characterised previous financial scandals. Even if it is still too early to draw any
conclusions from this extremely complex affair,
is useful and necessary to begin examining the
it
consequences it will have for European financial services policy.

C 88 E/172

Official Journal of the European Union

EN

8.4.2004

Does the Commission intend, therefore, to look at strengthening the legal auditing of accounts by drawing
up stricter measures for audit firms, making them responsible for all aspects of consolidated accounts?

Will the legal loophole created when two audit firms are each responsible for part of the accounts be
tightened? If so, how will this take place?

Is a ban on auditors’ being able to take part in any kind of management decision being considered?

Answer given by Mr Bolkestein on behalf of the Commission

(11 March 2004)

indeed very complex. However,

The Commission agrees that it is still too early to draw any final conclusions from the Parmalat corporate
failure which is
the Commission had already proposed in its
Communications of 21 May 2003 on Modernising Company Law and Enhancing Corporate Governance
in the EU and on Reinforcing statutory audit in the EU, a number of measures which specifically deal with
some of the problems identified in the Parmalat case. In response to this corporate failure, the Commission
intends to accelerate some of the proposals contained in these action plans.

As far as statutory audit is concerned, the Commission intends to include a specific provision in its
proposal for a modernised Directive which confirms the principle that the statutory auditor can in no way
be involved in management decisions. A specific rule will also be introduced that the group auditor bears
full responsibility for the audit report in relation with the consolidated accounts.

(2004/C 88 E/0180)

WRITTEN QUESTION E-0214/04

by Giles Chichester (PPE-DE) to the Commission

Subject: Details of EU funding to the Palestinian Authority

(30 January 2004)

Several constituents of mine have written to me to express their concerns about the much publicised
doubts over the use of European Union funds by the Palestinian Authority (PA). To date, detailed
information and accounting of the funds the EU provides the PA, to either substantiate or negate the
allegations, have been lacking.

In view of the continued allegations concerning the misuse of EU funds to the PA and the confidentiality
of the European Parliament Working Group looking into this matter, can the Commission explain (a) the
level of EU funding to the PA over the past three years; (b) the details of the purpose of the budget
(as stated in the PA application) and (c) what sums are anticipated for 2003-2004?

Answer given by Mr Patten on behalf of the Commission

(10 March 2004)

The total level of European Community assistance (excluding bilateral Member States assistance) to the
West Bank and Gaza, including humanitarian aid, food aid and support to non governmental organisations
(NGOs), over
the year 2000:
EUR 225,86 million, for the year 2001: EUR 149,39 million and for the year 2002: EUR 326,31 million.
This includes humanitarian assistance in favour of Palestinian refugees in Jordan, Lebanon and Syria.

three years has been as follows (commitment basis). For

the last

EC financial assistance over the last few years has tried to strike a balance between short-term emergency
assistance and more strategic forward-looking development support in preparation for a future democratic
Palestinian state.