On April 25, the legal affairs committee of the European Parliament toned down plans to reform the European auditing market in a move which will provide some relief to the “Big Four” auditors who would have been most affected.
The committee rejected the original draft bill from the European Commission, which called for compulsory audit firm rotation every six years, and suggested instead that the rotation should take place every 25 years. The committee also rejected the Commission’s proposal of caps on auditor market share, which could have split up the “Big Four.”
The reforms, which were initiated after the perceived failure of the auditors in recognizing the risks building up in banks before the financial crisis, will now be negotiated between member states before adoption by the full European Parliament. Press Release.