Financial Accounting Blog

Wednesday, March 24, 2004

EU proposes crackdown on auditorsWith the recent corporate scandals involving European firms Parmalat (Italian food giant) and Royal Ahold, European Commission is considering stricter standards for auditing firms. This proposal which may be adopted by the EU Parliament by mid 2005, will not only comply with the current U.S. laws but will also have stronger impact on auditing firm's criteria and directive. For example, group auditor will be completely reponsible for the consolidated accounts.
Auditors are our major line of defense against crooks who want to cook the books," said EU Internal Market Commissioner Frits Bolkestein. "Parmalat was a reminder of what happens when that defense fails." While "no one is naive enough to think any directive will stop accounting fraud at a stroke," Bolkestein said the rules would "inject more rigor and a stronger dose of ethics into the audit process."