Intern revision og revisionsudvalg i fremtiden: Konsekvenser af EU Kommissionens forordning

Julie Bendtsen

Student thesis: Master thesis


The financial crisis, with its beginning in 2008, has faced a number of weaknesses in the audit market and audit profession in Europe. Example companies collapsed or had problems with going concern in a short time after a clean audit report was given. Accordingly, The European Commission found it necessary to reform the audit market in Europe with the means of a new regulation. The main objectives of the regulation are to reinforce the independence of auditors and define and clarify the role of auditors and audit firms and thus improving the dynamic of the market concentration which is today dominated by four audit firms. A new regulation would restore the investors’ confidence in financial statements which hopefully would improve the stability and confidence in the financial market. At the end of 2011 the European Commission published a regulation for the auditing of public interest entities (PIE’s). The main objectives are:  Increasing the role of audit committees  Mandatory tendering for audit mandates  Mandatory rotation of the audit firm every 6 years  Expanding the audit report with more useful information to investors and stakeholders  Prohibition of non-audit services to companies by its auditor or audit firm This thesis focuses on the future consequences of a new regulation for the internal auditors1 and audit committees, especially at financial companies in Denmark. Through interviews with members of audit committees, chiefs of internal audit as well as two members from FSR2, the scope of this thesis has been to discover the representatives’ views on the proposals from the European Commission. The significant findings are that audit committees would find it difficult to recruit new members if the proposals regarding independence and technical competence for at least two members pass. Even the economic consequences would also have a negative impact. The proposal regarding the fact that audit committees should lead the mandatory tendering would not have an impact on the market concentration in Denmark because middle-tier audit firms do not have enough experience to lead an audit of PIE’s. The findings for internal auditors are that mandatory rotation would centralize the role of intern auditors because they have the experience and knowledge about the risks in the companies. If the proposal regarding more qualified members in the audit committees passes, it would have an impact on internal auditors. More members in the audit committees could lead to more questions and higher demand for internal auditors’ knowledge. The proposal regarding an informative external audit report could have an impact on the Danish Financial Supervisory Authority3 which could suggest a formal and informative internal audit report on financial statements. The main reason for prohibiting non-audit services is to improve the independence of external auditors but it could ignite a future discussion of the role of independence for internal auditors. Finally, it seems that the European Parliament and European Council already have amendments to the proposals by the European Commission. Accordingly, it is difficult to predict the development of the European audit market and profession.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2012
Number of pages122