Revision i forandring: Analyse af EU’s indflydelse på revisors uafhængighed

Niclas Kragh Stilling

Student thesis: Master thesis

Abstract

Since October 2010 where the European Commission published the Green Paper ”Audit Policy: Lessons from the Crisis”, there has been a great debate of the independence of auditors. The Green Paper wanted to improve the audit as auditors are playing an important role in the financial system and furthermore are entrusted by law to conduct statutory audits. This thesis will be focusing on the aspects concerning independence, especially the following three subjects; Appointment and remuneration of auditors, Mandatory rotation and Non audit services are being discussed in the context of the theoretical background provided by Mautz & Sharaf, Flint, Pratt & Van Peursem and Brenda Porter. Furthermore I analyse the responses on the Green Paper from Big 4 and the Danish auditor organisation FSR. I have dealt with the current Danish legislation in order to identify the opportunities for improvement and to compare it with the proposed amendment by the European Commission. In accordance to the theory there are some disadvantages in connection with the procedure of the appointment and remuneration of auditors and independence. On this matter Big 4 have no reasons to see complications and they decline the proposal of a governmental institution to take care of the remunerations. In the matter of mandatory rotation there are several strong arguments for rotating audit partners to ensure objectivity and independence. Nevertheless a mandatory rotation of firm, which is proposed in the Proposal for a Regulation of the European Parliament and of the Council, is in conflict with the recommendations given by Big 4. They conclude that the audit during the first two years of a new engagement will be of remarkably lower quality than by a continued engagement. Last but not least, the Non audit services have given the audit firms an expert knowledge, that has made it possibly for the audit firms to keep up with the multinational organisations rapid development in terms of complexity. A prohibition of audit firms doing Non audit services will have a great impact of their qualifications in auditing and you risk the quality in audit. I can conclude that the European Commission has had the objectives to improve audit and especially to enforce the independence of auditors. If the proposal is passed and implemented it will most likely influence the ways of audit. Only time will show how the impact will be, but I expect the quality and price level of auditing will be affected negatively. Notwithstanding I can conclude that the future of audit will be characterized by more and more legislation.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2012
Number of pages82