EU to curb influence of major Accounting firms

Like the rating agencies the big four accounting firms so far have escaped any major regulatory reform. So we welcome the announcement that the European Union plans to present a draft law curbing major auditing firms. While we are no friend of regulation - especially from the EU - we have for a long time argued that the way that listed companies select their auditing firms needs closer scrutiny. The party that really should supervise their activities are the shareholders. Management should have the right to be presented with their findings but should rely on the internal audit departments for their own purposes. Shareholders also should have more influence in deciding which firm is appointed to carry out the regular outside audit. Audit firms should also be changed at regular intervals and not be allowed to carry out non-audit work for their clients.
(12/02/2011)