COM(2004) 177 - Proposal for a Directive on statutory audit of annual accounts and consolidated accounts

EN EN EN COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, xxx COM(2004) yyy final 2004/aaaa (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on statutory audit of annual accounts and consolidated accounts and amending Council Directives 78/660/EEC and 83/349/EEC (presented by the Commission) EN EN EXPLANATORY MEMORANDUM 1 CONTEXT OF THE PROPOSAL 1.1 Grounds and objectives The recent spate of scandals in the US and the EU have emphasised that statutory audit is an important element in ensuring the credibility and reliability of companies’ financial statements. Significant economic damage to the capital markets and the economy has resulted. Recent scandals also confirm the urgency and the need for the envisaged EU initiatives on statutory audit outlined in the May 2003 Commission Communication “Reinforcing the statutory audit in the EU”. This proposal is one of the most important initiatives of this Communication. It considerably broadens the scope of the former Eighth Council Directive by clarifying the duties of statutory auditors, their independence and ethics, by introducing a requirement for external quality assurance, by ensuring robust public oversight over the audit profession and by improving co-operation between oversight bodies in the EU. The proposal also provides a basis for effective and balanced international regulatory co-operation with oversight bodies of third countries such as the US ...