BETA

Activities of Klaus-Heiner LEHNE related to 2011/0389(COD)

Legal basis opinions (0)

Amendments (30)

Klaus-Heiner LEHNE

Proposal for a directive
Recital 3

(3) In order to allow audit firms to grow, Member States should allow them to have access to external capital. Therefore, Member States should no longer require that a minimum amount of capital or of voting rights in an audit firm is held by statutory auditors or audit firms, provided that a majority of the members of the administrative body are audit firms approved in any Member State or statutory auditors of good repute.deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Recital 10 a (new)

(10a) In order to increase the confidence in and the liability of the statutory auditors and audit firms carrying out the statutory audit of public-interest entities, it is important that the transparency reporting by statutory auditors and audit firms is increased. Therefore, statutory auditors and audit firms should be required to disclose audited financial information. The transparency reports of audit firms should include a declaration on the application of a corporate governance code, if applicable;

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Recital 10 b (new)

(10b) Audit committees, or bodies performing an equivalent function within the audited entity, have a decisive role in contributing to high-quality statutory audit. It is particularly important to reinforce the independence and technical competence of the audit committee by requiring that at least one of its members is independent and that at least one of the members of the committee has competence in auditing and another one in auditing and/or accounting. The Commission Recommendation of 15 February 2005 on the role of non- executive or supervisory directors of listed companies and on the committees of the (supervisory) board1 sets out how audit committees should be established and function. Considering, however, the dimension of boards in companies with reduced market capitalisation and in small and medium-sized public-interest entities, it would be appropriate that the functions assigned to the audit committee for those entities, or to a body performing equivalent functions within the audited entity, may be performed by the administrative or supervisory body as a whole. Public-interest entities which are UCITS or alternative investment funds should also be exempted from the obligation to have an audit committee. This exemption takes into account the fact that where those funds function merely for the purpose of pooling assets, the employment of an audit committee is not appropriate. UCITS and alternative investments funds, as well as their management companies, operate in a strictly defined regulatory environment and are subject to specific governance mechanisms such as controls exercised by their depositary. _____________ 1 OJ L 52, 25.2.2005, p. 51.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Recital 10 c (new)

(10c) It is also important that the role of the audit committee in the selection of a new statutory auditor or audit firm be reinforced, for the benefit of a more informed decision of the general meeting of shareholders or members of the audited entity. Hence, when making a proposal to the general meeting, the board should explain whether it follows the recommendation of the audit committee and, if not, why. The recommendation of the audit committee should include at least two possible choices for the audit engagement and a duly justified preference for one of them, so that the general meeting can make a real choice. In order to provide a fair and proper justification in its recommendation, the audit committee should use the results of a mandatory selection procedure organised by the audited entity, under the responsibility of the audit committee. In such selection procedure, the audited entity should invite statutory auditors or audit firms, including smaller ones, to present proposals for the audit engagement. Tender documents should contain transparent and non- discriminatory selection criteria to be used for the evaluation of proposals. Considering, however, that this selection procedure could entail disproportionate costs for companies with reduced market capitalisation or small and medium-sized public-interest entities having regard to their dimension, it is appropriate to relieve such entities from this obligation.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Recital 10 d (new)

(10d) The right of the general meeting of shareholders or members of the audited entity to choose the statutory auditor or the audit firm would be of no value if the audited entity were to enter into a contract with a third party providing for a restriction of such choice. Therefore any contractual clause entered into by the audited entity with a third party regarding the appointment or restricting the choice of a particular auditor or audit firm should be considered null and void.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Recital 16 a (new)

(16a) In order to improve compliance with the requirements of this Directive Member States should foresee administrative pecuniary sanctions on statutory auditors, audit firms and public-interest entities for identified violations. To that end, measures and sanctions should be sufficiently dissuasive, proportionate and consistently enforced. The adoption and publication of sanctions should respect fundamental rights as laid down in the Charter of Fundamental Rights of the European Union, in particular the right to respect for private and family life (Article 7), the right to the protection of personal data (Article 8) and the right to an effective remedy and to a fair trial (Article 47). Member States should ensure that decisions taken by the competent national authorities are subject to the right of appeal to the courts

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 2 – point a

Directive 2006/43/EC
Article 2 – point 1 – point c

~~(c) voluntarily conducted by small undertakings;~~deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 2 – point b

Directive 2006/43/EC
Article 2 – point 10

Point 10 is replaced by the following: "10. “competent authorities” means the authorities designated by law that are in charge of the regulation and/or oversight of statutory auditors and audit firms or of specific aspects thereof; the reference to “competent authority” in a specific Article means a reference to the authority responsible for the functions referred to in that Article;"deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 3 – point a – point i

Directive 2006/43/EC
Article 3 – paragraph 2 – subparagraph 1

Each Member State shall designate the competent authorityies referred to in Article 32 as authority responsible for approving statutory auditors and audit firms.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 3 – point b – point i

Directive 2006/43/EC
Article 3 – paragraph 4 – subparagraph 1 – point b

~~(i) in the first subparagraph, point (b) is~~ deleted;

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 3 – point b – point iii

Directive 2006/43/EC
Article 3 – paragraph 4 – subparagraph 2

(iii) the second subparagraph is replaced by the following: "Member States may not set additional conditions in relation to these points. Member States shall not be allowed to require that a minimum amount of capital or of voting rights in an audit firm is held by statutory auditors or audit firms."deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 5

Directive 2006/43/EC
Article 6 – paragraph 1 a (new)

The competent authorities referred to in Article 32 shall cooperate in view of achieving a convergence of the requirements set out in this Article. They shall cooperate with ~~the European Securities and Markets Authority (ESMA)~~EGAOB and the competent authorities referred to in Article X of Regulation [XXX] of [XXX] in so far as such convergence relates to the statutory audit of public-interest entities.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 7

Directive 2006/43/EC
Article 14 – paragraph 3

3. The competent authorities referred to in Article 32 shall cooperate in view of achieving a convergence of the requirements of the adaptation period and the aptitude test. They shall enhance the transparency and predictability of the requirements. They shall cooperate with E~~SMA~~GAOB and the competent authorities referred to in Article [XXX] Regulation [XXX] of [XXX] in so far as such convergence relates to the statutory audits of public-interest entities.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 11 – point a

Directive 2006/43/EC
Article 22 – paragraph 1

1. Member States shall ensure that when carrying out a statutory audit, the statutory auditor and/or the audit firm and any holder of voting rights in the audit firm is independent of the audited entity and is not involved in the decision- taking of the audited entity.deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 12

Directive 2006/43/EC
Article 26 – paragraph 1 – subparagraph 1

Member States shall ~~ensu~~require that statutory auditors and audit firms comply with international auditing standards when carrying out statutory audits as long as those standards are in conformity with the requirements of this Directive and of Regulation XX/XX adopted according to paragraph 3. Member States shall require statutory auditors and audit firms to keep records of their work papers for at least five years in accordance with the rules on personal data protection and administrative and judicial proceedings.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 12

Directive 2006/43/EC
Article 26 – paragraph 1 – subparagraph 2 – introductory words

Member States may impose audit procedures or requirements in addition to the international auditing standards only if those audit procedures or requirements stem from specific national legal requirements relating to the scope of statutory audits. ~~Member States shall ensure that those audit procedures or requirements comply with the following conditions:~~

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 12

Directive 2006/43/EC
Article 26 – paragraph 1 – subparagraph 2 – point a

(a) they contribute a high level of credibility and quality to the annual or consolidated financial statements in conformity with the principles set out in Article 4(3) of Directive [xxxx] on the annual financial statements and the consolidated financial statements of certain types of undertakings;deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 12

Directive 2006/43/EC
Article 26 – paragraph 1 – subparagraph 2 – point b

~~(b) are conducive to the Union public good.~~deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 12

Directive 2006/43/EC
Article 26 – paragraph 1 – subparagraph 3

~~Member States shall communicate those audit procedures or requirements to the Commission, ESMA and other Member States.~~deleted

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 12

Directive 2006/43/EC
Article 26 – paragraph 3

3. The Commission shall be empowered to adopt delegated acts in accordance with Article 48a for the purpose of a~~mending the definition of~~dopting or revoking international auditing standards in paragraph 2 of this Article. When using such powers, the Commission shall take into account any amendments brought to the ISAs by the IFAC, the opinion of the Public Interest Oversight Board on such amendments as well as any other developments in auditing and the audit professiondecide on the applicability of international auditing standards within the Union being aware of the proportionality of these standards. The Commission shall adopt international auditing standards for application in the Union only if they (a) have been developed with proper due care, in a transparent manner, under public oversight and are generally accepted internationally; (b) they contribute a high level of credibility and quality to the annual or consolidated financial statements in conformity with the principles set out in Article 4(3) of Directive [xxxx] on the annual financial statements and the consolidated financial statements of certain types of undertakings; (c) are conducive to the Union public good.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 15 – point a

Directive 2006/43/EC
Article 32 – paragraph 1

1. Member States shall designate athe competent authorityies responsible for the public oversight of statutory auditors and audit firms based on the principles set out in paragraphs 2 to 7.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 19

Directive 2006/43/EC
Chapter X – title

~~19. Chapter X is~~ deleted.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 19 a (new)

Directive 2006/43/EC
Article 40

19a. Article 40 is replaced by the following: 1. Member States shall ensure that a statutory auditor or an audit firm that carries out statutory audit(s) of public- interest entities shall make public an annual transparency report at the latest three months after the end of each financial year. The annual transparency report shall be published on the website of the statutory auditor or audit firm and shall remain available on that website for at least five years. Member States shall ensure that a statutory auditor or audit firm shall be allowed to update its published annual transparency report. In such a case, the auditor or firm shall indicate that it is an updated version of the report and the original version of the report shall continue to remain available on the website. 2. The annual transparency report shall include at least the following: (a) a description of the legal structure and ownership of the audit firm; (b) where the statutory auditor or audit firm belongs to a network, a description of the network and the legal and structural arrangements in the network; (c) a description of the governance structure of the audit firm; (d) a description of the internal quality control and risk management system of the audit firm and a statement by the administrative or management body on the effectiveness of its functioning; (e) an indication of when the last quality assurance review referred to in Article 40 of Regulation XX/XX was carried out; (f) a list of public-interest entities for which the statutory auditor or audit firm has carried out statutory audits during the preceding financial year; (g) a statement concerning the statutory auditor's or audit firm's independence practices which also confirms that an internal review of independence compliance has been conducted; (h) a statement on the policy followed by the statutory auditor or audit firm concerning the continuing education of statutory auditors referred to in Article 13; (i) information concerning the basis for the partners' remuneration in audit firms; (j) the audited annual financial report and the audited annual income statement with total turnover divided into fees from the statutory audit of annual and consolidated accounts, and fees charged for audit-related and other assurance services and non-audit services other than prohibited non-audit services as defined in Article 10(2) of Regulation XX/XX. (k) a description of its policy concerning the rotation of key audit partners and staff in accordance with Article 39c; (l) a declaration on the application of a corporate governance code; if the statutory auditor is not subject to a corporate governance code and does not voluntarily apply one, it shall state so. The statutory auditor or audit firm may, in exceptional circumstances, decide not to disclose the information required in point (f) of the first subparagraph to the extent necessary to mitigate an imminent and significant threat to the personal security of any person. The information contained in point (f) shall also be provided to the competent authority supplemented by revenue figures for the individual statutory audits of public interest entities. 3. The transparency report shall be signed by the statutory auditor or audit firm.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 19 b (new)

Directive 2006/43/EC
Article 41

19b. Article 41 is replaced by the following: Each public-interest entity shall have an audit committee which can also form part of the supervisory body. The audit committee shall be composed of non- executive members of the administrative body and/or members of the supervisory body of the audited entity and/or members appointed by the general meeting of shareholders of the audited entity or, for entities without shareholders, by an equivalent body. At least one member of the audit committee shall have competence in accounting and/or auditing. The committee members as a whole shall have competence relevant to the sector in which the audited entity is operating. At least one member of the audit committee shall be independent. The chairman of the audit committee shall be appointed by its members. 2. By derogation from paragraph 1 of this Article, in public-interest entities which meet the criteria set out in points (f) and (t) of Article 2(1) of Directive 2003/71/EC of the European Parliament and of the Council, the functions assigned to the audit committee may be performed by the administrative or supervisory body as a whole, provided at least that where the chairman of such a body is an executive member, he or she is not the chairman of the audit committee. 3. Member States may exempt from the obligation to have an audit committee: (a) any public-interest entity which is a subsidiary undertaking within the meaning of Article 1 of Directive 83/349/EEC if the entity complies with the requirements in paragraphs 1 to 4 of that Article at group level; (b) any public-interest entity the sole business of which is to act as issuer of asset backed securities as defined in Article 2(5) of Commission Regulation (EC) No 809/2004; (c) any credit institution within the meaning of Article 1(1) of Directive 2006/48/EC whose shares are not admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC and which has, in a continuous or repeated manner, issued only debt securities admitted to trading in a regulated market, provided that the total nominal amount of all such debt securities remains below EUR 100 000 000 and that it has not published a prospectus under Directive. (d) The public-interest entities referred to in points (b) and (c) shall explain to the public the reasons for which it considers it not appropriate to have either an audit committee or an administrative or supervisory body entrusted to carry out the functions of an audit committee 4. By derogation from paragraph 1, a public-interest entity that has a body performing equivalent functions to an audit committee, established and functioning according to provisions in place in the Member State in which the entity to be audited is registered, may decide not to have an audit committee. In such a case the entity shall disclose which body carries out those functions and how that body is composed. 5. Without prejudice to the responsibility of the members of the administrative, management or supervisory bodies, or of other members who are appointed by the general meeting of shareholders of the audited entity, the audit committee shall, inter alia: (a) monitor financial reporting process and submit recommendations or proposals to ensure its integrity; (b) monitor the effectiveness of the undertaking's internal control, internal audit where applicable, and risk management systems; (c) monitor the statutory audit of the annual and consolidated financial statements and supervise the completeness and integrity of the draft audit reports in accordance with Articles 22 to 23 of Regulation XX/XX; (d) review and monitor the independence of the statutory auditors or audit firms in accordance with Articles 5 to 11 of Regulation XX/XX, and in particular the provision of additional services to the audited entity in accordance with Article 10 of Regulation XX/XX. (e) be responsible for the procedure on the selection of statutory auditor(s) or audit firm(s) and recommend the statutory auditor(s) or audit firm(s) to be appointed in accordance with Articles 39b; (f) approve the provision by the statutory auditor or audit firm of non-audit services as referred to in Article 10 of Regulation XX/XX to the audited entity.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE, Hubert PIRKER, Herbert DORFMANN

Proposal for a directive
Article 1 – point 19 c (new)

Directive 2006/43/EC
Articles 42 and 43

19c. Articles 42 and 43 are replaced by the following: Article 42 Appointment of the statutory auditors or audited firms 1. Member States shall ensure that for the purposes of the application of Article 37 (1) of this Directive, for the appointment of statutory auditors or audit firms by public-interest entities, the conditions set out in paragraphs 2 to 6 of this Article shall apply. Where Article 37(2) of Directive 2006/43/EC applies, the public-interest entity shall only inform the competent authority designated in accordance with Art 35 of Regulation XX/XX of the use of the alternative systems or modalities referred to in that Article. In this case paragraphs 2 to 7 of this Article shall not apply. 2. The audit committee shall submit a recommendation to the administrative or supervisory board of the audited entity for the appointment of statutory auditors or audit firms. The audit committee shall justify the recommendation made. The audit committee shall state that its recommendation is free from influence by a third party and that no contractual clause as referred to in paragraph 7 has been imposed upon it. 3. The recommendation of the audit committee referred to in paragraph 2 shall be prepared following a selection procedure organised by the audited entity respecting the following criteria: (a) the audited entity shall be free to invite any statutory auditors or audit firms to submit proposals for the provision of the statutory audit service and shall consider at least one of the invited auditors or firms which does not receive more than 15% of the total audit fees from public- interest entities in the Member State concerned in the previous calendar year; (b) the audited entity shall be free to choose the method to contact the invited statutory auditor(s) or audit firm(s) and shall not be required to publish a call for tenders in the Official Journal of the European Union and/or in national gazettes or newspapers; (c) the audited entity shall prepare tender documents for the attention of the invited statutory auditor(s) or audit firm(s). Those tender documents shall allow them to understand the business of the audited entity and the type of statutory audit that is to be carried out. The tender documents shall contain transparent and non- discriminatory selection criteria that shall be used by the audited entity to evaluate the proposals made by statutory auditors or audit firms. (d) the audited entity shall be free to define the selection procedure and may conduct direct negotiations with interested tenderers in the course of the procedure where it shall also address audit quality and remuneration aspects; (e) where, in accordance with national law or Union law, the competent authorities referred to in Article 35 of Regulation XX/XX, require statutory auditors and audit firms to comply with certain quality standards, those standards shall be included in the tender documents; (f) the audited entity shall evaluate the proposals made by the statutory auditors or audit firms in accordance with the selection criteria predefined in the tender documents. The audited entity shall prepare a report on the conclusions of the selection procedure, which shall be validated by the audit committee. (g) the audited entity shall be able to demonstrate to the competent authority referred to in Article 35 Regulation XX/XX that the selection procedure was conducted in a fair manner and that audit quality and remuneration aspects were duly taken into account. The audit committee shall be responsible for the selection procedure referred to in the first subparagraph. For the purposes of point (a) of the first subparagraph, the competent authority referred to in Article 35(1) of Regulation XX/XX shall make public a list of the auditors and audit firms concerned which shall be updated on an annual basis. The competent authority shall use the information provided by statutory auditors and audit firms pursuant to Article 28 to make the relevant calculations. (4) Public-interest entities which meet the criteria set out in points (f) and (t) of Article 2(1) of Directive 2003/71/EC shall not be required to apply the selection procedure referred to in paragraph 3. (5) The proposal of the administrative or supervisory board to the general meeting of shareholders or members of the audited entity for the appointment of statutory auditors or audit firms shall include the recommendation made by the audit committee. If the proposal of the administrative or supervisory board departs from the recommendation of the audit committee, the proposal shall justify the reasons for not following the recommendation of the audit committee. However, the auditor or auditors recommended by the administrative or supervisory board must have participated in the selection procedure described in paragraph 3. (6) In the case of a credit institution or insurance undertaking, the administrative or supervisory board shall submit its draft proposal to the competent authority referred to in Article 35(2) of Regulation XX/XX. The competent authority referred to in Article 35(2) of Regulation XX/XX shall have the right to veto the choice proposed in the recommendation. Any such opposition shall be duly justified. The absence of a reply by the competent authority within the prescribed time-limit following submission of the audit committee's recommendation shall be considered as constituting an implied consent to the recommendation. (7) Any contractual clause entered into between a public-interest entity and a third party restricting the choice by the general meeting of shareholders or members of that entity pursuant to Article 37 of Directive 2006/43/EC to certain categories or lists of statutory auditors or audit firms to carry out the statutory audit of that entity shall be null and void. The public-interest entity shall inform the competent authorities referred to in Article 35 Regulation XX/XX of any attempt by a third party to impose such a contractual clause or to otherwise influence the decision of the general meeting of shareholders on the selection of a statutory auditor or audit firm. 7a. The audit committee or supervisory board/non-executive directors shall issue the audit engagement without delay following the election. (8) Where the audited entity is exempted from the obligation to have an audit committee, the audited entity shall decide which body or organ of the entity shall perform its functions for the purposes of the obligations set out in this Article. (9) Member States may decide that a minimum number of statutory auditors or audit firms shall be appointed by public- interest entities in certain circumstances and establish the conditions governing the relations between the auditors or firms appointed. If a Member State establishes such requirement, it shall inform the Commission thereof.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 20

Directive 2006/43/EC
Article 43 a – paragraph 1

Member States shall ~~ensure that the application of the auditing standards~~require the competent authorities in their jurisdiction to recognize, when overseeing the profession and in particular in relation to inspections, that the auditing standards adopted in accordance with Article 26 are applied to the statutory audit of annual or consolidated financial statements ~~of medium-sized undertakings~~in a manner that is proportionate to the scale and complexity of the business of th~~ose undertakings~~e entity.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 23 a (new)

Directive 2006/43/EC
Chapter XI a (new) – title

23a. The following Chapter XIa is inserted: ADMINISTRATIVE SANCTIONS AND MEASURES

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 23 a (new)

Directive 2006/43/EC
Article 47 a (new)

Article 47a Administrative sanctions and measures Member States shall ensure, in conformity with their national law, that at least the appropriate administrative sanctions and/or measures applicable may be taken in cases of breaches of the provisions of this Directive to the persons responsible for those breaches. Member States shall ensure that those sanctions and measures are effective, proportionate and dissuasive.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 23 c (new)

Directive 2006/43/EC
Article 47 b (new)

Article 47b Publication of sanctions and measures Member States shall provide that every administrative measure or sanction imposed for breach of this Directive shall be published without undue delay, unless such publication would seriously jeopardise the stability of financial markets. Where publication would cause disproportionate damage to the parties involved, competent authorities shall publish the measures and sanctions on an anonymous basis. The publication of sanctions shall respect fundamental rights as laid down in the EU Charter of Fundamental Rights, in particular the right to respect for private and family life and the right to the protection of personal data.

2012/11/14
Committee: JURI

Klaus-Heiner LEHNE

Proposal for a directive
Article 1 – point 23 d (new)

2006/43/EC
Article 47c (new)

Article 47c Appeal Member States shall ensure that decisions taken by the competent authorities in accordance with this Regulation are subject to the right of appeal.

2012/11/14
Committee: JURI