BETA

25 Amendments of Anne E. JENSEN related to 2011/0359(COD)

Proposal for a regulation
Article 10 – title

Pro~~hibition of the pro~~vision of non-a~~udit~~ssurance services

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 1

1. A statutory auditor or an audit firm carrying out statutory audit of public- interest entities ~~may~~shall not provide to the audited entity, to its parent undertaking and to its controlled undertakings ~~statutory audit services and related financial audit services~~, to which the audited entity is material, prohibited services as mentioned below in the third subparagraph of paragraph 3. 2. Non-assurance services, not categorised as prohibited services, may be provided subject to pre-approval by the audit committee [or Board of Directors, if no audit committee]. In all circumstances the provision of non-assurance services may not create any threats to the independence of the statutory auditor of the public interest entity.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 1 – subparagraph 2 a (new)

(2a) The parent company is not audited by the statutory auditor or an audit firm carrying out statutory audit or a network firm related hereto, the restrictions above to provide prohibited services should not apply.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 2

2. For the purposes of this Article, related financial audit services shall mean: (a) the audit or review of interim financial statements; (b) providing assurance on corporate governance statements; (c) providing assurance on corporate social responsibility matters; (d) providing assurance on or attestation of regulatory reporting to regulators of financial institutions beyond the scope of the statutory audit and designed to assist regulators in fulfilling their role, such as on capital requirements or specific solvency rations determining how likely an undertaking will be to continue meeting its debt obligations; (e) providing certification on compliance with tax requirements where such attestation is required by national law; (f) any other statutory duty related to audit work imposed by Union legislation to the statutory auditor or audit firm.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 1

A statutory auditor or an audit firm carrying out statutory audit of public- interest entities shall not directly or indirectly provide to the audited entity, to its parent undertaking and to its controlled undertakings non-audit services.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 2

Where the statutory auditor belongs to a network, no member of such network shall provide to the audited entity, to its parent undertaking and to its controlled undertakings within the Union any non- audit services.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – introductory part

For the purposes of this Article, ~~non-audit services shall mean:~~ prohibited services shall mean: a) Any services where a statutory auditor or an audit firm assume a management responsibility or making the significant judgments and decisions for an audit client. b) accounting and bookkeeping, including payroll services, and preparing accounting records and financial statements c) designing and implementing internal control or risk management procedure related to the preparation and/or control of financing information included in the financial statements and advice on risk; that: (a) form a significant part of the internal control over financial reporting or (b) generate information that is significant to the client's accounting records or financial statements on which the firm will express an opinion creates a self-review threat. d) valuation services; if the valuations would have a material effect, separately or in the aggregate, on the financial statements on which the firm will express an opinion. e) actuarial and legal services, including resolving a dispute or litigation when the amounts involved are material to the financial statements on which the firm will express an opinion. f) participating in the audit client's internal audit and the provision of services related to the internal audit function; g) broker or dealer, investment adviser, or investment banking services, including providing corporate finance services involving promoting, dealing in, or underwriting an audit client's shares; h) human resources services, including recruiting senior management or a director or officer of the entity in a position to exert significant influence over the preparation of the client's accounting records or the financial statements on which the firm will express an opinion. These prohibited services include searching for or seeking out candidates for such positions and undertaking reference checks of prospective candidates for such positions.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point a

(a) services entailing conflict of interest in all cases: (i) expert services unrelated to the audit, tax consultancy, general management and other advisory services; (ii) bookkeeping and preparing accounting records and financial statements; (iii) designing and implementing internal control or risk management procedure related to the preparation and/or control of financing information included in the financial statements and advice on risk; (iv) valuation services, providing fairness opinions or contribution-in-kind reports; (v) actuarial and legal services, including the resolution of litigation; (vi) designing and implementing financial information technology systems for public-interest entities as referred to in Article 2(13)(b) to (j) of Directive 2006/43/EC; (vii) participating in the audit client's internal audit and the provision of services related to the internal audit function; (viii) broker or dealer, investment adviser, or investment banking services.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 3 – subparagraph 3 – point b

(b) services which may entail conflict of interest: (i) human resources services, including recruiting senior management; (ii) providing comfort letters for investors in the context of the issuance of an undertaking's securities; (iii) designing and implementing financial information technology systems for public-interest entities as referred to in Article 2(13)(a) of Directive 2006/43/EC; (iv) due diligence services to the vendor or the buy side on potential mergers and acquisitions and providing assurance on the audited entity to other parties at a financial or corporate transaction.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 1

When a member of the network to which the statutory auditor or the audit firm carrying out statutory audit of a public- interest entity belongs provides non-audit services to an undertaking incorporated in a third country controlled by the audited public-interest entity, the statutory auditor or the audit firm concerned shall assess whether his, her or its independence would be compromised by such provision of services by the member of the network.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 2

If his, her or its independence is affected, the statutory auditor or the audit firm shall apply safeguards in order to mitigate the threats caused by such provision of services in a third country. The statutory auditor or the audit firm may continue to carry out the statutory audit of the public- interest entity only if he, she or it can justify, in accordance with Article 11, that such provision of services does not affect his, her or its professional judgement and the audit report.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 3

Being involved in the decision-taking of the audited entity and the provision of the services referred to in points (ii) and (iii) of paragraph 3(a) shall be considered as affecting such independence in all cases.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 4

~~The provision of the services referred to in points (i) and (iv) to (viii) of paragraph 3(a) shall be presumed to affect such independence.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 4 – subparagraph 5

~~The statutory auditor or the audit firm may consult the competent authority for an opinion on this issue.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 5

5. Where an audit firm generates more than one third of its annual audit revenues from large public-interest entities and belongs to a network whose members have combined annual audit revenues which exceed EUR 1 500 million within the European Union, it shall comply with the following conditions: (a) it shall not directly or indirectly provide to any public interest entity non- audit services; (b) it shall not belong to a network which provides non-audit services within the Union; (c) any entity which provides the services listed in paragraph 3 shall not directly or indirectly hold more than 5 % of the capital or of the voting rights in the audit firm; (d) the entities which provide the services listed in paragraph 3shall not directly or indirectly hold together more than 10 % of the capital or of the voting rights in the audit firm; (e) such audit firm shall not directly or indirectly hold more than 5 % of the capital or of the voting rights in any entity which provides the services listed in paragraph 3.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 10 – paragraph 6

6. The Commission shall be empowered to adopt delegated acts in accordance with Article 68 for the purpose of adapting the list of related financial audit services referred to in paragraph 2 and the list of non-audit services referred to in Member States are allowed to include additional prohibited services in the list of prohibited services in the third subparagraph 3 of ~~this Article. When using such powers, the Commission shall take into account developments in auditing and the audit profession~~paragraph 3, based on national requirements or laws.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 1

The public-interest entity shall appoint a statutory auditor or audit firm for an initial engagement that shall not be shorter than ~~two~~one year and not longer than six years.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 2

The public-interest entity may renew this engagement ~~only once~~, subject to a proposal made by the audit committee or similar body and subsequently approved by the annual general meeting.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 1 – subparagraph 3

~~The maximum duration of the combined two engagements shall not exceed 6 years.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 2

2. After the expiry of the maximum duration of the engagement referred to in paragraph 1, the statutory auditor or audit firm or any members of its network within the Union, where applicable, shall not undertake the statutory audit of the public-interest entity concerned until a period of at least four years has elapsed.deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 4 – subparagraph 2

The statutory auditor or audit firm shall establish an appropriate gradual rotation mechanism with regard to the most senior personnel involved in the statutory audit, including at least the persons who are registered as statutory auditors. The gradual rotation mechanism shall be undertaken in phases on the basis of individuals rather than of a complete audit team. It shall be proportionate in view of the scale and the dimension of the activity of the statutory auditor or audit firm.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 5 – subparagraph 1

Where a statutory auditor or audit firm is replaced by another statutory auditor or audit firm, the former statutory auditor or audit firm shall provide the incoming statutory auditor or audit firm with a handover file. Such file shall include relevant information concerning the audited entity as may reasonably be necessary to understand the nature of the business and the internal organisation of the audited entity and to ensure the continuity of the statutory audit and the comparability with the audits carried out in previous years.information as required by law and regulation (Art 23 (3)in the current 2006- directive)

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 5 – subparagraph 2

The former statutory auditor or audit firm shall also grant access to the incoming statutory auditors or audit firms to the additional reports to the audit committee referred to in Article 23 of previous years and to any information transmitted to competent authorities pursuant to Articles 25 and 27.

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 6 – subparagraph 1

~~ESMA shall develop draft regulatory technical standards to specify technical requirements on the content of the handover file referred to in paragraph 6.~~deleted

2012/10/29
Committee: ECON

Proposal for a regulation
Article 33 – paragraph 6 – subparagraph 2

~~Power is~~ delegated ~~to the Commission to adopt the regulatory technical standards referred to in paragraph 6 in accordance with Article 10 of Regulation (EU) No 1095/2010.~~

2012/10/29
Committee: ECON