You will have seen the draft proposals from the European Commission that became public at the end of September, which, if adopted, would produce major changes to our profession, particularly in the auditing of listed companies. These proposals were followed by a detailed impact assessment prepared by the Commission’s Staff. This impact assessment is particularly welcome because it provides helpful analysis of the pros and cons associated with the key proposals and an insight into the views of other stakeholders outside of the audit profession. RSM welcomes the recognition of the challenges in the audit market that these proposals seek to address and the ambition of the proposals under consideration.
We believe that no single measure will provide an effective solution to the significant challenges faced by the audit market. The Commission’s draft proposals and subsequent impact assessment recognise this by considering a broad bundle of measures. Fundamental to our evaluation is whether audit quality will be enhanced by these measures both now and in the long term. As a profession we need to set aside ego and arrogance, which has no place in this debate, and thoughtfully consider what is in the long term interests of the market and wider stakeholders.
Strong views have been expressed in support of the status quo or more limited change. This is to be expected. However, we believe that many of the Commission’s proposals, if effectively implemented, would lead to enhancements in audit quality and would encourage investment within the profession to meet the needs of larger listed clients. RSM International has invested globally in quality assurance programmes, international audit methodologies and staff development for many years. Larger, more focused investment will be encouraged and forthcoming if these proposals reduce market concentration and deliver new opportunities.
It is time to support change in our industry - to embrace change in practices and structures that have developed over many years. This is our chance to build a profession internationally that exceeds the expectations of the market and stakeholders for the long term. In order to do this, we need to thoughtfully consider the proposals before us. Commissioner Barnier was right to say that the status quo is not an option if we are to secure a long term future for our profession.
Despite the immense amount of time we and others have spent on considering these proposals, this process is still at a relatively early stage. We look forward to a fuller debate once the European Commission adopts its final proposals.