Brussels (Jan. 23, 2004) -- With the European Union still reeling from the effects of Parmalat, Addeco and the like, a top EU official said that while tougher accounting rules are needed, hasty legislation could worsen regulatory problems.
"Immediately [after] the Enron affair came to light, the commission stated that Europe should not be complacent and that scandals of a similar scale could also occur in Europe. But now that a case of similar magnitude or worse has unfortunately occurred in Europe, the commission's view remains that hasty and ill-considered legislation could add to rather than solve regulatory problems highlighted by high-profile cases such as Enron and Parmalat," said European Union internal market commissioner Frits Bolkestein. Bolkestein’s remarks were made after a briefing with finance ministers earlier this week.
Bolkestein noted that the commission is finalizing proposals due to be presented in March to revise the rules for statutory auditors. The proposals will, among other things, tighten the oversight of auditors at the level of member states; introduce the principle that the group auditor is fully responsible for the audit report in relation to the consolidated accounts of a group of companies; establish rules on audit quality assurance; specify rules on independence of auditors and on ethics; and impose the use of high quality auditing standards for all statutory audits. In addition, the proposals will seek to ensure that there are independent audit committees in all listed companies, to strengthen sanctions for malpractice and to enhance cooperation of oversight bodies at the European level and with third-country regulators.
"On corporate governance issues, the Parmalat case highlights certain aspects as particularly urgent,” Bolkestein said. “Work needs to be accelerated on requiring all directors to be collectively responsible for company accounts, and on ensuring complete information and disclosure with regard to a group's structure and intra-group relations.”
Bolkestein also stressed that, in light of the Parmalat case, it was “even more important that member states ensure the swift and complete implementation of new rules.”
-- WebCPA staff
