Proposed EU Audit Reforms Essay

Proposed EU Audit Reforms Essay

Length: 1692 words (4.8 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

Introduction
The financial crisis that began in 2007 greatly undermined the integrity of the financial system. Measures were therefore suggested and some adopted to regulate various player of this industry in the hope that reoccurrence of such events would be prevented. Particularly, the roles of the banks, regulatory institution (such as central bank), rating agencies, and hedges funds, were promptly investigated and recommendation proposed. In contrast an important player, the Audit firms, appeared to have escaped the probing. In September 2011 things turned out to be different when a radical audit reform proposed by a commissioner of the European Commission internal market and services, Michael Barnier, was leaked ( Fielding 2011; European Commission 2011a).
Background of the EU Radical Reforms of Audit Market
Under his proposal Barnier consider Audit firms as the dogs which did not bark during the financial crisis, therefore questioning their effectiveness (Fielding 2011). He argues that Auditors should have played a bigger role in warning about the unhealthy financial position of their clients. Instead they offered commendable audit reports that were followed almost immediately by massive losses reported by the institution specifically from 2007 to 2009 (European Commission 2011a). Considering huge sums of taxpayers’ money amounting to € 4, 5888.9 was used between 2008 to 2009 to support this banks, he considered it to be vital to analyze all components of the financial system and suggest necessary reforms. According ton Barnier, undertaking the reforms will restore confidence especially in the financial sector. Investors and other interested parties will be able to access easily in a cost-effective manner companies...


... middle of paper ...


...s, H. (2011) ‘Big four auditors face massive shake-up.’ Reuters. [online] 27th September.
[Accessed on 10th August 2012] http://uk.reuters.com/article/2011/09/27/eu-auditing-idUKL5E7KR2FB20110927
Stokdyk, J. (2011) .Retaliation kicks in early EU audit reforms’. Accounting Web. [online]. 5th
October [Accessed on 10th August 2012] http://www.accountingweb.co.uk/blog-post/retaliation-kicks-early-eu-audit-reforms
The Economist. (2011) ‘Auditor Rotation: Musical Chairs.’ The Economist. [online] 3rd
September [Accessed on 10th August 2012] http://www.economist.com/node/21528279
Thompson, S. (2011) FTSE 100 Audit committee chairs question the rationale of EU audit
reforms. ICAEW [online] [Accessed on 10th August 2012] http://www.icaew.com/en/about-icaew/newsroom/press-releases/2011-press-releases/ftse-100-audit-comittee-chairs-question-rationale-eu-reforms



Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on Audit Expectations Gap

- Introduction Within the current crisis of confidence in the public accounting profession after the Enron debacle and series of high profile failures of financial services firms, the issues about ‘audit expectation gap’ have never been more important. Though it would take an enormous amount of effort to address these issues, I will argue that tremendous amounts could be done in order to close the gap down. In this essay I will discuss some of these issues and in particular the strategies to reduce the gap....   [tags: Accounting Regulations Finance]

Free Essays
1324 words (3.8 pages)

Questions and Answers About the Enron Scandal Essay examples

- The Enron scandal Question 1: What happened to Lay, Skilling and Fastow. Kenneth Lay created in 1985 after assimilation InterNorth and Houston Natural Gas . Later, he employed the likes of Jeffrey Skilling and Andrew Fastow, who were to be involved with him in committing gross accounting misconducts. Together with these men and many others, Lay hid huge sums of cash in debt from unsuccessful contracts and plans. This was possible through the use accounting loopholes, poor financial reporting and special purpose entities....   [tags: accounting, reforms, finances]

Powerful Essays
784 words (2.2 pages)

Problems with Tax Evasion in Kenya Essay examples

- ... It is estimated that in the financial years 2000/01and 2001/02, only 65 percent to 69 percent of income tax revenue was collected by KRA (KIPPRA, 2004). The puzzle of the economic theory as to why people evade taxes has extensively been discussed since Allingham and Sandmo (1972) strongly based their theory on economic crime theory; that the extent of deterrence, as a product of being detected and the size of fines imposed determines the level of compliance. The probability of being detected is shaped by the shared knowledge among categories of taxpayers and any deterrent measure that is put in place must clearly identify the common motivations specific to that category of taxpayers (Sle...   [tags: audit, compliance, reforms]

Powerful Essays
743 words (2.1 pages)

Different Perceptions of Audit Quality Essay

- ... (Public company accounting sighting overview, 2013). Inputs: They are categorized at engagement, firm and national level with the audit firm’s culture (values, ethics and attitudes), the time, knowledge and skill brought to the audit and the effectiveness of the audit’s processes and quality control procedures. Engagement level: The engagement team is independent and exhibits professional competence, due care and skepticism. The engagement team is aware that the audit is performed in public interest and they need to comply with the standards and ethical requirements....   [tags: audit committee, auditor´s opinion]

Powerful Essays
810 words (2.3 pages)

Education and the Examples of the Chile and Canada Reforms Essay

- 1. The overarching objective of educational policy-makers in developed nations is to make sure each child gets a good education, so that each child is more prepared to contribute to the economy and uphold the economic prosperity. This is why many reforms are in place to better educational systems as stated in a 2012 article by Bensimon, Alicia, Dowd, Longanecker, and Witham. They indicated that, “The nation is in an era of policy reform aimed at improving the productivity and effectiveness of higher education”(Bensimon, Dowd, Longanecker, & Witham, 2012)....   [tags: Students, Reforms, Policies]

Powerful Essays
1077 words (3.1 pages)

How the Role of an Audit Firm has Expanded Over Time Essay

- As the nature and structure of companies has changed over the years, so has the portfolio of services that auditors provide. Today, while companies still rely on an auditing firm’s classic audit services, they use the same firms for attestation services and increasingly for financial and non-financial assurance services as well. The changing scope dovetails with a rise in the outsourcing of non-core activities and a heightened need for management to understand and drive continuous improvement through their business processes....   [tags: cpa examination, audit services, tax service]

Powerful Essays
1342 words (3.8 pages)

The Law on Murder and Proposed Reform Essay

- The Law on Murder and Proposed Reform The law on murder is a mess and should be reviewed for the first time in more than half a century. A major overhaul is required including a re-think of whether murder should always carry a life sentence. It could be argued that one area which might be worth looking at is the question of whether or not it's right to have the same offence to cover cases where there is an intention to kill, as well as cases where there is not an intention to kill....   [tags: Papers]

Powerful Essays
748 words (2.1 pages)

The Michigan No-Fault Insurance Program & Its Proposed Reform Essay

- Introduction The purpose of this research is to identify the key issues with the current No-Fault automobile insurance system in Michigan and to discuss the three components of the proposed reform and their effect on the no-fault program. This system, which mandates unlimited lifetime coverage for all automobile accidents, is the most expensive in the United States. The three phases of the proposed reform are to set a limit to lifetime coverage, establish cost controls for medical expenses, and establish a state authority to combat insurance fraud....   [tags: Medical Fee Schedule, Fraud Rates]

Powerful Essays
1696 words (4.8 pages)

The Healthcare Reforms Act 2010 Essay

- The Healthcare Reforms Act 2010 or the Affordable Care Act introduces the universal form of health care. The ACA seeks to reduce healthcare costs and allow people to be more engaged in their own health care. The ACA intends to make healthcare more affordable and increase access of health care by expanding government’s Medicaid program to the financially disadvantaged, such as the low income earners, disabled people and people over 65 years of age (Arvantes, 2010). The healthcare reform ensures every individual in America has a government or private insurance to cater for their hospital bills....   [tags: Affordable Care Act, universal healthcare]

Powerful Essays
2618 words (7.5 pages)

Essay on Xbox: Marketing Audit

- Marketing Audit Approach: Microsoft Xbox 360 Company Description Microsoft is motivated and inspired every day by how our customers use our software to find creative solutions to business problems, develop breakthrough ideas, and stay connected to what's most important to them (Microsoft Corporation, 2006). Microsoft is in various technological areas (computers, IT programs, IT Solutions, and gaming systems). This Marketing audit will focus on the Microsoft Xbox 360. Currently, Microsoft has three goals for the Xbox 360: 1....   [tags: Business Marketing]

Free Essays
1531 words (4.4 pages)