Ernst & Young statement on Barnier legislative proposals

London, 30 November 2011: Ernst & Young believes that several of the key proposals announced today by the European Commission on audit reform, should they come into effect, would damage audit quality and provide little or no added value while increasing the cost of audit at a time of economic uncertainty. Furthermore, these proposed measures would have minimal impact in addressing one of the Commission’s key concerns – the role of the audit profession in helping to prevent past or future financial crises.

We share the concerns of others that more choice is needed in our profession and have said on many occasions that having only four global networks is not ideal. Therefore, we support those Commission proposals that would increase choice and enhance audit quality, including the proposal for an EU passport and the adoption of International Auditing Standards, which we believe will create a stronger European audit market. We also support the proposed elimination of ownership restrictions and artificial barriers to choice which would be good for investors and overall audit quality.

The European Parliament and Member States now have an opportunity to turn the debate into a constructive discussion that considers the quality and relevance of audits and the important role of independent audit committees. It is our view that a multi-disciplinary service model, particularly when combined with an engaged and effective audit committee, improves audit quality, helps the profession attract the best talent and fosters the provision of high quality services to companies around the world.

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