EU states agree to toughen up company audit rules
LONDON Dec 18 (Reuters) - European Union member states agreed to tighten rules for companies hiring accountants to improve book-keeping quality in the wake of the financial crisis.
Ambassadors from the bloc's 28 member states meeting on Wednesday approved a preliminary deal that was reached on Tuesday with a qualified majority, the bloc's presidency Lithuania said in a statement.
The European Parliament and member states are due to formally rubberstamp the new law in coming weeks to end two years of protracted debate.
The EU hopes a requirement for companies to regularly switch auditors will break up too-cosy relationships, increase competition between accountants and help avoid a repeat of the 2007-2009 crisis, which resulted in the bailout of banks given a clean bill of health by their auditors only months earlier.
"I believe that the agreed audit reform package should enhance the quality of statutory audits in the EU and will help to strengthen confidence in audited financial statements, in particular those of banks, insurers and listed companies," said Lithuania finace minister Rimantas Sadzius.
The reform, due to take effect in the first half of 2016, seeks to boost competition in a sector dominated by the "Big Four" accountants, KPMG, PwC, Deloitte and EY.
EY estimated that switching auditors at more than 30,000 companies will cost the EU economy more than 16 billion euros ($21.97 billion) because of the work involved in preparing and scrutinising tenders.
"This is a bad deal for investors, a bad deal for business and for jobs, and a bad deal for the European and global economy. We encourage the EU to undertake an economic analysis and consider the consequences before it moves forward," EY said in a statement released on Tuesday evening.
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