Audit
ESMA’s activities in the audit area aim to enhance audit quality, thereby boosting investors' and the broader public’s confidence and trust in financial reporting within the EU.
Audit Directive and Regulation
The amended Audit Directive (2014/56/EU) and Audit Regulation (537/2014/EU) introduced stricter requirements on the statutory audits of public-interest entities, such as listed companies, credit institutions, and insurance undertakings. The objective of these changes is to reduce risks of excessive familiarity between statutory auditors and their clients, encourage professional scepticism and limit conflicts of interest.
The Audit Regulation also establishes the foundations for cooperation among audit oversight bodies in the EU as well as with the European supervisory authorities (ESAs) within the Committee of European Auditing Oversight Bodies (CEAOB), in which ESMA is a member without voting rights.
Committee of European Auditors’ Oversight Bodies (CEAOB)
The main objectives of the Committee of European Auditing Oversight Bodies (CEAOB) are to foster convergence among European audit regulators and enhance audit quality, thereby increasing trust in informative, reliable, and independent audit reports.
Through its contributions to the CEAOB, ESMA provides the perspectives of securities regulators and aids in the consistent application of statutory audit rules, the technical examination of International Standards on Auditing (ISAs), and the monitoring of market quality and competition in the provision of statutory audit services to public interest entities.
A significant portion of the CEAOB's work is carried out by its five sub-groups. ESMA chairs the subgroup responsible for the technical assessment of third-country audit regulatory frameworks and the cooperation between EU and third-country audit oversight authorities. These technical assessments facilitate cooperation with third-country regulators, ensuring high audit regulatory standards. The subgroup also supports CEAOB members in their interactions with third-country audit oversight bodies.
Other ESMA activities to promote audit quality
To enhance the quality and uniformity of practice in the global auditing and assurance profession, ESMA also provides comment letters to the International Auditing and Assurance Standards Board (IAASB) and to the International Ethics Standards Boards for Accountants, expressing European securities regulators’ views on enhancing investor protection and improving listed entities’ auditors’ reports.
- Comment letters to IAASB: on Sustainability reporting assurance standard and on Fraud
- Comment letter to IESBA: Independence and Ethics for sustainability reporting assurance engagements
ESMA is also a member of these Boards’ Stakeholder Advisory Council.