The amended Audit Directive (2014/56/EU) and the Audit Regulation (537/2014/EU) which became applicable on 17 June 2016 and introduces stricter requirements on the statutory audits of public-interest entities, such as listed companies, credit institutions, and insurance undertakings. This is to reduce risks of excessive familiarity between statutory auditors and their clients, encourage professional skepticism, and limit conflicts of interest.
The Audit Regulation 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.
Through its contribution in the CEAOB, ESMA provides securities regulators’ perspectives and contributes to the implementation and consistent application of the audit statutory rules, the technical examination of international auditing standards (ISAs) or the monitoring of the market quality and competition in the provision of statutory audit services to public interest entities. In addition, ESMA will chair the subgroup of the CEAOB responsible for the technical assessment of public oversight systems of third countries, and the international cooperation between EU and third countries audit oversight authorities.
In order to enhance the quality and uniformity of practice in the global auditing and assurance profession, ESMA has regularly provided comment letters to the work of the International Auditing and Assurance Standards Board (IAASB), in order to express European securities regulators’ views to enhance investor protection and improve listed entities’ auditors’ reports.