The amended Audit Directive (2014/56/EU) and the Audit Regulation (537/2014/EU) which became applicable on 17 June 2016 and 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 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 statutory audit rules, the technical examination of international auditing standards (ISAs) and the monitoring of the market quality and competition in the provision of statutory audit services to public interest entities. In addition, ESMA chairs the CEAOB subgroup which is responsible for the technical assessment of public oversight systems of third countries and the 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 regularly provides comment letters to the International Auditing and Assurance Standards Board (IAASB), expressing European securities regulators’ views on enhancing investor protection and improving listed entities’ auditors’ reports.