Statutory audit, the new European regulations

The transposition into national law of the EU texts relating to legal financial control of companies should be accompanied by significant changes to French professional practices, as a result of the growing complexity of regulations and procedures, and the increasingly frequent internationalisation of companies.

At the 27th Assises de la CNCC [National Company of Statutory Auditors symposium] held in Nantes on 11 and 12 December, Yves Nicolas, then president of the CNCC, pointed out that “this legal development is a real opportunity for us to continue the process of modernisation that most of our members have already got well under way, and to lay the foundations of a new economy for our sector.”

The two texts (regulation no. 537/2014 and directive no. 2014-56), which came into force on 17 June 2014, will be applicable from 17 June 2016 in all member states of the European Union. In addition to this transposition, French lawmakers must reach a decision on a number of options that the European Commission which are left to the member states to decide upon, such as the addition of services to the list of prohibited non-audit services, the strengthening of the powers of audit committees, the addition of items in the content of audit reports, or the communication of this report to the board of directors of the audited entity. To address these issues, the chancellery set up working groups which are to report their findings at the start of spring 2015 to allow publication of the ruling at the start of 2016.

The profession also has other concerns, such as the use of new technologies in the service of auditing. Vincent Papazian, national audit director at Grant Thornton, stressed that: “our main concern is now to continue adapting our services to the increasing demands of the finance departments or senior management that are our clients. At a time of digitization of transactions and an explosive growth in data, we understand that they expect increasingly thorough and relevant analyses of us, as well as recommendations that contribute to the reinforcement of their control processes and improvement of their performances.”

Lastly, the growing complexity of regulations and procedures, making it increasingly difficult to translate them into financial and accounting terms “obliges us to go beyond the legal obligations in terms of training for all of our employees”, says Thierry Denjean, managing partner of an audit firm.