​Yesterday the European Commission published draft regulation on audit reform following lengthy discussions that have arisen from last year’s publication of the EU Green Paper: ‘Audit Policy: Lessons from the Crisis’.

The publication represented a unique opportunity for Commissioner Barnier to bring about fundamental change and reform the accounting industry, which in its present guise is unsustainable. Whilst, the regulation and its ramifications for both the audit profession and BDO will take some time to fully digest, it is unfortunate that aspects of the draft proposals relating to market structure reform , including joint audit and other measures that would strengthen the independence of the auditor, have been removed or watered down. Indeed, the removal of mandatory joint audit is extremely disappointing and does not enable the industry to address the urgent issue of market concentration.

However, we continue to support an ambitious and forward-looking review of the structural aspects of the audit profession, which are vital to both enhance the quality of audits and to restore trust in our profession. The dilution of these important proposals before they have been democratically and publicly debated is extremely disappointing, worrying and does not serve the public interest well.

We need now to devote the necessary time to conduct a valid analysis of the current proposals for our network and for the profession as a whole. It is likely, however, that we will be strongly recommending that the European Parliament restores the progressive proposals that have been deleted, both in the interests of investors and in order to ensure the enactment of game-changing policies, rather than half-hearted ones.