The EGIAN Position Paper in full (republished by permission) Quoracy.com fully endorses the views expressed in this document
AN EGIAN POSITION PAPER
EGIAN SUPPORTS ROBUST REFORM PROGRAMME FOR THE EUROPEAN UNION AUDIT PROFESSION
PRINCIPLES AND ACTIONS
1 THE URGENT NEED FOR CHANGE
The creation of a more open vibrant market in the audit of large listed companies is urgently needed to protect and advance the public interest. If no action is taken, the currently excessive levels of concentration in this segment of the audit market in nearly all Member States of the European Union will very likely continue to rise even further, not least as a result of non-Big 4 firms being taken over by their dominant Big 4 competitors in key markets. An example of how to define large listed companies is set out at the end of this paper. Read more…
Two months ago I started a discussion on the CEE Professionals Group on Linked-In.
“Help to find a phrase for PL-CZ-SK or coin one if there isn’t one…
Everyone knows what Benelux is, who the PIGS or BRIC countries are, or even what is meant if we say “German Speaking World”, but how would you find an easy way to describe the triangle of countries Poland, Czech Republic and Slovakia? Please remind me or educate me of an existing term I may have overlooked, or failing that let’s put our heads together and coin one.”
Among the 49 comments to date several very interesting options appeared, no less than 21 choices from 16 people – a testimony to the helpfulness and the creativity of the Group. So now is the time to vote on them, which I’ve asked people to do here as there’s no voting there and also people may want to vote without putting their name to the vote.
Hopefully the mods of the Group will see this as fair, as there is a chance for my regulars to know about and join the Group as well as for Group members to see this site and sub to it.
Anyway, here’s the poll and thansk in advance for your vote. I can’t see your IP Address but the machine at polldaddy does so you can only vote the once and be counted. Further attempts are not counted, but enable you to see how the vote is progessing, and when it pans out I’ll put the results into the discussion.
There isn’t a prize for the winner, other than the honour of having thought of the best one, but my heartfelt hanks for all your help in getting to an optimal answer to the problem!
- Splitting Europe (zewar.wordpress.com)
- Sorbs: relics of the Ostsiedlung | Gene Expression (blogs.discovermagazine.com)
- Taking Your Pulse: Karaoke vote results in a tie (pbpulse.com)
Two fantastic free resources courtesy of Baker Tilly Czech Republic.
I wrote my views today to the head of Corporate Governance at the OECD relating to their Guidelines on Corporate Governance. A work which I believe under-represents to position of external audit in Governance.
The document can be downloaded as a pdf for free from the OECD website.
It has been used as the basis of the Corporate Governance code in numerous countries. Its paucity of regulations on what should be the rights and powers as well as duties of external auditors have assisted Governments to fail to accord a full range of powers – of the sort enjoyed in the UK for instance – to external statutory auditors in many countries.
At the same time the EU did not impose on Member States the obligation to enact that auditors should be entitled to attend AGMs - at the very least of quoted companies they audit and given the right to speak at them. That is because they saw it as a matter of Corporate Governance which should be covered by Corporate Governance Codes.
At the same time, even were the OECD code contains great recommendations such as the one on page 44 that barriers to international voting should be done away with, many nations are still asking for physical attendance at the AGM. The AGM ought to be attendable in this day and age by personal appearance OR videolink and the auditor should always be in attendance – if not the people have no guarantee that they are being given the real audit report, and there is no guarantee that serious findings that the auditor wanted to have commuicated to the owners will be portrayed with the necessary gravity, or just explained as if they were harmless and made a joke of by the embarrassed Board.
Anyway, here is the letter I wrote:
I was only able in this 66 page document which I downloaded from the OECD website to see less than half a page of the most basic information on the topic of external auditors.
External auditors are the most effective way to police good corporate governance, and yet the lack of any recommendations for our profession to be given teeth means that countries such as Poland who used the OECD guidelines to create their own codes and thought that they were getting the best protection available don’t have anything like the built in systemic safeguards that countries like the UK have.
One example – in the UK the auditor has the right to attend the AGM. They must be given notice of it and have the right to address it in matters concerning their report. In Poland there is no such right and the OECD code is where the authorities point to show that there is no need of it. They are using the brevity of the code as an excuse for poor practice, and the result is that stock listed companies are able to call AGMs where they talk around the findings of auditors, often dead-batting our recommendations and we are not even given the right to be present and put the record straight.
My reason for writing is to ask to have the views of the audit profession heard more forcefully in a – hopefully near future – reworking of the Code. I believe that IFAC would be able to place much more technically high-powered people than myself to your disposal when the time comes, but if not I’m happy to give time to this as a public service. The way things are now I deeply feel that the code develops very well some aspects of governance, such as Directors’ duties, but gives so small a role to the natural enforcers and advisors on governance in client firms, namely our profession, and impose on us duties without according us any powers – or recommending the according to us of powers whether by national law or by contract – as to constitute a missed opportunity for good.
Had someone asked me, before I had opened the pdf, to guess at how many of the 66 sides would be dealing with the question of external verification, I would have said 5 to 10. I add that just as a quantifier of how relatively important to the whole I believe the topic is, and therefore as well and indication of its degree of under-representation, in my opinion, in the document.
The above is my individual view, not necessarily the view of all my colleagues.
David J. James
- EFF Declines to Endorse OECD Communiqué on Principles for Internet Policy-Making (eff.org)
- The Harvard Law School Forum on Corporate Governance and Financial Regulation (bjconquest.com)
- OECD: See Greek Deficit In Line With IMF Target, But Risks (forexlive.com)
- Report: Poverty in households with children is rising in nearly all OECD countries (bespacific.com)