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Splitting up Financial Audit Firms

Financial Audit Firms Miami are under a microscope. The European Commission has proposed a draft law that could split up the largest financial audit Miami firms and their counterparts overseas and force them to use a separate entity and name for their advisory and non-audit practices.

Gustavo A Viera CPA is a Miami Financial Audit Firms, the proposal aims to clarify the role of Financial Audit Firms in response to problems found during the financial crisis and during inspections of Financial Audit Firms by national regulators. The proposals would introduce more stringent rules for the financial audit sector to strengthen the independence of Financial Audit Firms and introduce greater diversity into the highly concentrated financial audit market, which is dominated by the Big Four. The commission noted that concerns around conflicts of interest have been expressed about the potential for an accumulation of systemic risk, as the market is effectively dominated by the Big Four.

As a Financial Audit Firms I know Investor confidence in financial audit and As a Condo Auditor Miami firms has been shaken by the crisis and I believe changes in this sector are necessary. “We need to restore confidence in the financial statements of companies. Today’s proposals address the current weaknesses in the financial audit market, by eliminating conflicts of interest, ensuring independence and robust supervision and by facilitating more diversity in what is an overly concentrated market, especially at the top end, states Viera Financial Audit Firms”

Financial Audit Firms would be prohibited from providing non-audit services to their audit clients under the proposals. In addition, large Condo Auditors Miami firms would be obliged to separate Financial Audit Firms financial audit activities from non-financial audit activities in order to avoid all risks of conflict of interest.

The proposal to create a single market for statutory Financial Audit Firms services by allowing Financial Audit Firms to exercise their profession freely, once they are licensed in one member state. There are also proposals for a strengthened and more coordinated approach to the supervision of Auditors.

All the measures are supposed to enhance the quality of statutory Financial Audit Firms in the US and EU and restore confidence in audited financial statements, particularly those of banks, insurers and large publicly listed companies.

The proposals regarding the statutory financial audit of public-interest entities, such as banks, insurance companies and listed companies, envisage measures to enhance auditor independence and to make the statutory audit market more dynamic.

The key measures include mandatory rotation of Financial Audit Firms. Under the proposals, public companies would be required to rotate their Condo Auditor Miami firms after a maximum engagement period of six years, with some exceptions. A cooling-off period of four years would be required before the financial audit firms Miami could be engaged again by the same client. The period before which rotation is obligatory would be extended to nine years if joint audits were performed, specifically if the entity being audited appointed more than one financial audit firm to carry out its audit, thus potentially improving the quality of the audit performed.

Joint Financial Audit Firms would not be made obligatory but would be encouraged.

Under the proposals, public-interest entities would be obliged to have an open and transparent tender procedure when selecting a new auditor. The financial audit committee of the audited entity would need to be closely involved in the selection procedure.

In addition, given the global context of the audit profession, the European Commission has proposed that the coordination of auditor supervision activities be placed within the framework of the European Markets and Securities Authority to provide greater oversight at all level as well as internationally.

The commission has proposed the creation of a single market for statutory audits by introducing a “European passport” for the financial audit profession. A measure US counterparts are looking into according to Viera, a Financial Audit Firms. To this end, the commission proposals would allow financial audit firms to provide services across the EU and to require all statutory auditors and audit firms to comply with international auditing standards when carrying out statutory audits.

The proposal would also allow for a proportionate application of the standards in the case of small and midsized companies.

 

About the Author

Gustavo VieraGustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO - Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His office is located at One Alhambra Plaza Floor PH Coral Gables FL 33134, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at 786-250-4450.View all posts by Gustavo Viera →