New audit scheme for public-interest entities
Question for written answer E-002792-16
to the Commission
Nuno Melo (PPE)
The new audit scheme for public-interest entities (Regulation (EU) No 537/2014) has been leading Member States to adopt legislation not in accordance with the regulation.
Under Article 41 mandatory rotation of audit engagements is to apply: (1) with effect from 17 June 2020 for engagements which on 17 June 2014 had continued for 20 years or more; and (2) with effect from 17 June 2023 for engagements which on 17 June 2014 had continued for 11 years or more but for less than 20 years. The Commission confirmed that this was the case in its answer to Written Question E-09001/2015.
In Portugal the authority concerned, the CMVM (Securities Market Commission), has taken the view, according to its FAQs, that the length of service up to the entry into force of Law 140/2015 is fully factored in, for the purposes of possible renewal of engagements, by statutory auditors or statutory auditing companies. Engagements dating back more than 10 years on 1 January 2016 are being allowed to run until the end of their current term, but renewal is prohibited as from 1 January 2016.
It follows that an engagement in, say, its 12th year on 17 June 2014 (and hence its 14th year on 1 January 2016) and due to end on 31 December 2016 could not be renewed for the 2017 financial year, and the end effect of that would be to infringe the regulation.
Is the Commission aware of this situation, which runs counter to the safeguards provided in Article 41 and the gradual transition and legal certainty protected under it? What does it intend to do in this connection?