Activities of statutory auditors in light of Directive 2014/56 / EU

The Green Book: "Principles of auditing financial statements: Lessons learned from the crisis" is a report from 13.10.2010, prepared by the European Commission, which gave rise to numerous changes in the way that statutory auditors performed their activities. A further legislative act that significantly affects these activities is Directive 2014/56 / EU of the European Parliament and Council of 16.04. 2014, which was implemented in Poland by the law of May 11, 2017.

New EU regulations on the activities of statutory auditors

On May 27, 2014 a legislative package was published in the Official Journal of the European Union, consisting of:

• Directive 2014/56 / EU of the European Parliament and Council amending Directive 2006/43 / EC regarding statutory audits of annual accounts and consolidated accounts;
• Regulation of the European Parliament and Council No. 537/2014 of April 16, 2014, on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC.

The Act of May 11, 2017 on statutory auditors, auditing companies and public supervision implements the provisions of Directive 2014/56 / EU in the Polish legal order. In turn, the European Parliament and Council Regulation 537/2014 regulates some of the issues related to the audit of financial statements of public interest entities and the functioning of audit firms that carry out these audits.
In the opinion of the authors of the new legislation, the new regulations not only strengthen the independence and impartiality of statutory auditors, but will contribute to the increase in the quality of statutory audits, as well as strengthen public oversight. In turn, reducing the advantage of large network companies, while simultaneously creating the possibility of market entry for other entities, will contribute to the de-concentration of the market for providing statutory audit services to public interest companies.

What changes are introduced by Directive 2014/56 / EU?

The most important changes related to the implementation of new regulations from Directive 2014/56 / EU include:

• the obligation for the Audit Oversight Commission to control audit firms auditing public interest companies (imposing of penalties and conducting of disciplinary investigations),
• appointment of a Financial Supervision Authority, responsible for supervising public interest companies and the activities of audit committees,
• introduction of solutions that reduce the conflict of interest between the statutory auditor and the audit firm and the audited entity,
• creating a separation between audit services and consultancy,
• extending the scope of information contained in the opinion from the audit,
• increasing the independence and the role of audit committees created by public interest companies.

Directive 2014/56 / EU significantly changes the previously existing legal status of the rights and obligations of statutory auditors, of which there 7,100 operating in Poland in 2017, according to the register.