EU lawmakers in tentative deal on accounting cap: sources

Wed Apr 24, 2013 4:41pm EDT
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By Huw Jones

LONDON (Reuters) - Companies would have to change their accountant every 25 years under a tentative deal ahead of Thursday's committee vote on a European Union audit market reform, two parliamentary sources involved in the talks said on Wednesday.

If endorsed, it would mark a big dilution in the draft EU law and trigger relief among the "Big Four" accounting firms - Deloitte DLTE.UL, Ernst & Young LLP ERNY.UL, PwC PWC.UL and KPMG KPMG.UL - who check the books of nearly all blue chip companies worldwide.

If backed by the European Parliament's legal affairs committee on Thursday, the change would still need support of full parliament and the 27 EU member states to become law.

The reform has been deadlocked for months over whether and how often companies should have to switch accountants.

Critics say there are too few accounting firms with the breadth of experience to force a switch on a frequent basis.

Supporters say mandatory switching would encourage the next tier of accountants like Grant Thornton, Mazars and BDO to investing in more staff.

The reform is being closely tracked by the United States whose audit regulator is also mulling a cap on tenure.

The original draft proposed a switch at least every six to nine years to increase competition and stop auditors being cozy with clients. Policymakers were angered that banks were given a clean bill of health by accountants just before they were rescued in the financial crisis.   Continued...

The Deloitte Company logo is seen on a commercial tower at Gurgaon, on the outskirts of New Delhi August 9, 2012. REUTERS/Parivartan Sharma