Category: Auditing and Related Services

International Standards on Auditing within the European Union

December 2007

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International Standards on Auditing within the European Union

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The new Audit Directive of May 17, 2006 enforces the use of International Standards on Auditing (ISAs) for all statutory audit to be performed in the EU. Aiming at a consistently high quality for all statutory audits required by Community law, the Audit Directive has given implementing powers to the European Commission (EC) to adopt the ISAs in accordance with the so-called "Comitology procedure." Recently, this procedure has been modified in order for the European Parliament (EP) to exercise the so-called "scrutiny rights" when overseeing the administrative process of endorsement.

This article indicates the importance of the ISAs, as established by the International Auditing and Assurance Standards Board (IAASB). It deals with the evolution from the genesis of the standard setting process at the international level to the so-called "Clarity Project" whereby the ISAs are "clarified" regarding their objectives and requirements.
Finally, the article provides for a summary of the fairly complicated new comitology procedure, now incorporating a "regulatory procedure with scrutiny."

The text of this article refers to the situation existing as of August 31, 2007.

* This article has been published in the Belgian Journal "FORUM FINANCIER / REVUE BANCAIRE ET FINANCIÈRE 2007/8 (p. 515-529)." (cf. http://www.bff-ffb.be/fr/revue.html)