Brexit Negotiations Must Consider Statutory Audit

At its meeting later this week, the European Council will assess progress on the Brexit negotiations. As last week’s update provided by the European Commission and the UK Government demonstrated, negotiations are moving forward - but there are still major obstacles to be overcome, including the backstop position for the Northern Ireland border. In addition, there has been little movement on the future EU-UK relationship; the timetable for agreement is looking extremely tight.

Among the key issues of concern for our profession is the prospect of disruption and of adverse consequences for statutory audit which helps underpin the integrity and stability of markets. Unless appropriate arrangements are put in place for post-Brexit, there are risks of legal uncertainty, especially in relation to the validity of audit reports, as well as of a proliferation of overlapping regulatory requirements which will ultimately impact on individual businesses and markets overall.

In this context, the publication issued today by Accountancy Europe and supported by the CCAB, is an important milestone. It recognises the significant market inter-dependencies between the EU27 and the UK, and the specific audit regulatory issues that need to be resolved as part of the negotiations.

The Accountancy Europe publication demonstrates the unity of the European profession in wishing to see a regulatory framework for the European audit profession, that is conducive to maintaining effective and efficient cooperation in the provision of statutory audit.  It also recognises that a decision on the equivalence and adequacy of the UK regulatory framework for statutory audit should be considered as part of the process to put in place the necessary post-Brexit arrangements.

I hope that all Accountancy Europe bodies within the EU will be encouraging their own governments to consider what needs to be done and why it matters for the integrity and stability of markets.

It is this message we are continuing to press with ministers in the UK government and I would encourage members to do the same.