1. 1 The Auditor of the Future The Harmonisation of the Profession in the EU Estoril, 26 October 2006 Prof.Henri Olivier FEE Secretary General Ordem dos Revisores Oficiais de Contas

2. 2 FEE - European Federation of Accountants  Representative organisation for the accountancy profession in Western Europe  44 Member organisations in 32 countries  Including all 25 EU countries, 2 candidate countries and 3 EFTA members  Representing a combined membership 500.000 individuals  45 % in public practice  55 % industry, commerce, government and education

3. 3 The mission of FEE in Society (…)  To work towards the enhancement, harmonisation and liberalisation of the practice and regulation of accountancy, statutory audit and financial reporting in Europe in both the public and private sector, taking account of developments at a worldwide level and, where necessary, promoting and defending specific European interests;

4. 4  Why do we need a single market for accountancy services in Europe?  Companies are operating on a European and global market  Capital markets are no longer national  Risk of duplicating oversight measures  Building a European single market for the profession requires a minimum harmonisation Harmonisation of the Profession

5. 5  The absence of a common definition of the profession: a barriers to harmonisation  Activities of professional accountants vary in EU Member States  Except for audit and some assurance services defined by EU Directives, most activities are unregulated  Chances are small to find a common scope of activities for accountants in Europe

6. 6 Harmonisation of the Profession  What are the common characteristics of a profession ?  Equivalent level of education (1)  Equivalent principles of ethics (2)  Equivalent standards of practice (3)  Equivalent quality of services (4) Uniformity is not the goal, equivalence is necessary

7. 7 Equivalent Level of Education (1)  A recognised level of competence is a feature of a profession at national level  At European level, free movement of professionals raises the question of equivalence of the qualifications of migrants. The issue is dealt with in two EU Directives:  The Directive on statutory audit (17 May 2006)  The Directive on recognition of professional qualifications ( 7 September 2005)

8. 8 Equivalent Level of Education (1)  Statutory Audit is the core business of the profession. The Directive defines conditions for approval and registration of auditors which will be the benchmark for other activities of accountants  However competition authorities raised the question: what is the appropriate level of education for other activities?  Education means competence and must be maintained during the entire professional life

9. 9 Equivalent principles of ethics (2)  The IFAC code of ethics offers a solid foundation for professional ethics at a global level  FEE supports the IFAC code and would not wish to define different rules for Europe  Some significant differences remain among the European Member States  From a public interest perspective, these differences relate to less important aspects  Relevance of competition regulations

10. 10 Equivalent standards of practice (3)  The accountancy profession must be recognised by the quality of its services rendered to clients  For assurance services, including auditing, one of the measures adopted to improve quality is to develop professional standards.  Except for consequences of local laws and regulations, there is a general interest to refer to global standards. Indeed we must be sure that these standards take European Interests into consideration

11. 11 Equivalent quality of services (4)  Building the reputation of a profession requires long efforts but can be quickly destroyed by the fault of few people  The profession has an interest in being sure that all its members are continuously improving the quality of services  In auditing, the public interest justifies the system of quality assurance under public oversight  The future of the profession is in quality and innovation

12. 12 Harmonisation of the Profession  What can FEE do to promote harmonisation?  (1) Education is the responsibility of Member bodies; FEE works with the European Commission at facilitating recognition of professional qualifications between Member States  (2) FEE supports the application of the IFAC Code of ethics in Europe; our Ethics working party works actively to defend European solutions on ethics at global level

13. 13  What can FEE do to promote harmonisation?  (3) Using common standards allows beter understanding of financial reporting and assurance services. FEE working parties work actively to defend European interests in setting the standards for financial reporting (IASB) and audit or assurance services (IAASB) at global level  (4) Quality assurance and oversight also becomes a priority in the implementation of the Directive on Statutory Audit. FEE keeps close contact with the European Commission and EGAOB Harmonisation of the Profession

14. 14 Harmonisation of the Profession Conclusions  The profession has an interest in promoting the European single market for accountancy services  We need to think more European and more global because this with help delivering better services  Harmonisation is not uniformity; there is still room for dealing with local issues at national level  Harmonisation in Europe must have quality of services as ultimate objective

15. 15 Harmonisation of the Profession FEE Fédération des Experts Comptables Européens Avenue d’Auderghem 22-28 B – 1040 BRUSSELS Tel. + 32 (2) 285 40 85 Fax: + 32 (2) 231 11 12 Email: secretariat @ fee.be Website: www.fee.be