While the audit reforms that have been adopted by the EU, and are to be implemented from 17 June 2016, are viewed as a cause for complications in the audit process, some firms see this as an opportunity to enhance their value proposition.

Including the mandatory firm rotation, the reforms related to financial audit for companies registered in the EU would become applicable. And this is not only limited to companies based in the EU region but encompasses all subsidiaries that are registered in any EU member state. Such companies would also have to conform to new audit rotation rules and restrictions on non-audit services. EU independence requirements also need to be followed by the audit firms that are appointed for this purpose.

For companies based outside of the EU, the new regulations mean that they would have to bring in sweeping changes, coordinate with their European subsidiaries and obtain professional guidance from accounting firms with EAR experience.

The mandatory rotation of audit firms is an opportunity that companies engaged in the practiced are looking forward to. Such companies are given an opportunity to expand their valuation offering.

The EU members and the auditors are however preparing feverishly to adhere to the new regulations. The primary aim of the regulations is to ring in measures to enhance confidence in the quality of audits and increase the value of auditor reporting to the investor community.

“The Audit Regulation and Directive is large and complex. We are working closely with professional bodies to make sure the new regulatory regime works as effectively as possible,” says Stephen Haddrill, FRC chief executive of Financial Reporting Council of UK.

“We must ensure that it builds on the progress already made in the UK and that the regulatory regime that emerges provides confidence to investors and to firms by being fair, understandable and independent,” Haddrill adds.

“American companies with a presence in the EU would be affected by the new regulations. American companies must anticipate sweeping changes and coordinate with their European subsidiaries, as well as getting professional guidance from an accounting firm with EAR experience,” says Fatemeh Jailani, European affairs project director at Mazars Group.