1. EYES
WIDE
OPEN

2. Audit
quality wheel
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4. “ Breach [WE] faces double inquiry by reporting watchdog”
RULES
REGULATIONS
EIP/Audit EP
Evaluation
Local audit committee
Report
Group audit EP
Group audit committee
[WE] faces double inquiry by reporting watchdog”

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[Name], [Position]
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6. Not just within the EU... EU PIEs Estimated >30,000 PIEs in the EU
EU entities listed on an EU regulated market
EU PIEs
Certain credit & insurance institutions (including non-EU headquartered)
Entities designated by member states as PIEs
Estimated >30,000 PIEs in the EU
Cost in excess of €16bn
The regulation will impact all entities governed by the law of a Member State, that have listed securities in the EU; this would include the PIE subsidiaries of non-EU Groups.
Not just within the EU...

7. Mandatory firm rotation
Provisions
Transition
NAS restrictions
Start date
What?
[…]
[…]% cap
What does it mean...?

8. Country interpretation
PIE definition
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Clarity
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Country interpretation
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9. Extended to 24 years for joint audits
(Note 2)
Extended to 20 years where a public tendering process is conducted
10 years mandatory firm rotation required for all PIEs
(Note 1)
TEXT PLACE-HOLDER
Transition measures for […]
Tenure <11 years
[…] after 12 years from date of entry into force
Tenure 11 – 20 years
[…] after 9 years from date of entry into force
Tenure >20 years
[…] after 6 years from date of entry into force

10. Prohibitions extend beyond […]
Additional prohibitions for:
Tax
Services linked to financing, capital structure and allocation, and investment strategy
Plus services that involve playing any part in management or decision making process
Member state option to allow certain tax and services
All fees require audit committee approval

11. Expected start date for […]:
2 years after entry of entry into force – mid 2016
‘Clean period’ requirements
The statutory auditor is not permitted to provide prohibited NAS within the […] in:
period between beginning of the period audited and the issuing of the audit report; and
the financial year immediately preceding in relation to services relating to ‘designing and implementing internal control … financial information technology systems’.
Any remaining permissible […] capped at 70% of average fees paid in the last three consecutive years for the statutory audit

12. Principles of independence are complied with
Member states may allow certain tax and valuation services provided:
No direct or have immaterial effect separately or in aggregate on the audited financial statements
Likely Impact:
Materiality exemption may be difficult to apply.
A patchwork approach across the […].
Estimation of the effect is comprehensively documented and explained in additional report to the audit committee
Principles of independence are complied with

13. Evaluate potential conflicts“
1 July 2014
Network firm interests
Deloitte counts cost of ignoring conflicts of interest at Rover”
Reasonable and informed third party
Safeguards “
Disclosure/consent
Not adversarial
Chinese Walls not the best solution for KPMG”
Too confidential?

14. “KPMG to pay $8.2 million to settle SEC charges over auditor independence”
AICPA affiliate rules
Other
(US to provide)
Definition of control

15. Since Dublin...
Breaches
Conflicts
AICPA affiliate rules
Global independence training
[KICS guidance]
EIP induction
Independence Clearance Process – Phase 1
Tax and legal guidance
Advisory illustrative scope
Threats and safeguards template
Marketing and sponsorships
Alert – February 2014
Alert - ?April 2014
Alert - ?March 2014
Announcement - ?March 2014
Announcement Nov 2013
Announcement Sept 2013
Alert Aug 2013

16. Presentation by Name Surname