EU proposals to improve the audit market will not improve transparency and fee limits are too restrictive, says Liz Murrall

The fact that companies’ accounts are subject to a quality audit is vital to confidence in the capital markets – in that markets value the information and investors believe what they are told about their investee companies.

Nevertheless investors have concerns which broadly fall into three categories – each of which the reforms seek to address: auditor independence and audit quality; the limited number of players; and the outputs and the nature of the audit report.

Many of the reforms are welcome but investors have reservations about some of the reforms, their effectiveness and their unintended consequences.

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