EC to consider new audit rules for large firms

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EC to consider new audit rules for large firms

BRUSSELS, EU - New rules under consideration by the European Commission could see companies forced to rotate their audit firm or switch the audit partner in charge of their accounts, according the Financial Times.

The rules are being examined as a possible response to Italy's recent Parmalat scandal and would mean that all listed companies in the European Union would either have to rotate their audit firm every seven years or change the senior partner in charge of the audit every five years.

The measure is aimed at helping to prevent further large frauds by ensuring that ties between auditors and companies do not grow too close.

The Brussels body is also considering the possibility of requiring non-EU auditors to register with national authorities if they are employed by certain companies listed in the 15-nation bloc, a response to similar measures in the US Sarbanes-Oxley laws, which rearranged corporate governance in the wake of the Enron scandal.

Any Commission proposal will require approval by EU member states and the European parliament.

"We are of course giving this issue of rotation and independence serious consideration because they are pertinent issues, particularly in light of Parmalat," an official told the FT.

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