In a move to improve audit quality in Europe through the co-operation of national regulators, the European Audit Inspection Group (EAIG) has launched a pan-European database compiling inspections reports on the 10 largest European networks of audit firms.
The EAIG was created in 2011 and regroups independent audit regulators from 27 European countries. The non-public database will enable regulators to collect and exchange their findings from the inspections of PwC, KPMG, Deloitte, EY, BDO International, Grant Thornton International, Nexia International, Baker Tilly International, Mazars and Moore Stephens International.
The UK Financial Reporting Council (FRC), which is a member of EAIG, said in a statement: "The database will be used by the EAIG to identify common issues in relation to particular networks or the application of particular standards by audit firms in practice and help establish common approaches in addressing audit deficiencies."
EAIG will use their findings from the database to support the dialogue between the networks, the audit profession at large and standard setters.
International Auditing and Assurance Standards Board (IAASB) chairman Arnold Schilder said that the database will give EAIG a regional picture of what is going on in the audit profession and, in turn, this will allow EAIG to come up with more comprehensive comments with regards to the quality of audit.
"The database is an important development as a tool to help facilitate the common goals of the inspectors groups, the standards setters and the firms to further improve practice," IAASB technical director James Gunn said
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By GlobalDataMoore Stephens chairman Richard Moore welcomed the launch of the database as a mean "to improve and support audit quality and in particular consistency in the application of regulatory review between jurisdictions and networks".
"There are issues that will need to be considered in the application as network structures do vary but this initiative does seem to be the logical development," he added.
However European Group of International Accounting Networks and Associations executive director John Capper told the IAB that he didn’t believe the database should be a cause for concern for accounting firms because "as long as it is used appropriately it will not adversely impact their work".
"We welcome any cooperation which helps the enforcement of international standards which we all comply with. And we believe this database could be a good tool to help facilitate cooperation between regulators," Capper said.