The European Parliament and EU Member States have reached an audit reform agreement that calls for 10-year term limits on audit firms and new limitations on non-audit services that auditors can perform for public interest entities.
To bring about greater independence for auditors, the agreement will require audit firms to rotate off their public interest entity clients every 10 years, with entities allowed to extend tenure once. It places limits on tax services and other non-audit services tied to financial and investment strategy of the entity that auditors will be permitted to perform for their audit clients, and it sets a cap on permitted non-audit services at 70 percent of the audit bill.
