The European Commission has opened on 13 October a public consultation about the  role of statutory audit as well the wider environment within which audits are conducted. The aim of this consultation is to learn from the experience of the crisis and try to reduce to the maximum financial risks in the future. All interested parties may submit their opinions by 8 December 2010.

Restoring the confidence in the financial sector and its evaluation by statutory audit is one of the main objectives of Commission's Consultation on audit policy - Lessons from the Crisis. The crisis has highlighted some sector's inefficiencies which is necessary to take care of and take into account in order to avoid them in the future.

As a result of the banking crisis in particular, questions have arisen on whether the role of auditors can be enhanced to mitigate any new financial risk in the future. The aim of the Green paper is to launch a wide consultation to determine what changes might be needed to audit policy.

Key elements of the Green paper on EU Statutory Audit sector

• The independence of auditors - it is unclear if auditors are truly detached and critical when examining the financial statements of a company when that same company is an existing or potential client for non audit services.
• The reliance stakeholders can place on audited financial statements. That is why we seek to understand what 'expectation gaps', if any, exist amongst stakeholders with regard to the scope and the methodology of audit.
• The potential for systemic risk because of the strong concentration in the audit sector (what consequences could there be for the wider financial system if one of the big audit firms closed down?).
• The role played by supervisors, and whether national supervision is fully effective.
• The potential for a real internal market for audit and the removal of barriers which currently make audit a mainly national market. In that context, the concept of a European passport for auditors should be explored further.
• The specific needs of small businesses – ensure proportional application of rules to SMEs.
• The global context: audit is a global market with firms operating as global networks; to this extent it is important to co-ordinate our efforts at an international level.

Responses to the Green Paper are welcome until 8 December. On the basis of those responses, in line with the rules to improve supervision and credit rating agencies, Commission will decide on the need for any measures in the course of 2011. The Commission will seek to cooperate and align its position with those of its main international partners within the Financial Stability Board and the G-20.