Ms Karen Erwin:

I will give members a sense of what we are talking about while the copies are being circulated.

Slide 16 entitled mandatory rotation of audit firms. We believe there should be mandatory rotation of firms every eight to ten years. We are not supportive of mandatory joint audits but are supportive of regular mandatory tendering. We are supportive of the proposal to ban Big Four clauses, which require auditors to be from the Big Four firms only. I am assuming that members know the names of the Big Four firms.

In relation to non-audit services, we are not supportive of an outright ban on the basis that it has implications for audit quality and the cost of audit. We are supportive of the current APB model. We are supportive of raising capital from external sources, subject of course to the safeguarding of auditor's independence, that is in relation to the voting rights in firms. In relation to transparency reporting, we are supportive of proposals on transparency reporting from a public interest perspective but note that the current system of transparency reporting still needs to be assessed. On the European passport, we are not supportive of the European passport in the context that the success of the recently introduced existing system should be assessed before making changes. In relation to the international standards, we are supportive of the introduction of international standards across Europe. These are already in use in Ireland.

In relation to the proportionate application of standards for SMEs, we are not supportive of the concept of limited audits the ISAs already allow for scalability. The expectation gap could be widened if limited audits were implemented. It was suggested that it may be preferable to increase audit exemption limits.

We are supportive of an expanded audit report. The view is that additional detail on audit methodology employed could narrow the expectation gap. It is suggested that auditors provide more detail on aspects of the audit where professional judgment was central and the considerations in arriving at such key judgments.

If these proposals go through, it will have an impact on IAASO as it will be the potential end of self-regulation by the profession. As I said earlier, that may end anyway if the quality assurance comes in. There will be immediate applicability of measures if the regulation comes in. There will be a broader definition of PIEs and the definition of PIEs will expand. We can talk about that later. There will be significant powers given to the European Securities Markets Authority, ESMA, and we will not be sitting on ESMA, as a person from the Central Bank sits on that board and we are not represented on it.

It would give significantly increased responsibilities because then we would be directly responsible for not just audits of PIEs but of all audits and that would hugely increase our remit.

We will continue to provide support and assistance to the Department during the Presidency and the EU audit reform dossier. We will continue to engage with our European counterparts and maintain a watching brief on the proposals as they develop in the European Union. We see what is happening now, what can happen in a year's time and what can happen dependent on the results of everybody's deliberations. That concludes my presentation.