The Association of Chartered Certified Accountants agrees with the overarching aim of the consultation - ensuring high quality and reliable corporate reporting for healthy financial markets, business investment and economic growth, as well as cross-border investments and the development of the capital markets union (CMU). ACCA will now carefully assess the questions of the consultation and look forward to contributing to the public debate.

Mike Suffield, director of Professional Insights at ACCA says: ‘We welcome the end-goal of the consultation, which is improving audit quality – an issue that remains vital to public confidence in audit.

‘Concerns about audit quality persist, both about those audits that fall below satisfactory standards and about the pace of improvement. As UN climate talks concluded with a deal - the Glasgow Climate Pact – it’s also more important than ever to foster integrity and trust in sustainability-related information by leveraging robust, transparent, and trustworthy methods of assurance. An open and honest debate both at global and EU level is therefore needed about how audit quality can be maximised and driven.’

As highlighted in its report Tenets of a quality audit , ACCA believes that the factors that contribute to a quality audit are varied and include: thoroughness and timeliness; independence and closeness; standardisation and autonomy; delivering a holistic opinion and responding to fraud; being both backward-looking and forward-looking, and supporting both ttransparency and, where appropriate, confidentiality.

Mike Suffield stresses: ‘ACCA agrees that the main objective of a high quality and reliable corporate reporting framework should be to ensure that companies publish the right quantity and quality of relevant, comparable and assurable information in order to allow investors and other interested stakeholders to assess the company’s performance and governance, and to take informed decisions based on it. We also share the European Commission’s view that corporate reporting should be seen as part of a wider ecosystem, and therefore welcome the scope of the EC consultation around three pillars: corporate governance, statutory audit and supervision.’

‘It is vital to connect reporting requirements with other policy levers to ensure that business resources are not focused on reporting compliance but on transforming business models for a just and green transition, implementing credible strategies that support sustainable value creation, engendering trust and confidence in them. In the same vein, we very much look forward to the publication of the forthcoming EU sustainable corporate governance initiative’, Mike Suffield adds.

The global professional body for accountants is convinced that the right framework will enable the accountancy profession to play its essential role in driving positive business change and supporting economies and organisations across the world to build back better, as argued in Professional accountants at the heart of sustainable organisations.

Mike Suffield explains: ‘From ensuring strong governance and the sustainable financial development of organisations, through to taking a leading role in critical challenges facing businesses today, such as responding effectively to the imperatives of climate change or championing the natural capital and the environmental, social and governance (ESG) agenda, professional accountants will use their skills, ethics and professional judgement, acting in the public interest to help create new value opportunities for organisations in all sectors across the world, enriching society at large.’

In addition, for the corporate reporting ecosystem to perform well, the role of its actors must be well understood. ACCA therefore believes that a new approach to closing the expectation gap in audit is needed, and suggests in its recent report Closing the expectation gap in audit: the way forward on fraud and going concern: a multi-stakeholder approach that it’s necessary to consider three separate components: the knowledge gap, the performance gap and the evolution gap, and to address each component separately. ‘To narrow the expectation gap in audit, collaboration, transparency and dialogue between the audit profession and its stakeholders, such as management representatives, those charged with governance, governments, regulators, professional bodies and standard setters and of course financial statement users - eg investors, consumers and the public - are key’, Mike Suffield points out.

‘We understand that the call for evidence and the public consultation will feed into an impact assessment that the European Commission will prepare in 2022, to possibly amend and strengthen the current EU rules. ACCA stands ready to play its part in the process, with important players in the profession, such as IFAC, Accountancy Europe and EFAA, as well as others stakeholders’, Mike Suffield concludes.