July 2014 Round-up of accounting and regulatory news for audit …€¦ ·  · 2015-07-28consolidated ad hoc entities and the condensed ... Round-up of accounting and regulatory

There is no shortage of accounting, tax and financial news to consider when preparing your interim statements!Current reflection on the quantity

versus the relevance of accounting information finds a natural place for expression in the interim statements. They provide the opportunity to present the accounting consequences of the major events of the past half-year period in condensed form.In many sectors, the application of the new consolidation rules will considerably alter the main aggregates of financial statements and reporting will need to be adapted.Meanwhile, coordinated action by the Member States to combat tax evasion has begun. For companies, the audit reform presents a major change, the full effects of which will be seen in the coming years. This reform does not just concern auditors. By increasing the independence and competence of audit committees, by establishing the coordinated oversight of auditors, all of the oversight and governance procedures of public interest companies will be affected.

The time for self-regulation has passed, giving way to regulation decided by the legislator.Our recent publications on governance, risk management and fraud and corruption encourage companies to reflect on the internal control system which best covers all the risks inherent in their activities. The application of the new internal control framework (new COSO) is an opportunity to rethink the approach to controls within groups and their information systems.This booklet provides a round-up of the main finance, accounting, regulatory and governance news for members of audit committees and finance departments, including:• The imperatives for the interim closing

of accounting news on partnerships, leasing contracts and revenue recognition;

• The tax changes surrounding the citizen oversight plan in France and the definition of “production tax”;

• The changes surrounding integrated financial reporting, particularly within the framework of the international standard on integrated reporting;

• The subjects regularly tackled by audit committees including fraud, corruption, Big Data and risk management;

• The specific questions on the consequences of the application of the audit reform, and more specifically on the mandatory rotation of audit firms and the additional roles of statutory auditors.

This overview is available in paper and digital format, with additional content so you can obtain more details on certain subjects and consult the relevant EY documentation.For further information on any of these subjects and to discuss their specific consequences on your company, you can get in touch with your normal contacts and EY professionals.

Happy reading!

July 2014

02Accounting and financial news

04Tax / regulatory news

07Audit reform in Europe

08Recent publications

05Financial reporting news

06Risk management news

Access the on-line versionwww.ey.com/fr/Actualite-Comptable

Round-up of accounting and regulatory news for audit committees and finance departments

Interim financial statements as at June 30, 2014

Round-up of accounting and regulatory news for audit committees and finance departments - July 20142

Accountingand financial news

Presentation of the income of companies accounted for under the equity method

The first application of standard IFRS 11 provided an opportunity for the Autorité des Normes Comptables (French accounting standards authority, abbreviated to the ANC) to publish a recommendation authorizing a change to the presentation of the share of net income of companies accounted for under the equity method (affiliated entities or partnerships) of an “operational nature in the continuation of the group’s activity”. According to this text, the share of net income of these companies can be presented after the operating income and before a sub-total including the income from these equity method affiliates.Companies should in all cases be mindful of the transparency of the presentation and should not distort the calculation of the ratios presented: for example, by not associating an income item including the share of companies accounted for under the equity method to revenue or a debt excluding, by construction, the companies accounted for under the equity method.

Interim financial statementsIn condensed interim statements, it is now more than ever necessary to select the information to provide to the users of the financial statements. The objective is to update the information contained in the latest annual statements published in order to explain the impact of significant events and transactions over the period.

In certain cases, although they are condensed statements, a note as comprehensive as the one attached to the annual statements should still be provided, for example in cases of significant acquisitions, in accounting policy changes or changes in the estimate of the recoverable value of fixed assets (increase or reversal of impairment).

Moreover, specific information is required regarding the fair value of financial assets and liabilities.

Determining the relevant level of information is a complex exercise as this relevance is assessed on the basis of the particularities of the transactions and events specific to each group and to each year-end.

Points to consider for the interim financial statements

For many European groups, the 2014 interim statements are an opportunity to provide a detailed report on the first application of the new consolidation (IFRS 10) and joint venture accounting (IFRS 11) rules.

The impact of the IFRS 10 standard on the scope of consolidation of industrial and commercial groups should remain relatively limited. Any variations must be explained if they have a significant impact.

The ending of proportional integration for the accounting of joint ventures linked to the application of standard IFRS 11 might, however, have a more significant impact for groups henceforth obliged to account for their partnerships under the equity method, especially in some sectors.

We should expect these points to be the subject of particular attention of the Autorité des Marchés Financiers (French financial markets authority, abbreviated to the AMF), possibly resulting in additional information requests in certain situations.

These new consolidation rules go hand-in-hand with an increase in the amount of information to be provided in the notes to the annual statements, persuant to the new IFRS 12 standard, particularly as regards the specific clauses of shareholders’ agreements, non-consolidated ad hoc entities and the condensed statements of significant partnerships and affiliated entities. In view of the challenges and problems linked to the provision of this information, it is important to prepare as early as possible.

Finally, after a year 2013 marked by relative stability in medium- and long-term interest rates, the first half of 2014 saw a return to major swings in these rates, which have fallen significantly on all the markets. The fall in interest rates should notably have an effect on the recognition of actuarial losses from June 30, 2014.

Find out more

� 2014 IFRS Update (March 2014)

� Applying IFRS - IFRS 13 Credit Valuation adjustments for derivative contracts (April 2014)

� IASB projects - a pocketbook guide (March 2014)

� Good Group standard financial statements - June 30, 2014

� Applying IFRS - IFRS 11 (June 2014)

IFRS newsNews from the IASB (International Accounting Standards Board), is marked principally by the publication of the new standard on the accounting of leases at the end of May.

The IASB has also published new rules prohibiting the amortization of a capital asset pro rata to the revenues generated by its use, restricting this option to intangible assets by introducing a rebuttable presumption that this method is inappropriate.

Note also the abandonment of the project on the publication of new rules to account for the share of other net asset variations of an entity in the statements of the entity which accounts for it under the equity method.

Focus on IFRIC 21

The interpretation of IFRIC 21 on accounting for levies was adopted by the EU Commission regulation no. 634/2014 of June 13, 2014. It takes effect in the European Union for financial periods commencing from June 17, 2014 at the latest. Remember that this interpretation, for virtually all levies, will prohibit the spreeding of annual levies in the interim statements, the burden of which must be accounted for in full as a liability on the date the levy becomes payable by the company.

� Applying IFRS: Accounting for levies

3Round-up of accounting and regulatory news for audit committees and finance departments - July 2014

Leasing contracts

After eight years of work, the IASB and the FASB (Financial Accounting Standards Board) have now entered the final phase of their project, the ambitions of which have been significantly scaled down vis-à-vis the initial proposals. It was decided, for example, to change nothing in the accounting of lessors, even though the accounting of lessees is set to change considerably.Significant divergences have now emerged between the two standard-setting bodies, despite the fact this is a joint project. In all cases, however, lessees will record the liability corresponding to their lease obligations for all leases on their balance sheet. For their part, companies will recognize a right of use, for a nominal amount equivalent to the liability, as an asset. However, the IASB and the FASB are currently discussing exclusions from the scope of application of these new rules.The project has now entered a crucial phase. The standard is unlikely to be published before 2015.

� Watch the video: Accounting of leasing contracts: which way will the IASB and the FASB go?

Publication of the new standard on revenue recognition - IFRS 15

The standard on the recognition of revenues from client contracts has just been published. This is the culmination of a lengthy process, common to IFRS and US standards, which replace current standards with a single revenue recognition model applicable to all client contracts in all sectors.

� Global IFRS Developments, Issue 80: IASB and FASB issue new revenue recognition standard - IFRS 15 (May 2014)

� Applying IFRS: A closer look at the new revenue recognition standard (June 2014)

The standard, which the IASB has arranged to take effect on January 1, 2017, must now be submitted to the European adoption procedure. Its first application will be retrospective.

� Watch the video: IFRS 15 / Presentation

Depending on the sector, this new standard could have a very significant impact on current revenue recognition practices.

� Watch the video: IFRS 15 / Challenges

In the United States, the transition is being organized notably through sector-based working groups set up to study the application of this text in the 15 principal sectors identified. It is important that companies elsewhere in the world also commit as soon as possible to similar reflections and a transition exercise.

Group cash flow and liquidity managementThe market conditions observed in recent years have forced companies to reflect still further on their debt and liquidity management strategy.

The key points of this strategy were:

• Arbitration between a certain level of liquidity in available cash flow at any given moment (whether cash flow directly present in the company’s bank accounts or through firm credit facilities) but at a certain cost, and the risk of borrowing conditions being tightened because of a deterioration in the market conditions linked to the macro-economic or competitive environment. This tightening could make it more difficult for companies to obtain the necessary financing for their development.

• A greater disintermediation (strengthening of bond debt) and a diversification of investors.

• The extension of the maturity of company liabilities.

Strengthening the balance sheet and cash flows has also been a major consideration for liquidity management strategy. Thus, to obtain the best terms, correct presentation of the accounting and financial ratios used to determine the relative share of the enterprise value (such as gearing or net debt ratios / EBITDA) as well as rating management by the rating agencies have proved indispensable. These objectives highlighted the management of WCR through optimal stock management, cost reduction programs favoring EBITDA and the management of balance sheet flows (such as receivable monetization programs).

The final notable aspect in liquidity management was the use of tools favorable to the ratings of the rating agencies, such as notably perpetual subordinated notes on more favorable terms, where the banks agree to bear the carrying cost linked to the difference between the cost of the loan and the investment rate.

The debt and liquidity management strategy therefore remains a key concern for managers and financial directors and requires a sustainable and rational approach, based on reliable tools, to resolve any uncertainties about the future growth of the companies.

Regulator newsRegulator news is marked principally by the publications of the European Securities and Market Authority (ESMA):

• The draft recommendation on the use of performance indicators not defined in the accounting standards (“Non GAAP”) in financial reporting. This draft affirms the precedence of accounting indicators and requires the justification of the use of a “Non GAAP” measure, its definition and reconciliation with an accepted accounting measure. The finalization of this recommendation is expected in early 2015;

• The publication in April 2014 by the EECS (European Enforcers Coordination Sessions) of a new series of “enforcement” decisions by the EU Member States, some of which, notably those relating to the accounting of business combinations and depreciation tests, are far-reaching;

• The publication in mid-June 2014 of a report of recommendations on the application of the standard on the accounting of business combinations (IFRS 3) based on the review of the practices of a sample base of 56 EU issuers of varying sizes.

Round-up of accounting and regulatory news for audit committees and finance departments - July 20144

Tax news

Shift toward a change in relations between Member States and companies?In taxation, recent years have been marked by the clearly expressed wish of Member States to combat all forms of international and French tax evasion. The anti-tax-evasion approach which began under the impetus of the G8 and the G20 bears testament to this wish, the realization of which can be seen through the work of the OECD. The second half-year will mark a new stage with the publication of new proposals in September. This work, conducted at a European level by the Commission, points to a major change in the perception of the international tax management of company transactions.

Companies are now faced with the management of a reputation risk extended to the area of taxation which must now assume the same importance, in the companies’ arbitration on their tax positions, as the traditional risk of inquiries by the local tax authorities. This situation is compounded by the implacable development of IT tools for use by the tax authorities. Following the computerization of tax inspections, the authorities are now working on the interconnection of information between authorities and the reinforcement of company transparency obligations (transfer price policy,

“country by country”, tomorrow’s reporting). A tax optimization strategy at any price now seems outdated in these times of crisis, at the risk of being perceived un-citizenly and damaging the company’s reputation.

Managing tax risk and meeting an ever-increasing number of reporting requirements presupposes that adapted internal control tools are to hand in order to ensure the correct reading of the transactions and their translation to tax. This type of system will help to restore relations of trust which the Member States wish to foster with companies willing to participate in the efforts of countries in which they are established. It will also meet the legitimate expectations of directors and audit committees of a better assessment of tax risk.

In France, 2014 seems to be marked by the wish to restore a climate of trust with companies, through tax conferences and, more recently, setting up citizen oversight and a new call for applications for the signature of new relationship of trust agreements.

In order to be realized, however, this approach will require a substantial change to the current organization of a tax inspection which has become more severe and which now requires litigation to recognize the validity of the tax positions adopted.

The citizen oversight plan in France

The Comité National de Lutte contre la Fraude session (French committee to combat fraud, abbreviated to the CNLF) held in May 2014 affirmed that, while combatting fraud remains a priority of the French government, fiscal control should not lead to disproportionate constraints for companies wishing to pay their taxes correctly.To that end, measures have been taken to promote citizen oversight with companies to improve their legal security, encourage settlements before and during a tax inspection and establish a system of penalties and fines more proportionate to the error committed.

CNCC survey on conventionsLa Compagnie nationale des commissaires aux comptes (French auditing body, abbreviated to the CNCC) published a survey in May 2014 on regulated and current agreements. It follows on from proposal no. 19 of recommendation no. 2012-05 of the AMF which wanted the CNCC survey on intragroup agreements dating from 1990 to be updated to help directors to understand what the notion “current agreement concluded under normal conditions” encompasses.

The CNCC survey was consulted on with the Haut Conseil du Commissariat aux Comptes (French high council of statutory auditors, abbreviated to the H3C) and the AMF1, and was enriched by the

1. AMF recommendation no. 2012-05 of July 2, 2012 on general meetings of shareholders of listed companies.

observations of the AFEP the MEDEF. It provides a clarification on the difference between current agreements and regulated agreements. There are no new elements of substance or changes in doctrine, but it provides a compilation of numerous items of information and clarifications arising notably from case law.

The first part of the survey presents the form, nature and object of agreements in commercial companies. The notion of current agreement is defined (“current” nature and “normal conditions”) and the first part explains how certain agreements are excluded from the control procedure because they are subject to a specific procedure (compensation of directors, securities, endorsements and guarantees, etc.).

The second part is devoted to the problems of agreements in groups (the very existence of a group of companies favoring the conclusion

of transactions between the companies and the presence of common directors, board members and shareholders, etc.). The survey refers to the fact that the texts and case law do not provide for any particular exemption for a group although the number of agreements concluded naturally increases. This situation should develop on the adoption of the order referred to in Article 3 of the enabling law “simplification and security of the life of companies”, excluding agreements concluded between a company and a subsidiary controlled 100% directly or indirectly from the scope of application.

Lastly, the survey presents a list of agreements raising questions on their regulated or unregulated nature and giving, for these agreements, various doctrinal elements and elements of case law in order to answer this question.

Regulatory news

Find out more

� EY legal and tax newsletter

� Observatoire des Directions Juridiques (Observatory of Legal Offices) - 3rd edition. Evaluating the performance of the legal function

� 2014 Tax Risk & Controversy Survey. Bridging the divide

� Tax Insights Magazine no.11. The future of tax

� Managing indirect tax data in the digital age: VAT/GST electronic filing and data extraction

Round-up of accounting and regulatory news for audit committees and finance departments - July 2014 5

Financialreporting news

How do we account for the integrated nature of company performances?Last June 17, EY published the results of a survey1 conducted to analyze the way in which companies account for the integrated nature of their performance through their financial reporting.

This survey evaluated 113 communications media, published by 23 companies, from three sectors (energy, food processing and real estate), listed either in France, Europe or on other financial markets.

If integrated reporting aims to establish concise documents reporting the future prospects of the company and indicating how its intangible assets are valued, what is the situation for documents made available to investors on the company websites?

�First finding: Concise, already including non-financial elements, the presentation media produced for investors might constitute the first step towards integrated reporting. These documents have an average of 39 pages and generally cover matters of CSR (Corporate Social Responsibility). Companies must, however, be vigilant in their ability to publish and update

a same documentary base over the long term. Note that English-speaking companies tend to publish a larger number of documents than French companies and involve their internal experts more in roadshows. US and UK issuers can therefore capitalize on a better segmentation of media and therefore better target their messages to increase their ability to convince.

�Second finding: Companies struggle to clearly express their objectives or how they manage their risks and seize market opportunities. In fact, while an average of 56% of the media distributed mention operational objectives for the current year, only 32% of documents report on how the company intends to allocate its resources to position itself on new markets, develop its assets portfolio, invest in R&D, etc., yet these are structuring factors for its valuation by the financial markets2. Furthermore, in almost 9 out of 10 media, the company does not present the existing processes for mapping, prioritizing and managing its risks, yet this is a key element in investor decision-making3.

�Third finding: The media do not sufficiently highlight the particularities of intangible assets. Despite being central to the company’s value, the assets portfolio is only presented in an average of 1 out of 4 documents. Other assets (corporate culture, innovation, confidence, quality, etc.) are only mentioned in an average of 1 out of 10 media. There is therefore considerable scope for improvement: each issuer could gain from strengthening the communication of the particularities of its economic model, what enables it to create value and its ability to develop these assets and their particularities in the long term.

The survey therefore identified three areas to improve the communication of the integrated nature of company performances:

1. Consider the corporate vision and its “story telling” as the cornerstone of any corporate communication.

2. Like certain US and UK issuers, try to focus on what sets the company apart from its peers so that its particularities become its strengths.

3. Identify the specific cases for which the integrated nature of performance was effectively the key success factor and make more use of experts for the financial reporting of issuers.

Draft change to the audit report: where are we?The draft change to the audit report proposed internationally by the IAASB2 continues, taking into consideration the comments received on the exposure draft published in 2013. This draft aims to “enrich” audit reports, notably by:

• Inserting comments on the “Key points of the audit3” for the audits of listed companies;

• Clarifying the format of the report (for example, by positioning the opinion at the top of the report and providing the option to move the “standard” elements not specific to the audited entity to the annex to the report);

• Stating the respective responsibilities of management and the auditor in terms of business continuity;

• Listing the due diligence on the other information (“reading” of the management report, annual report, etc.).

This draft, which will lead to the creation or modification of certain ISA4 standards, should be finalized in late 2014. The objective is to ensure compatibility with the format of the audit report applicable at a European level, in application of the directive on the legal control of annual statements and consolidated statements amended in May 20145.

Note that in the United Kingdom and Ireland, a new report format which is more developed and more explanatory with regard to the auditor’s due diligence took effect in 2013. Thus, for the first time, shareholders had access in the auditor’s report to information such as significant risks, the determination of the materiality and the “coverage” of the audit within a group. This experience should allow lessons to be learned and the relevance of responses to stakeholder expectations regarding the content of the audit report to be evaluated.

The PCAOB (Public Company Accounting Oversight Board) is also continuing its reflections on changes to the audit report6.

2. International Auditing and Assurance Standards Board

3. “Key audit matters”

4. International Standards on Auditing5. Directive 2004-56, OJEU of May 27, 2014,

Article 28

6. Consultation conducted from August to December 2013

1. Survey “Presentations to investors: the 1st step towards integrated reporting?” conducted by the EY Corporate Sustainability teams

� 2. “Business valuations: what do the financial markets look at?” EY, 2014

� 3. “Tomorrow’s investment values”, EY, 2014

Round-up of accounting and regulatory news for audit committees and finance departments - July 20146

Global Fraud Survey

Last June 11, EY published the results of its 13th global fraud survey, entitled “EY Global Fraud Survey - Overcoming compliance fatigue. Reinforcing the commitment to ethical growth”. This global survey was conducted with 2,700

professionals in 59 countries, among which were financial, internal audit and legal directors. Besides the need to re-invigorate compliance, overall, the survey identified an insufficient perception of fraud and corruption and, particularly, shortcomings in accounting for emerging risks, the main one being cybercrime, which close to half of participants considered to be low risk.

� www.ey.com/Global Fraud Survey

Big Data

Our anti-fraud, anti-corruption and litigation experts (FIDS) conducted the first survey on forensic data analysis (FDA). The survey was carried out in 11 countries between November 2013 and January 2014, with 466 heads of companies,

on their use of data analysis for combatting fraud and corruption. Published last March, the survey highlights the benefits of forensic data analysis over traditional tools, particularly its contribution to improving the risk assessment process and strengthening fraud detection capabilities. However, while 72% of respondents believed that Big Data technologies can play a key role in the prevention and detection of fraud, only 7% were familiar with these technologies and only 2% used them. The survey also highlighted that the volume of data analyzed was relatively small compared with the size of the companies. This finding tells us there is significant potential for improvement through forensic data analysis.

� www.ey.com/Big Data

Corporate Fraud - The Human Factor

Corporate Fraud - The Human Factor, written by Maryam Hussain, an EY partner – focuses on the experiences of FIDS collaborators throughout the world and offers a practical guide to help companies identify the

many forms of fraud and control risks. This booklet is aimed at management committee members, legal directors, compliance and IT service directors and lawyers specializing in fraud and corruption.

� www.ey.com/Corporate Fraud

Risk management news

The introduction of an anti-fraud and anti-corruption compliance systemUS and UK practice in combatting fraud and corruption tends to be based on the application of anti-corruption laws drawing from American (FCPA) laws and British laws (UK Bribery Act). These laws, rather like the law on countries embargoed in the United States, are laws with extraterritorial application which might impact on companies without a presence in the legislator country. The last example to date is Brazil’s adoption of an anti-corruption law in January 2014, following the example of other emerging countries such as Argentina and India which have more stringent legislation than the countries of continental Europe.

In France, the government has a number of anti-corruption systems in place, although these don’t have the same level of constraint as in the US and UK, as well as a tougher law against tax fraud (2013).

However, the Service Central de la Prévention de la Corruption (Central corruption prevention service, abbreviated to the SCPC) highlighted that the implementation of anti-corruption systems by French companies is insufficient or lacking.

US and UK practice introduces the notion of accountability without directly committing the infringement and the requirement to implement compliance measures in order to minimize fraud and corruption risks. These compliance measures are centered on the implementation of a prevention framework (code of ethics or conduct giving the “tone of the top”, training, anti-corruption procedures, etc.) and risk assessment and detection tools. In this regard, our 2014 Global Fraud Survey raised concerns about opinions on the need for multinational companies to have tools in place to protect them from the risk of fraud and corruption throughout

the world, despite 21% of CEOs acknowledging they were offered a bribe last year. Thus, a certain compliance fatigue is observed at a time when companies cannot afford for this to happen. The survey participants describe a compliance environment which has a tendency to remain static.

Our survey found that 1/5th of companies do not have anti-corruption procedures and less than 50% of organizations have a whistleblowing hotline or have organized fraud and corruption awareness training. While 40% of directors consider corruption to be widespread in their country, only 30% of them actively participate in the assessment of fraud and corruption risks.

Fraud and corruption publications

Round-up of accounting and regulatory news for audit committees and finance departments - July 2014 7

Harmonization and simplification: two priority objectives which the European audit reform fails to achieveThe European audit reform was voted through by the European Parliament last April and published in the Official Journal at the end of May. Its application will be mandatory from mid-2016.

The objective pursued by the European Commission was to improve audit quality and harmonize the rules between countries in Europe. EY shares these objectives to improve the relevance of the financial information published and strengthen confidence in our economy. On reading the adopted texts, however, we questioned whether these objectives were achieved.

Many options were in effect left to the discretion of the Member States, whether in regard to the procedures for the mandatory rotation of audit firms or the limitation of non-audit services.

The rate of mandatory rotation, which is considered a key pillar of auditor independence and audit quality by the European Commission, will be determined by each Member State and can run to 24 years in the case of joint auditors. This will not favor the harmonization of rules between European countries. For groups consisting of several public interest entities (PIE) in Europe (this is the case of all banking and insurance groups), the organization of the audit will be more complex, with differing maximum audit periods depending on the country (e.g. nine years in Italy, eight years in the Netherlands and 24 years in France in the case of joint auditors). The rotation at different times of the main partners and the problems linked to the transition phase will accentuate the implementation difficulties.

In terms of the restriction of non-audit services, the Member States can complete the list of prohibited services, reduce the limit fixed on non audit services fees and establish the framework for authorized services.

The options therefore left to the discretion of the Member States risk resulting in high disparity levels within Europe, increasing the cost of the audits for companies and reducing the overall effectiveness and quality of the audits.

This reform does not therefore bring about a true harmonization, or simplification, of practices. We believe it is essential that companies address Member States to strengthen European harmonization, opt for maximum rotation periods (either by public tendering process or through joint auditors) and adopt the list of incompatible missions as provided for in European legislation.

The impact of the European audit reform for companies

Which texts and what changes?

A directive which will apply, after transposition into the various national laws, to all audits. The main provisions of the directive regarding:• The definition of public interest entities;• The rules for registering and recognizing statutory auditors;• The application of the international audit standards (ISA) adopted

by the Commission;• The rules for auditors on ethics, independence and confidentiality;• The option for Member States to order an audit for SMEs,

with the application of ISAs proportionate to the size and complexity of the company;

• Independent audit oversight authorities with the authority to investigate and impose penalties;

• An external audit quality control system;• Rules on the audit committees (composition and role).

A regulation which will be applicable directly in the Member States, however with a certain number of options left to the discretion of the Member States, for the auditing of public interest entities. The main provisions of the regulation concern:• The mandatory rotation of audit firms;• The restriction of non-audit services;• The extension of the content of the audit report (notably the description

of risks of significant anomalies, including fraud risks, explanation of the audit strategy in the face of these risks, principal observations of the auditor in connection with these risks);

• The establishment of a detailed report to the audit committee;• The creation of a body to coordinate the national audit oversight

authorities, the Committee of European Audit Oversight Bodies (CEAOB).

What scope of application for the regulation?

The regulation applies to public interest entities:• Entities whose securities are listed on a regulated market

(shares or bonds);• Credit institutions;• Insurance companies.The Member States have the option to extend this definition. Public interest entities will be subject to the rules of the Member State to which they belong.

Audit reform in Europe

Round-up of accounting and regulatory news for audit committees and finance departments - July 20148

Audit Committee Bulletin

The Audit Committee Bulletin addresses the key questions at present for audit committees in Europe. This new issue focuses in particular on the

new requirements for investors vis-à-vis audit committees, the risks and opportunities of social media and the rotation and selection of auditors.

� www.ey.com/Audit Committee Bulletin

Reporting 7 - Beyond financials

The 7th EY “Reporting” magazine for CFOs, audit committee members and accounting directors focuses notably on the following subjects:• The management of human

capital;• The value of data analysis;• Investments in Asian high-technology companies;• Risk management, with an interview with

Christian Mouillon - Global Managing Partner Risk Management at EY;

• Mining disputes…

� www.ey.com/Reporting 7 - Beyond financials

Board Matters Quarterly

The latest issue of Board Matters Quarterly looks at the risks associated with digital technologies. The contents of this issue: trusting the Cloud, risk-free use of IT tools outside the company, the social

media business, what’s new in financial reporting.

� www.ey.com/Board Matters Quarterly

Leading practice for audit committee

This publication offers a compendium of leading practices for audit committees.

� www.ey.com/Leading practice for audit committee

EACLN Viewpoints (joint publications with Tapestry Networks)

• Update on cybersecurity (Issue 40)

• A dialogue with Stephen Haddrill, CEO of the UK Financial Reporting Council (Issue 41)

� www.ey.com/EACLN Viewpoints

CFO program: Partnering for performance - Part 2: the CFO and HR

“CFO program: Partnering for performance” is a series of publications on CFO relations with other operational divisions. Part 2

explores the relations of the CFO – HRD pairing and this pairing’s contribution to company performance: employee commitment and productivity, maturity of the organizational structure, investment of the CFO in the strategic HR decisions, choice of performance indicators, etc.

� www.ey.com/CFO program: Partnering for performance - Part 2

Business Pulse: Top 10 risks and opportunities

Business Pulse 2013-2015: Decide, arbitrate, orientate: the key risks and opportunities to consider between 2013 and 2015! Globalization and the ongoing effects of the financial crisis have favored an increasingly

competitive environment. How to reduce risks and maximize opportunities in 2015? The 2013-2015 Business Pulse survey was produced on the basis of the responses of 650 senior executives in 21 countries. It provides a cross-view of the reflections and expectations of corporate senior executives and EY experts on risks and opportunities.

� www.ey.com/Business Pulse

Expecting more from risk management - Drive business results through harnessing uncertainty (série “Insights on governance, risk and compliance”)

This Risk Insight gives EY’s perspective on the new best practices in risk management. Risk management is still too often wrongly perceived as simply protecting sensitive assets and complying with standards and regulations. Conversely, the risks associated with transactions and activities are not given sufficient consideration, while these are the risks that instantly produce rapid and violent changes to the environment. Company leaders in risk management therefore review their plans and opt for more business-oriented approaches, notably through REPM (Risk-Enabled Performance Management) initiatives.

� www.ey.com/Expecting more from risk management

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