Europaudvalget 2021-22
EUU Alm.del Bilag 323
Offentligt
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NOTE
26 January 2022
Response to the European Commission’s consultation document
Strengthening of the quality of corporate reporting and its enforce-
ment
The Danish Government fully agrees that high quality and reliable corpo-
rate reporting is of key importance for healthy financial markets, business
investment and economic growth. The Danish Government also agrees that
high quality and reliable corporate reporting depends on the quality of the
three pillars defined: corporate governance; statutory audit; and supervi-
sion, as well as the interaction between the three pillars. The primary re-
sponsibility for corporate reporting lies with the company’s management
under the supervision of the board of directors/supervisory board. The re-
sponsibility for high audit quality lies in the first instance with auditors and
audit firms. Audit committees also play an important role to enhance audit
quality. Supervision of corporate reporting and statutory audit is the third
instance to ensure high quality and reliable corporate reporting. The frame-
work should reflect this.
The Danish Government supports the initiative of the Commission to pre-
pare an impact assessment in order to determine the need to amend and
strengthen the current EU rules based on the responses to the consultation
document. However, actions to strengthen the current EU rules should be
supported by underlying analysis that shows the needs to enhance quality
and reliable corporate reporting in general and that potential new burdens
must be commensurate with the benefits.
As regards of the Danish capital market The Danish Government does not
see a general quality problem and no general loss of confidence calling for
immediate EU actions regarding corporate governance or supervision.
However, the Danish Government finds that action can be taken regarding
the following:
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Market concentration in the PIE audit market.
Options in the audit regulation.
Task of audit committees.
Supervision.
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Regarding
market concentration,
the Commission’s market monitoring
report shows a very high market concentration in the PIE audit market in
several countries, including in Denmark, which the provisions in the audit
regulation have not effectively been able to address. We encourage the
Commission to investigate joint audit models that effectively address the
market concentration issue. At the same time, we will be supportive to-
wards the creation of a passporting system in the EU to address the con-
centration issue, and also to ensure that the companies have sufficient op-
tions when appointing a new auditor.
The independence of the auditor is of crucial importance for the quality and
reliance in the audit of the corporate reports. The provision of non-audit
services to the audit engagements creates a threat to independence. The
Danish Government can therefore not support a restriction on the Member
States' ability to strengthen the rules of the provision of non-audit services
without this taking place in connection with a general reduction of access
to the provision of non-audit services. Options regarding the provision of
non-audit services and rotation of audit firms create considerable complex-
ity for auditors and companies. Due to the very different implementation in
the Member States it seems to create unnecessary burdens on the PIE. The
Danish Government sees potential to reduce the number of
options
in the
audit regulation in order to further harmonize and strengthen provisions
applicable to statutory audits and auditors across Member States.
The
audit committee
plays an important role to ensure the quality of cor-
porate reporting, including monitoring the statutory audit. The task of the
audit committee may be strengthened by strengthening the professional
qualifications in the committee.
The Danish Government is positive towards further harmonization and
strengthening of the
supervision
and oversight of statutory audit across the
Member States.
In conclusion,
the Danish Government finds that action can be taking re-
garding statutory audit in regard to market concentration, options regarding
NAS, task of audit committees and supervision.
The Danish Government would also like to highlight the importance of not
letting the current cases of financial fraud in Europe result in hasty regula-
tion based on individual cases. Special conditions in the individual cases or
conditions in individual member states may have made these cases possible
–
not necessarily poor regulation at EU-level.
However, the Danish Government points out that the current regulation is
partly based on the Transparency Directive and partly on the more detailed
guidelines from ESMA, which are not legally binding for Member States.
It might therefore be considered to incorporate ESMA's guidelines into Eu-
ropean regulation. The Commission should also consult supervisors and
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stakeholders on whether the current regulation limits the effectiveness of
enforcement.
In this context, the Danish Government is in favor of looking at the rules
on the role of national supervisors and their possibility of exchanging in-
formation with other authorities, ensuring that national authorities have
sufficient resources and powers and improving co-operation between na-
tional supervisors in the EU.