RESTRICTED
WORLD TRADE S/WPPS/W/3/Add.1
10November 1995
ORGANIZATION
(95-3506)
Original: English Working Party onProfessional Services
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES
Current Community system ontherecognition ofprofessional qualifications
heldbymembers oftheaccountancy profession,
whoarenationals ofECMember States
Addendum
Thefollowing communication iscirculated attherequest oftheEuropean Communities and
theirMember States tothemembers ofWorking Party onProfessional Services.
____________
Eighth Council Directive (84/253/EEC) of10April 1984 on
"theapproval ofpersons responsible forcarrying out
thestatutory audits ofaccounting documents"
1. Basic objective
Several Directives require theannual andconsolidated accounts ofcertain undertakings tobe
audited byaqualified professional. Astheaudit isrequired inthepublic interest, theaudit function
mustbesurrounded withacommon setofminimum guarantees which permit thevarious users torely
ontheaccounts published bytheundertakings concerned.
Thebasicobjective oftheEighth Council Directive (84/253/EEC) of10April 1984istoensure
thatpeople carrying outstatutory auditing activities inanyMember Statefulfil atleasttheminimum
qualifications laiddown intheDirective. Because these areminimum qualifications, Member States
mayimpose additional requirements.
TheEighth Directive ismeant tosetupminimum requirements concerning three basic
characteristics: personal integrity, theoretical education andpractical experience. Personal integrity
isindicated asapre-requisite foranyperson whohastocarry outacontrol function. Theoretical
education andpractical experience arenecessary toachieve professional competence, which mayonly
beobtained nowadays withanadequate mixofappropriate education andextensive practice.
TheEighth Directive doesnotdealwiththequestion whether andtowhatextent aprofessional
auditor canestablish himself inanother Member Stateinorder tocarry outstatutory audits inthatState.
NordoestheDirective dealwiththequestion whether aprofessional auditor fromoneMember State
cancarry outastatutory audit inanother Member State, without establishing himself inthatState.
Thefirstmatter isdealt withintheMutual Recognition ofDiplomas Directives (89/48/EEC andS/WPPS/W/3/Add.1
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92/51/EEC). Thesecond matter iscovered byArticle 59EEC-Treaty andmight bethesubject of
further rules.
2. Contents
Scope
TheEighth Directive setsuptheminimum qualifications fortheapproval ofthenatural and
legal persons whocarry outthestatutory audit ofannual andconsolidated accounts asrequired by
Community law.
According totheEighth Directive, bothnatural andlegalpersons maybeapproved. Inthe
caseoflegalpersons, certain criteria havebeenestablished inorder toensure thatthestatutory audits
carried outonbehalf ofafirmofauditors areactually conducted byapproved persons andthatcontrol
andmanagement ofsuchfirms areinthehands ofapproved persons.
Approval maybegiven byanational authority orbyaprofessional association towhich this
authority hasbeendelegated bylaw.
Minimum Requirements
Theminimum characteristics required forbeing approved asstatutory auditors maybedivided
inmoral requirements andeducational requirements.
Moral requirements
Tobeapproved, aperson must havethefollowing moral requirements:
1. Tobeofgood repute .
2. Toshow professional integrity ,which means nottocarry onanyactivity which is
incompatible withtheauditing activity.
3. Tobeindependent .
TheEighth Directive doesnotprovide foranyspecific definition oftheabove-mentioned moral
characteristics norforalistofwhattheyconsist of.IthasbeenlefttoMember States todefine such
criteria. Member States shallalsoensure thattheapproved persons whocarry outaudits without having
themoral characteristics necessary areliable toappropriate sanctions.
Educational requirements
Tobeapproved, aperson must fulfil thefollowing educational requirements:
1. Tohaveattained university entrance level.
2. Tohavethencompleted acourse oftheoretical instruction .S/WPPS/W/ 3/Add.1
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3. Tohaveundergone practical training .Thetraining consists inaminimum ofthree
years'practical training in(among other things) theauditing ofannual accounts,
consolidated accounts orsimilar financial statements. Thewhole period oftraining
must becarried outunder persons providing adequate guarantees oftraining, andat
leasttwo-thirds ofthepractical training mustbecompleted under aperson approved.
4. Tohave passed anexamination ofprofessional competence ofuniversity, final
examination levelorganised orrecognised bytheState.TheEighth Directive specifies
thesubjects tobecovered bytheexamination. Theexamination mustguarantee the
necessary leveloftheoretical knowledge ofsubject relevant tothestatutory auditing
ofaccounting documents aswellastheability toapply suchknowledge inpractice.
Inorder totakeaccount ofthetradition insome Member States, where aprofessional acquires
hisexpertise aftermany years ofpractice withanestablished professional, theDirective allows Member
States toapprove persons whohavebeenengaged inprofessional activities which haveenabled them
toacquire sufficient experience inthefields offinance, lawandaccountancy foranumber ofyears
andwhich havepassed theexamination ofprofessional competence.
Quality control
Member States mustseetoitthatthepersons whocarry outastatutory audit aredoing soin
aproper way. Asaresult ofthisrequirement, many Member States havesetupelaborate systems
ofpeerreview ormonitoring.
Mutual Recognition ofprofessionals from third countries
TheEighth Directive doesnotdealwithquestions offreedom ofestablishment orfreedom
toprovide services. Member States mayhowever approve professionals whohaveobtained allorpart
oftheirqualifications inathirdcountry, provided thatsuchqualifications areconsidered asequivalent
andthattheprofessionals concerned candemonstrate tobesufficiently skilled inthelegalknowledge
required inthatMember State forthepurposes ofstatutory auditing.