Statutory Auditors were not involved in drafting the legislative proposals to be approved by the Council of Ministers, putting the future of auditing in Portugal at risk.
The trans
The transposition of the European Audit Directive into Portuguese law is expected to be completed by mid-2016. Along with this transposition, the European Regulation on the Audit of Public-Interest Entities is expected to be adopted.
The Portuguese Institute of Certified Public Accountants believes that this transposition process should be used as an opportunity to conduct a thorough review of the legislation currently in force regarding corporate governance and corporate oversight, in order to ensure consistency among various scattered laws and to strengthen oversight and governance mechanisms in line with practices adopted in the most developed European countries.
The Order recognizes that it is necessary to ensure the quality of audits; however, it is essential that this be achieved with the involvement of the various parties concerned with companies’ financial information, and never to serve narrow interests at the expense of the public interest, to the detriment of the many stakeholders in the financial reporting process and its intended recipients.
Thus, the legislative process should be the result of in-depth technical and practical consideration and a broad debate involving the various stakeholders: professionals, companies, and other entities; professional organizations; subject-matter experts; regulators; and the users of financial information.
However, according to reports that have been made public and of which the Bar Association’s Board of Directors is aware, a draft of legislative proposals has been prepared for submission to the Council of Ministers for approval.
Contrary to the history of similar legislative processes—the most recent being the efforts leading to the transposition of the Accounting Directive—the Order finds it puzzling that the key stakeholders and parties affected by audit quality have not been involved, given that this is the primary purpose of the European regulation.
The Order believes that this is not the way to achieve the desired quality in the audit and fears that the legislative process followed will result in serious harm to the public interest.
As is happening in the other Member States, the government should promote a broad public debate on the issue, involving primarily the organizations representing all stakeholders, before any bill is passed.
José Azevedo Rodrigues
President of the Order of Certified Public Accountants
Lisbon, May 13, 2015