ERU, Alm.del - 2021-22 - Bilag 198: Regeringens høringssvar på Kommissionens offentlige høring om forbedring af kvaliteten og håndhævelsen af virksomhedsrapportering samt orienteringsnotat, fra erhvervsministeren

Erhvervsudvalget 2021-22
ERU Alm.del Bilag 198
Offentligt

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:

Market concentration in the PIE audit market.

Options in the audit regulation.

Task of audit committees.

Supervision.

ERU, Alm.del - 2021-22 - Bilag 198: Regeringens høringssvar på Kommissionens offentlige høring om forbedring af kvaliteten og håndhævelsen af virksomhedsrapportering samt orienteringsnotat, fra erhvervsministeren

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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.