The impact of the EU audit reform on representatives of international networks in Malta

Abstract

Purpose: To assess the impact of the Audit Reforms on representatives of international networks in Malta and to study the impact that the Reforms will have on the role of audit committees and their relationship with the external auditors. Design: Qualitative interviews were carried out with the Big Four firms, mid-­‐tier firms representing an international network and audit committee members. The interviews were conducted with individuals with the necessary insight and exposure to the topic in question. Findings: The study showed that the Reforms are expected to have an impact on all firms, however mid-­‐tier firms are likely to be positively impacted to a larger extent. However, the full impact will be seen in the coming years seeing as Member States have until June 2016 to transpose the legislation. Additionally, the relationship between the external auditor and the audit committee is expected to become stronger. Conclusions: It emerged that the mid-­‐tier firms seem more optimistic about the Reform whereas the Big Four firms were less eager. Mandatory firm rotation is likely to have the largest impact on the firms, whereas the prohibition of non-­‐audit services will likely have the least impact. Finally, unless the people who sit on audit committees have the necessary expertise and experience in the Profession, and there are honest partners in audit firms, then the said Reforms will not serve their purpose. Value: This dissertation may help in identifying the major difficulties in the local Audit and Accounting Profession for external auditors and hence identify areas which can be focused on for improvement. Additionally, this study may encourage more in depth research on the full impact of the Reform on the audit firms in the near future.