Cooperation with Non-Eu Jurisdictions on Auditor Oversight

March 2007

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CMVM (PORTUGUESE SECURITIES MARKET REGULATOR) RESPONSE TO CONSULTATION ON IMPLEMENTATION OF ARTICLES 45-47 OF THE DIRETIVE ON STATUTORY AUDIT (2006/43/CE)

COOPERATION WITH NON-EU JURISDICTIONS ON AUDITOR OVERSIGHT

The CMVM acknowledges the benefitsof an EU equivalence assessment and decision, in cooperation with Member States, therefore supporting the EU taking the lead on the equivalence assessment.

The assessment should focus on the oversight system as a whole, as provided for in article 46/1.

The CMVM acknowledges the need for transitional measures, supporting the second option as it provides for an incentive to third countries, while the first option would represent administrative costs and might mitigate EU capital markets’ competition.

But thisdoes not mean providing a lack of assurance in the system

No comments.

Further work should be devoted to registration systems’ interaction in EU Member States, in order to avoid additional administrative burdens, as well to safeguard the objectives stated under 3.1.1, above.

We should pay attention to the fact that a passport system is provided under the prospectus Directive and transparency directive. Taking this into consideration, we need to ensure an equivalent system as regards the statutory auditor report, in order not to undermine/ overrule this principle, especially in European capital markets.

The proposed cooperation registration procedure may help reducing administrative burden. Further harmonised procedures could be discussed within the scope of the EGAOB.

We also need to assure that what has been achieved under the Prospectus and Transparency Directives indefining the competent authority could be implemented along the same lines when talking about recognition of statutory auditors of cross-border listed companies and issuers.

We understand this practical approach, however how could we justify a different treatment for a particular third country GAAS? We need to have a strong argument for treating differently such GAAS.

Given the uncertainty of IFAC’s equivalence requirements to the Directive’s, Option 1 could be viewed as fit (as to ensure equivalent independence rules). However, as soon as we have a revised and acceptable IFAC Code of Ethics, we should follow option 2.

In setting out criteria for an adequacy test, the European Commission is to consult with the parties directly concerned by Article 47.

Confidentiality of transmitted documents should be duly ensured.

Should there be a legal requirement of transmission to other authorities that should be clearly stated in working agreements between competent authorities. Such transmission and information should not be too restrictive,provided it is in full compliancewith the competencies incumbent upon of the authorities.

Without informationsharing, a useful enforcement will not be achievable and the system itself will be penalized in the last instance.

Please refer to response toQuestion 9.

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