Definition of mandating reporting
DEFINITIONS, SCOPE AND ENTRY INTO FORCE What is a public-interest entity (PIE)?
PIEs are defined as listed companies, credit institutions and insurance undertakings.
In addition, Member States can designate as PIEs other undertakings that are of significant public relevance, because of the nature of their business, their size or the number of their employees.
The definition of public-interest entities (PIEs) is the same as under the Accounting Directive (). The new legal framework is based on two legislative instruments: a Directive amending the existing Statutory Audit Directive and a new Regulation on specific requirements regarding statutory audit of public-interest entities.
Why are there stricter requirements for the audit of public-interest entities (PIEs)?
Stricter requirements govern the statutory audit of PIEs because the potential negative consequences of misstatements for shareholders, investors and more broadly society at large, are usually greater than for other types of undertakings.
This will ensure that by the time of the application of the Regulation, every Member State should have put in place the provisions necessary to comply with the Directive.
The possible costs of the specific rules concerned are thus far outweighed by the benefits of avoiding audit problems in those public-interest entities. Once formally adopted by the two co-legislators, the Regulation and the Directive will be published in the Official Journal of the European Union.
The Directive will enter into force 20 days after its publication, and Member States have two years to adopt and publish the provisions necessary to comply with the revised regulatory framework.
For this reason, statutory audit contributes to the orderly functioning of markets by improving the integrity and efficiency of financial statements.
Thus, statutory auditors fulfil an important societal role.