Ethniki Asfalistiki insurance company

Ethniki Asfalistiki insurance company

On 5 October 2020, Greek Member of the European Parliament (MEP) Nikos Androulakis of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament posed a written parliamentary question to the European Commission:

“The wheels have now been set in motion for the sale of the Ethniki Asfalistiki insurance company. However, its staff association alleges that the firm of auditors bought in to examine the accounts is also providing consultancy services for a fund that happens to be a prospective purchaser. The auditors appear to have been recommending a number of measures, including an increase in statutory reserves, thereby eroding profit margins and doubtless diminishing the company’s sale value.

Agreement was also reached, for no real reason, on a EUR 500 million write-down in the value of Ethniki Asfalistiki on the books of its sole shareholder, the National Bank of Greece (whose accounts are audited by the same firm).

In view of this:

1. Is it admissible under European law for a single firm of accountants to provide auditing and consultancy services respectively for each of the parties to a single transaction?

2. How is it possible to guarantee the confidentiality of business and financial data relating to Ethniki Asfalistiki where a firm of accountants with access thereto is also providing consultancy services for a prospective purchaser?”

On 25 January 2021, Financial services, financial stability and Capital Markets Union Commissioner Mairead McGuinness responded on behalf of the European Commission stating: “EU audit legislation sets out general rules for statutory audits of public-interest entities, including insurance undertakings, to improve the independence and objectivity of statutory audit firms and auditors from the audited entity.

This is important to avoid conflicts of interests, reinforce professional scepticism, and safeguard confidentiality and professional secrecy. EU audit rules include a list of prohibited non-audit services and require that statutory auditors and audit firms be subject to appropriate oversight by national competent authorities.

EU audit rules do not specifically prohibit that statutory auditor provide different services to two parties in a transaction. It is a matter for the Greek authorities to determine whether in this specific case the accountancy firm has violated any national rules or ethical standards.

Auditors must be independent of audited entities and they must carry out statutory audits in compliance with national auditing standards, procedures or requirements. The Commission is conscious of the high concentration in the audit market and of the issues related thereto.

It intends to publish its second market monitoring report in early 2021. Furthermore, the Commission is launching a study to assess the impact of the EU audit legislation.”


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