Earlier this week it was confirmed that the new unit in the European Parliament, which has been set up to "stress test" the European Commission’s impact assessments, has been asked to evaluate the European Commission’s impact assessment of the audit market.   In late November 2011, the European Commission published an impact assessment analysing the European audit market. It looked at the role of statutory audits for banks, insurance companies and other listed companies (so-called public interest entities) in the after-math of the financial crisis. The impact assessment proposes several “radical policy proposals” to address some perceived problems with the audit market following the financial crisis.   In February 2012, Copenhagen Economics released a review of the Commission’s audit market impact assessment. The purpose of our review is to provide policy makers with an independent assessment of the analyses made in the Commission’s impact assessment.   We find no clear analysis of the benefits of the proposed measures in the Commission’s impact assessment. We also concluded that some of the proposed measures could very well have the opposite impact of what is intended. How the negative and positive effects  balance out is not assessed, since in our assessment, the Commission’s impact assessment has – in crucial areas – only looked at the possible benefits of the proposal for policy intervention in the audit market.   As mentioned, in April 2012, the European Parliament decided to make its own evaluation of the Commission’s impact assessment to stress test the results and recommendations.   To read our review report, please see here.   To read the European Commission impact assessment, please see here.   For more information, please contact partner Martin H. Thelle.      

Background The European Parliament has created an office to carry out impact assessments on draft EU laws. In July 2011, the Parliament’s bureau decided to set up a legislative assessment directorate within the internal policies department. The new directorate, which has a staff of 19, has been fully operational since March, according to European Voice.

Malcolm Harbour, a UK MEP from the European Conservatives and Reformists group, said MEPs would no longer have to rely on the European Commission’s impact assessments. According to the European Voice, Harbour said the assessments would “help ensure we have fully researched justifications for our initiatives, invaluable for supporting the parliamentary position in negotiations with the member states”.