Large European Audit Firms to Face 'Ambitious' Regulatory Proposals

The European Commission is expected to lay extensive regulations on audit firms this year, as officials continue to assess the cause of the 2008 financial collapse, particularly the bankruptcy of Lehman Brothers Holdings.

Regulators assert that the audit industry showed marked failures throughout the crisis, adding that "ambitious" steps will need to be taken to mitigate the risk of such errors in the future.

This week, Bloomberg obtained a draft of such proposals - to be unveiled in November - and among the most noted concerns is a provision that mandates large publicly traded auditing firms to "appoint at least two statutory auditors," who are intended to improve trust in "the veracity of the financial statement."

The commission has argued that the 90 percent market share held by the top four accounting firms in the EU make for an unfair and unstable auditing sector.

However, Michael Izza, CEO of the Institute of Chartered Accountants of England and Wales, expressed his reservations about such measures.

"Many of these ideas aren't new but we've never seen proposals that include all of these ideas at the same time," he told Bloomberg. "They've been aggregated in one place and that's where you get the big impact."