Discussant's response to status report on auditing in the European Community;

              Discussant's Response to
Status Report on Auditing in the European Community Jan Klaassen
Vrije Universiteit, Amsterdam
(Visiting faculty, Oklahoma State University, Spring 1976)
The task of preparing a report on the status of auditing in a single country is a difficult one because of the many auditing aspects involved; preparing a status report on auditing in nine countries is even more difficult because of the differences among the countries. Taking this into account, Richard Kramer's report gives a clear analysis of the current accounting and auditing situation.
I will not focus my discussion on the description of the current situation as such, but try to add some aspects that are relevant for an evaluation of that situation and for formulating expectations.
I will cover mainly three topics:
(a) The evaluation criteria used to analyze the status of auditing.
(b) The current status and future expectations about accounting.
(c) The current status and expectations concerning the future of auditing.
Evaluation Criteria
The problem of using appropriate criteria is probably the most difficult prob­lem
that one faces in evaluating the current status, since the outcome of the evaluation is very much dependent upon these criteria.
The author compares the situation of the EEC as a whole with that of the U.S., taking in most instances the American situation as a standard. It is undoubtedly interesting for U.S. accountants and auditors to compare their situation with the European situation. Unfortunately, however, this method of comparison obscures the fact that the EEC is so different from the U.S. that the two cannot realistically be compared.
First, the EEC consists of nine different states, each one having its own economic, political, and social system. To consider the EEC as a whole is at the present time only justified in the areas of agricultural and trade policy. The corporations in each of the member states are mainly operated under company laws, which are different in each state. There is not yet a European company operating under EEC rules.
A unified European capital market, in the sense that banking systems, stock exchanges, etc., are integrated, does not exist. Although there are, of course, in the EEC a number of multi-national corporations, the capital sources, ownership, and employees for most companies are concentrated in the countries where the companies have their main operations. So the financial statements and the attached auditing reports are mainly only of importance within each country.
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