Share with your friends

Fact sheet 2: Restrictions on Non-Audit Services

Restrictions on Non-Audit Services

The EU audit legislation prohibits many non-audit services from being provided to companies by their statutory auditors. This fact sheet details which services are prohibited under the EU baseline rules and those that could potentially be allowed under certain circumstances, including interpretations available to Member States. It also explains how to calculate the proposed cap on non-audit fees.


Related content


Under EU Audit Reform, the statutory audit firm is prohibited from providing a number of services to any EU-based public interest entity for which it is the statutory auditor.

Prohibited Non-Audit Services (NAS)

The new NAS prohibitions will apply to the first financial year starting after 17 June 2016 and will impact not only the incoming auditor of the PIE itself, but also any member of the auditor’s network that provides services either to the audited entity, its parent undertaking(s), or its controlled undertakings within the EU. The list of prohibited services will be more extensive for most EU Member States than it is today, with tax services significantly affected – unless Member States take the option to permit certain services.

Permitted Non-Audit Services

An auditor and its network can provide any non-audit service that is not explicitly prohibited to the audited PIE, its parent undertaking or its controlled undertakings (subject to general principles of independence). However approval of the audit committee is needed following an assessment of the threats to independence and the safeguards in place to mitigate or eliminate those threats.

The Cap on Fees

Permitted services (other than those imposed by national or EU legislation) provided by the statutory auditor are subject to a cap of 70 percent of the average of the fees paid in the last three consecutive financial years for the statutory audit(s) of the audited entity and, where applicable, of its parent undertaking and controlled undertakings and of the consolidated financial statements of that group of undertakings. Further guidance on the cap is expected as Member States adopt the legislation.

Key questions addressed by this fact sheet include:

  • What is the full list of prohibited services?
  • What are the ‘clean period’ requirements in relation to the provision of non-audit services?
  • How do the prohibitions apply to controlled undertakings incorporated outside the EU?

This fact sheet applies to the EU baseline rules. The final regulatory environment will be impacted by how each EU Member State interprets the legislation and any derogations they choose to implement.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today