PwC has designed three key ways the audit profession can take on board the lessons from the financial crisis in response to the European Commissions Green Paper on Audit Policy. They are:

Support for ideas that will improve governance and oversight of the audit profession itself such as regulation of the audit profession at an EU level through a two-tier mechanism of strengthened EU coordination and continued development of the oversight systems in member states. A single European passport for auditors as well as the need for simplification of requirements for small-and medium-sized companies, audit firms and practitioners has also been proposed.

As well, standards for corporate reporting and auditing should be revised in order to give clearer and better assured information in these areas. The effectiveness of some of the narrative disclosures that accompany financial statements has been called into question by the crisis, in particular around certain risks, the uncertainties and judgments that underlie a set of financial statements and the going concern statement.

Enhancing the accessibility and transparency of the audit to stakeholders is another important element. This area includes communications about financial reporting and the conduct of the audit, potentially through an expanded report by the audit committee and expanded reporting of key risks by companies on which the auditors could provide assurance.

Finally, the introduction and adoption of ISAs throughout the EU is another critical element.

However, there are certain areas on this Green Paper where the audit quality not be improved according to PwC such as expansion of existing restrictions on audit firms providing non-audit services and putting the appointment, remuneration and duration of auditor appointments in the hands of a third party.

Source: http://www.big4.com/news/pwc-three-key-ways-for-auditing-profession-to-implement-european-commissions-green-paper-on-audit-policy-2833