The proposals, due to be adopted by the European Commission in November and first reported Monday by Accountancy Age, would require companies with balance sheets exceeding €1 billion ($1.36 billion) to hire two auditors to conduct joint audits their books, including one firm outside the so-called Big Four of Deloitte LLP, Ernst & Young, PricewaterhouseCoopers and KPMG. The rules would also force companies to change auditors periodically with the goal of boosting investors' trust in financial reporting.

Speaking to journalists in Brussels Wednesday, Sept. 27, Commission spokeswoman Chantal Hughes confirmed that the EU executive is working on "ambitious" proposals to regulate the audit industry, and may come forward with a formal proposal as soon as November.

"The audit sector displayed clear failings during the [financial] crisis and this is why we believe more has to be done," she said.

Smaller accounting firms have been pressing Brussels regulators for years to reduce the stronghold of the Big Four - who, according to EU Internal Market Commissioner Michel Barnier, control more than 80% of the corporate auditing market in a majority of EU countries - and remove barriers to market entry.

In a December 2010 paper laying out its thinking, the Commission noted that the financial crisis highlighted "certain weaknesses" in the audit sector. It urged a closer look at auditors' independence, the reliability of financial statements, and the potential for systemic risk given the strong concentration in the audit sector.

"We need to see what improvements can be made," Barnier said at the time, calling for a frank and open discussion into possible reforms. "No subject should be taboo." Given that the auditing sector is a global one, he said it is important to coordinate the EU's efforts with other jurisdictions around the world.

In a speech to the European Parliament earlier this month, Barnier said the auditing sector "must become more open."

According to a draft of the proposals widely cited in media reports, the Commission sees non-audit work as "a source of conflict of interest" and says that audit firms "of significant dimension" should be prevented from offering services beyond their statutory audit function such as consultancy and advisory work.

The EU is still tweaking the text, which must be approved by the European Parliament and governments of the EU's 27 member countries. Strong opposition is expected to come from the UK under pressure from the Big Four, most of whom have large British operations.

In a statement issued Tuesday, Deloitte said although it supports moves to sustain and enhance audit quality and boost investor confidence, it opposes "certain matters that have been discussed, such as joint audits, market rotation and tendering, and a complete ban on non-audit services."

Deloitte added: "We are steadfast that any changes to the audit market must not be detrimental to audit quality and should not harm the capital markets or the critical focus on economic growth."