The move comes as a response to new EU rules on statutory audits, which include strict additional requirements for PIEs.
Strategic audit boost
The EU reform "aims to improve audit quality and restore investor confidence in financial information, an essential ingredient for future investment and economic growth".
This applies more to PIEs than to any other company. So the inclusion of these new tags is great news for auditors, who'll be able to search for PIEs – or subcategories of PIE – across Europe or in individual member states, or determine whether a company is a PIE from the legal information attached to its record.
Importantly, the rules dictate the relationship auditors have with groups of companies. PIEs – often big companies near the top of corporate trees – must tender statutory audits on a fixed cycle. Firms that win those tenders are then free to audit all businesses within these groups.
However, if they've recently audited any company within the group – typically small non-PIEs – they're precluded from any involvement in the official tender process for the PIE and its wider group.
Auditors keen to maximise the scope of their work might therefore want to investigate companies' corporate structures to help plan the most strategic time to approach potential clients – something that this new PIE data, used alongside Bureau van Dijk's ownership information, makes possible.
But what are PIEs and how do we identify them on Orbis?
PIEs in focus
EU legislation defines four types of PIE:
- Entities governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC [so listed companies];
- Credit institutions as defined in point 1 of Article 43(1) of Directive 2013/36/EU of the European Parliament and of the Council, other than those referred to in Article 2 of that Directive;
- Insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC; or
- [Ones] Designated by Member States as public-interest entities, for instance undertakings that are of significant public relevance because of the nature of their business, their size or the number of their employees.
We cater for the first three types by carefully extracting data from three regularly updated official sources: the European Securities and Markets Authority (ESMA); the European Banking Authority (EBA); and the European Insurance and Occupational Pensions Authority (EIOPA).
No member states have yet submitted any lists of designated PIEs (the fourth type). Indeed only five countries have so far incorporated the rule into national legislation. But as they are gradually published, we'll work towards adding any new data to Orbis, and we've already set up a framework to deal with these variable datasets.
Importantly, the way we deal with this data is to flag up PIEs only if we're 100% certain that that's how they should be classified. Other companies might get tagged up in due course. But from day one, when you do a search of PIEs on Orbis, you can be certain that those are what you'll be delivered.
A number of prominent consultancy firms have reviewed our offering, one of which had asked us to investigate adding the data when the new rule was first mooted.
Early feedback suggest that the initiative will be hugely beneficial to efficient PIE identification, something on which auditors need reliable information.
How to access this data
To find out more about accessing this new dataset on Orbis, please email us at [email protected].