The European Union Audit Reform (Regulation (EU) No 537/2014) imposes strict rules on audit firms to ensure independence and reduce conflicts of interest.
Why C is correct:
The EU restricts non-audit services that auditors can provide to clients they audit.
A monetary cap of 70% of audit fees is imposed on permissible non-audit services to limit financial dependence.
These measures ensure auditors do not compromise audit quality by having financial incentives to approve misleading financial statements.
Why not A or B?
A is incomplete—a list of allowable services alone does not limit the financial influence of consulting fees.
B is incomplete—a monetary cap alone does not specify which services are prohibited.
[References:, EU Regulation No 537/2014 on Audit Reform, European Commission’s Guidelines on Auditor Independence (2021), , , , , ]
Submit