Charlie McCreevy, European Union internal market commissioner, signalled yesterday that he was confident a compromise solution would soon be secured over proposals on the introduction of audit committees.

The European Commission's draft audit directive, a response to financial scandals such as Enron and Parmalat, proposes a mandatory audit committee at all listed companies.

Business organisations are opposed to its plans, which they claim would undermine national corporate governance codes and impose too rigid a system.

A committee of the European Parliament last month voted to make the proposals more flexible, a move the Commission has said it is reluctant to endorse.

In a speech read out at a London conference yesterday, Mr McCreevy revealed that he had recently held talks with Bert Doorn, the European Parliament's rapporteur for the proposal.

"On the basis of my discussions with Mr Doorn, I am confident that we will be able to find a coherent solution," Mr McCreevy said.

"All involved are agreed that the proposal must stay firmly on track for adoption this autumn."

Mr McCreevy was due to address the annual conference of the International Corporate Governance Network (ICGN), but could not travel to London following Thursday's terrorist attacks.

Many European countries do not have a culture of company audit committees, while others, such as the UK, eschew a mandatory approach in favour of a "comply or explain" regime.

People close to the situation say the final proposals are likely to make mandatory audit proposals apply only where no national codes exist. The International Corporate Governance Network is the world's leading investor lobby group. - (Financial Times Service)