"The status quo is not going to be an option for the European Commission," the bloc's financial services chief Michel Barnier told a news conference.
"We are happy in 2011 to produce legislation in this respect," Barnier said as he launched a two-month consultation on his ideas to change the sector.
Regulators are turning their attention to whether auditors were proactive enough in questioning what was going on at banks before the crisis unfolded and sparked a string of bailouts.
Britain's Financial Services Authority and Financial Reporting Council (FRC) published a consultation paper in June saying there may be a need for new rules forcing auditors to "blow the whistle" on suspect practices.
The FRC is already probing how Ernst & Young audited the books of Lehman Brothers, the US bank whose failure in 2008 brought the world's financial system to its knees.
"The crisis highlighted failings in the audit sector. We want to strengthen this profession and its credibility," Barnier said.
No subject taboo
Possible "no taboo" reforms could focus on several areas:
- Is it wise for auditors to have the same customers for decades?
- How to tackle potential conflicts of interest where an auditor checks the books of a company that it also conducts consultancy work for.
- Are auditors independent enough to question companies?
- Are investors placing too much reliance on audits?
- The sector is dominated by the "Big Four" – PWC, Deloitte, KPMG and Ernst & Young - which together represent 70% of the European market. Would there be a risk for the broader financial system if one of them failed?
- Could more competition be introduced by a smaller auditor conducting joint audits with one of the Big Four?
- Should smaller firms have less onerous auditing rules?
- How best to build European supervision?