Ambassadors approved a preliminary deal with a qualified majority, the bloc’s presidency said in a statement.
The European Parliament and member states are due to formally rubberstamp the new law in coming weeks to end two years of protracted debate.
The EU hopes a requirement for companies to regularly switch auditors will break up too-cosy relationships, increase competition between accountants and help avoid a repeat of the 2007-2009 crisis, which resulted in the bailout of banks given a clean bill of health by their auditors only months earlier.
“I believe that the agreed audit reform package should enhance the quality of statutory audits in the EU and will help to strengthen confidence in audited financial statements, in particular those of banks, insurers and listed companies,” said Rimantas Sadzius, finance minister at EU presidency Lithuania.
The reform, due to take effect in the first half of 2016, seeks to boost competition in a sector dominated by the Big Four accountants, KPMG, PwC, Deloitte and Ernst & Young.
EY estimated that switching auditors at more than 30,000 companies will cost the EU economy more than 16bn euros because of the work involved in preparing and scrutinising tenders.
“This is a bad deal for investors, a bad deal for business and for jobs, and a bad deal for the European and global economy,” said EY, which urged the EU to carry out an economic analysis.