Appointing a statutory auditor – what are the advantages?

Appointing a statutory auditor in an organisation is a crucial step in assuring the integrity of financial reporting and governance. Statutory auditors play a key role in maintaining independence, monitoring regulatory compliance and providing objective oversight of the management. Their expertise and experience help improve decision-making, transparency and stakeholders’ trust.

When should a statutory auditor be appointed?

Not all annual accounts have to be checked by a statutory auditor. In fact the law provides for 2 exceptions where a statutory auditor is not mandatory:

1. General partnerships, limited partnerships and European Economic Interest Groupings (EEIGs) of which all partners with unlimited liability are natural persons do not have to appoint a statutory auditor.
2. Small companies or associations (A) that are not listed or are not part of a group that is required to prepare and publish consolidated annual accounts are not required to appoint a statutory auditor either.
   (A) To qualify as a small company or small association, no more than one of the criteria below may be exceeded on the balance sheet date (BCCA 1:24 for companies and 1:28 for non-profit organisations and foundations). Each case is assessed individually, but if an organisation exceeds the criteria for 2 consecutive years, it will be classified as large as of the year following the second time the criterion is exceeded.
   • Annual average number of employees: 50
   • Annual turnover: EUR 9,000,000
   • Balance sheet total: EUR 4,500,000

What are the advantages of appointing a statutory auditor?

Appointing a statutory auditor does have a few advantages. A statutory auditor is an external independent party who is responsible for reviewing and auditing an organisation’s financial reports and procedures to ensure they are accurate and compliant with the law. The most important advantages of appointing a statutory auditor are listed below:

1. Independence and objectivity: Statutory auditors are usually independent of management and their main aim when reviewing financial reports and procedures is objectivity. This reduces the risk of conflicts of interest and increases trust in the accuracy of the audit.
2. Better regulatory compliance: Auditors have the expertise to ensure that financial reports and procedures comply with all the regulatory requirements and accounting standards. This helps companies to avoid fines, legal problems and reputational damage.
3. Quality assurance: The presence of a statutory auditor in the audit process provides a higher degree of quality assurance. They conduct thorough reviews and identify any shortcomings, which results in improved financial reporting practices.
4. Stakeholder trust: Having an auditor increases stakeholders’ (i.e. investors’, creditors’, regulators’, etc.) trust. This could lead to a more favourable assessment of the organisation and better access to funding.

Our PKF BOFIDI experts will be pleased to give you further advice

Do you want more information about the appointment of a statutory auditor? Then please contact Mathias Jacobs at PKF BOFIDI Audit. He will be pleased to give you more info.

This article was written by Mathias Jacobs.