Why is a company auditor essential?

The company auditor plays a crucial role in the business world, serving the public interest and ensuring financial reliability. Through independence, ethics, and the quality of their work, they provide trust, transparency, and increased security, which can promote economic growth and prosperity. The auditor is bound by an obligation of means rather than an obligation of results. The objective of their audit missions is to obtain reasonable assurance that the annual accounts or financial statements, as referred to internationally, do not contain significant anomalies arising from fraud or errors. A reasonable degree of certainty is a high level of certainty.

Types of interventions or certifications:

• the legal audit of annual accounts,

• the certification mission on behalf of the works council,

• occasional statutory tasks (financial contributions, etc.),

• and contractual missions (due diligence during an acquisition, etc.).

What is an audit of annual accounts?

The mission of the company auditor is to express an opinion on the annual accounts, also known as the certification mission. It is a permanent statutory task.

A company or an ASBL/foundation must appoint a “commissioner” when it is considered “large” and exceeds at least two of the following three criteria:

• average annual number of employees: 50;

• annual turnover (excluding VAT): 11,250,000 euros;

• total balance sheet: 6,000,000 euros.

The qualification of “large” is accepted or modified when at least two of the three mentioned criteria are exceeded or are no longer exceeded, and this only has consequences if it occurs over two consecutive financial years. In such cases, the consequences take effect from the financial year following the one in which more than one criterion was exceeded or was no longer exceeded for the second time.

For newly established companies, ASBLs, AISBLs, and foundations, the aforementioned criteria are estimated in good faith from the figures at the start of the financial year.

According to the Companies and Associations Code, small listed companies, small enterprises that are public interest organizations, and companies that are part of a group subject to consolidation requirements (art. 3:72, 2° CSA) are always obliged to appoint a commissioner.

Entities not required to appoint a commissioner may do so voluntarily, enhancing their credibility and financial transparency.

Commissioner's mandate: How is the appointment made and what is its duration?

The law stipulates that the commissioner is appointed on the proposal of the management body and, if applicable, on the recommendation of the works council. The general assembly of the company or association appoints the commissioner among company auditors registered in the public registry of the Institut des Réviseurs d'Entreprises or among accredited audit firms, for the legal audit mission of annual and, if applicable, consolidated accounts. The general assembly also sets the remuneration of the commissioner. If the company is legally obliged to establish an audit committee, the proposal from the management body is made on the recommendation of the audit committee. This audit committee recommendation is communicated for information to the works council.

The commissioner is always appointed for a “renewable” three-year term.

For mandates within public utility bodies (particularly listed companies, etc.), renewal is limited to three three-year mandates, except in the following cases. Renewal up to 6 mandates, or 18 years, is possible if the selection was based on a public tender, and renewal up to 8 mandates, or 24 years, is possible if independent commissioners conduct joint review.

Works council and company auditor

The mission of the “company auditor” in companies with a created works council is to certify the fidelity and completeness of the economic and financial information (EFI) provided by the management body. The company auditor must play a pedagogical role and promote dialogue. The commissioner generally assumes this mission.

Under law, one or more company auditors must be appointed in every company where a works council has been established. The law provides exceptions for subsidized educational institutions.

The mission of the company auditor in relation to the works council is to:

• report on the annual accounts and the annual report;

• certify the fidelity and completeness of the economic and financial information provided by the management to the works council;

• explain and analyze the significance of the economic and financial information with respect to the financial structure and the evolution of the financial situation of the company;

• and, if they believe they cannot deliver the certification referred to in point 2° or identify shortcomings in the economic and financial information provided to the works council, inform the management body and, if there is no response within a month following their intervention, inform the works council on their own initiative.