French Commercial code
In forceThe professional practice standard relating to the statutory auditor's reports on the annual and consolidated financial statements, approved by the Minister of Justice, is shown below:
NEP-700. Statutory auditor's reports on the annual and consolidated financial statements
Introduction
01. When certifying the financial statements pursuant to article L. 823-9 of the French Commercial Code, the statutory auditor prepares a report for the body called upon to approve the financial statements in which, justifying his assessments, he expresses his opinion in accordance with the provisions of article R. 823-7 of the aforementioned code.
02. In the same report, the statutory auditor shall give an account of the specific verifications and information required by the laws and regulations.
. 03. The statutory auditor shall provide, in the case of a public interest entity, the other information provided for in Article 10 of Regulation (EU) No 537/2014.
04. The report on the consolidated accounts shall be separate from the report on the annual accounts.
05. The purpose of this standard is to define the principles relating to the preparation of these reports by the statutory auditor.
Certification of accounts
06. Pursuant to the provisions of articles L. 823-9 and R. 823-7 of the French Commercial Code, the statutory auditor declares:
-either certify that the annual or consolidated financial statements to which the report relates are true and fair and give a true and fair view of the results of operations for the past financial year and of the financial position and assets and liabilities of the person or entity or of the group formed by the persons and entities included in the consolidation at the end of the financial year;
> or -qualify the certification;
or -or refuse to certify the accounts;
> or -or be unable to certify the accounts;
In the latter three cases, the auditor shall state the reasons for the reservation, refusal or inability to certify in the part of his report relating to the basis for the opinion.
When the statutory auditor intends to issue a qualified opinion, a refusal to certify or an inability to certify, he shall communicate the reasons to the bodies mentioned in Article L. 823-16 of the Commercial Code.
07. In accordance with the power conferred on him by the aforementioned Article R. 823-7, the statutory auditor shall, if appropriate, make any useful observations.
In making an observation, the statutory auditor shall take into account any observations made by the company. In formulating an observation, the statutory auditor draws the attention of the reader of the accounts to information provided in the notes to the accounts. He cannot dispense with information that is the responsibility of management.
Observations are made in a separate section. Observations are formulated in a separate section before the justification of assessments.
The statutory auditor systematically formulates an opinion on the financial statements. The statutory auditor systematically formulates an observation when legal and regulatory provisions so require. This situation arises, for example, in the event of a change of method in the annual accounts during the financial year. When the statutory auditor intends to make an observation, he shall communicate the reasons for this to the bodies mentioned in Article L. 823-16 of the Commercial Code.
Unqualified certification
08. The statutory auditor issues an unqualified audit opinion when the audit of the financial statements that he has performed has enabled him to obtain a high level of assurance, albeit not absolute due to the limitations of the audit, and conventionally referred to as reasonable assurance, that the financial statements, taken as a whole, are free from material misstatement.
Qualified certification
09. The statutory auditor shall issue a qualified audit opinion on the grounds of disagreement:
-when he has identified material misstatements in the course of his audit of the accounts and these have not been corrected;
-the impact of the material misstatements on the accounts is clearly delineated;
and -and that the wording of the reservation is sufficient to enable the user of the accounts to make an informed judgement;
10. When the statutory auditor specifies the reasons for the disagreement reservation, he quantifies as best he can the impact on the accounts of the material misstatements identified and not corrected or indicates the reasons why he cannot quantify them.
11. The statutory auditor shall issue a qualified audit opinion for limitation:
-when he has not been able to carry out all the audit procedures necessary to base his opinion on the accounts;
-the impact on the financial statements of the limitations on its work is clearly circumscribed;
and -and that the wording of the reservation is sufficient to enable the user of the accounts to make an informed judgement.
Refusal to certify
12. The statutory auditor shall formulate a refusal to certify on the grounds of disagreement:
-when he has detected material misstatements during his audit of the accounts and these have not been corrected;
and that:
-either the impact on the accounts of the material misstatements cannot be clearly delineated;
> or -or the wording of a reservation is not sufficient to enable the user of the accounts to make an informed judgement.
13. When the statutory auditor specifies the reasons for refusing to certify on the grounds of disagreement, he shall quantify, where possible, the impact on the accounts of the material misstatements identified and not corrected.
Unable to certify
14. The statutory auditor shall declare that it is impossible to certify:
On the one hand, when it is impossible to certify On the one hand, when he has not been able to carry out all the audit procedures necessary to base his opinion on the accounts, and that:
-either the impact on the accounts of the limitations on his work cannot be clearly delineated;
> or -or the wording of a reservation is not sufficient to enable the user of the accounts to make an informed judgement;
On the other hand, when it is unable to express an opinion due to multiple uncertainties, the impact of which on the accounts cannot be clearly circumscribed.
Justification of assessments
15. Pursuant to the provisions of Article L. 823-9 of the French Commercial Code, the statutory auditor shall justify his assessments for all persons or entities whose annual or consolidated financial statements are subject to certification. To this end, he applies the principles defined:
-either in the professional practice standard relating to the justification of assessments in the auditor's reports on the annual and consolidated financial statements of persons and entities that are not public interest entities;
> or -or in the professional practice standard relating to the justification of assessments in the auditor's reports on the annual and consolidated financial statements of public interest entities.
Verification of the management report, the other documents on the financial situation and the accounts and the information included in the corporate governance report sent to the members of the body called upon to approve the accounts
16. Pursuant to the provisions of articles L. 823-10, L. 225-235, L. 22-10-71 or L. 226-10-1, L. 22-10-78 et L. 441-14 of the French Commercial Code, the statutory auditor carries out specific verifications and formulates his conclusions as provided for in the standard concerning the diligence of the statutory auditor with regard to the management report, the other documents on the financial situation and the accounts and the information relating to the report on corporate governance addressed to the members of the body called upon to approve the accounts.
Where applicable, the statutory auditor reports on the verifications carried out and the conclusions reached. Where applicable, the auditor shall include in his report any information relating to the entity that is required by law or regulation, such as the acquisition of shareholdings or control during the financial year, the various disposals made pursuant to legislation on reciprocal shareholdings and the identity of the persons holding the share capital and voting rights.
Other verifications or information required by law or regulation. Other verifications or information required by laws and regulations
. 17. Where applicable, the statutory auditor shall state the other verifications or information that the legal and regulatory texts require him to mention in his report, such as the information required in the report on the accounts of public interest entities relating to the initial date of appointment of the statutory auditor and the total duration of his assignment without interruption, including previous renewals of the statutory auditor.
Content and form of the report
18. The reports drawn up by the statutory auditor shall mention the information provided for in articles R. 822-56, R. 823-7, D. 823-7-1, L. 225-235, L. 22-10-71 or L. 226-10-1, L. 22-10-78 et L. 823-10 of the French Commercial Code.
The report is drafted in a clear and unambiguous manner. It shall include:
a) A title indicating that it is an auditor's report;
> b) An indication of the name of the auditor and the name of the auditor's firm;
c) A description of the auditor's report b) An indication of the body for which the report is intended;
c) The following distinct and clearly individualised parts:
-the opinion, including:
-the origin of the appointment of the statutory auditor;
the identity of the person or entity whose accounts are being certified;
- the nature of the accounts, whether annual or otherwise -the nature of the annual or consolidated financial statements which are the subject of the report and are attached to it;
the balance sheet date and the financial year to which the accounts relate;
- the accounting rules and methods applied in preparing the accounts the accounting rules and methods applied in preparing the financial statements;
-the basis of this opinion, including the reasons for its opinion the basis of this opinion, including:
- a sub-section on the reference framework used to prepare the financial statements a sub-section relating to the audit framework, including the professional practice standards in accordance with which the engagement was performed;
> -a sub-section attesting that the auditor has performed the audit in accordance with the professional practice standards in accordance with which the engagement was performed -a sub-section certifying that no services other than the certification of accounts prohibited by the code of ethics have been provided and that the statutory auditor has remained independent of the audited entity during the engagement;
- where applicable, the reasons for the auditor's decision to withdraw from the engagement. where applicable, the reasons for the reservation, refusal or inability to certify the accounts;
> - where applicable, the uncertainties surrounding the certification of the accounts any significant uncertainties relating to events or circumstances that may call into question the going concern basis;
> -any observations provided for in the notes to the financial statements; and the justification for the assessments;
> -in the case of an assessment, the reasons for the assessment in the case of a report on the annual financial statements, verification of the management report, other documents relating to the financial position and the financial statements and information relating to the corporate governance report sent to the members of the body called upon to approve the financial statements;
-in the case of a report on the annual financial statements, verification of the management report, other documents relating to the financial position and the financial statements and information relating to the corporate governance report sent to the members of the body called upon to approve the financial statements;
in the case of a report on the consolidated financial statements, the verification of the information relating to the Group given in the management report;
> - where applicable, other audit services such as the verification of the financial statements and the information relating to the corporate governance report sent to the members of the body called upon to approve the financial statements where applicable, other verifications or information required by laws and regulations;
- a reminder of the responsibilities of the bodies mentioned above -a reminder of the responsibilities of the bodies referred to in Article L. 823-16 of the French Commercial Code in relation to the financial statements;
-a reminder of the statutory auditor's responsibilities relating to the audit of the accounts including the scope of the engagement and a statement explaining the extent to which the certification of the accounts was considered to enable irregularities, in particular fraud, to be detected;
d) The date of the report;
e) The signature of the statutory auditor, a natural person, or, when the mandate is entrusted to a company of statutory auditors, of the person mentioned in the first paragraph of Article L. 822-9 of the Commercial Code.
19. The report on the accounts of public interest entities shall also include the following other information provided for in Article 10 of Regulation (EU) No 537/2014:
-it shall state the initial date of appointment of the statutory auditor and the total duration of the statutory auditor's engagement without interruption, including previous renewals of the statutory auditor;
-it confirms that the audit opinion is consistent with the content of the supplementary report provided for in III of Article L. 823-16 of the Commercial Code and intended for the specialised committee referred to in Article L. 823-19 of the Commercial Code. Apart from this requirement, the report on the financial statements does not contain any reference to the supplementary report intended for the specialised committee;
- it indicates the services, other than those provided by the auditors, which are provided to the specialised committee. -it indicates the services, other than certification of the accounts, that have been provided by the statutory auditor to the audited entity and the entities it controls within the meaning of the article L. 233-3 of the French Commercial Code, and which have not been disclosed in the management report or the notes to the financial statements.
The statutory auditor does not use the name of any competent authority in a way that may indicate or imply that this authority approves or endorses the report on the accounts.
