Explore the world of statutory audit requirements for corporate annual financial statements in the Netherlands in this blog. As a dedicated accounting firm, we emphasize the importance of an accurate and fair presentation of the financial position and performance of a legal entity in the financial statements. Learn why the statutory audit obligation exists and when it applies. Dive with us into the Civil Code and the Guidelines for Annual Reporting. Discover everything you need to know about engaging an accountant. Read on now…
Why does a legal obligation exist to have your company’s financial statements audited?
That is a question we often receive as an accounting firm. The answer is simple: stakeholders of your company need to be able to rely on the financial statements as providing a fair and reliable view of the financial position, financial resources, and results of the company. That is why a statutory audit obligation exists for the annual financial statements of legal entities.
When are you required to have the financial statements audited?
This depends on the size of your company. If your company is considered “medium-sized” or “large,” you are required to have the financial statements audited. This obligation applies to all legal entities in the Netherlands, such as associations, cooperatives, public limited companies, private limited liability companies, and foundations.
What criteria apply to this obligation?
The criteria are laid down in Title 9, Book 2 of the Civil Code, particularly in Article 2:396 of the Civil Code. If your company meets two out of the following three criteria for two consecutive financial years, you are required to have the financial statements audited:
- The value of assets according to the balance sheet exceeds EUR 6,000,000.
- The net turnover for the financial year exceeds EUR 12,000,000; and
- The average number of employees during the financial year is less than 50.
This assessment is performed on a consolidated basis and in accordance with the commercial principles prescribed in the Guidelines for Annual Reporting.
However, there are also exceptions to these rules. For example, consider the group exemption when your company is part of a group, and exemptions that may apply when using IFRS as the basis for preparing the financial statements or the so-called intermediate holding exemption.
Who is authorized to engage the accountant for auditing the financial statements?
That authority lies with the legal entity itself, as stipulated in Article 2:393 of the Civil Code. The general meeting, the supervisory board, or the management board of the company is authorized to provide this engagement.
Conclusion:
It is crucial for your company to be aware of the legal obligations regarding the audit of the financial statements. If you are unsure whether your company is subject to an audit requirement, please feel free to contact our accounting firm. We are happy to assist you further!