Auditing is the activity carried out by professionals, called auditors, aiming at double check the truthfulness and correctness of the accounts of an annual and/or consolidated balance sheet and financial statement.
Under Italian Law, a distinction must be made among auditors. Internal auditors (sindaci) are elected by the shareholders to supervise the management of the company: they are called statutory auditors. External auditors (revisori legali) are external to the company and therefore independent auditors, enrolled in a special register, called to double check the Accounts and to supervise the activity carried out by the statutory auditors.
The auditing of the accounts is based on the right of the shareholders to have an independent entity verifying whether what is reported in the Accounts reflects the actual financial situation of the company.
According to Italian Law, in a joint-stock company (S.p.A.) (listed or not) the financial auditors shall be someone external to the company. He can be an individual professional or a company specialised in auditing. The main requirement is that such individual or company is enrolled in a special register with the Ministry of Finance.
However, if the joint-stock company is not required to prepare consolidated financial statements, then the financial auditing may also be assigned to the board of statutory auditors (collegio sindacale), whose members must be in any case registered (enrolled) in the relevant register.
In limited liability companies (S.r.l.), the obligation to appoint an external auditor arises when the company is required to draft consolidated financial statements or when it controls a company subject to financial auditing. Furthermore, the obligation is also applicable when two of the following thresholds are exceeded:
If none of these thresholds is exceeded for at least 3 consecutive years, then the obligation is no longer applicable.
The main task of the financial auditor (revisore legale) is to check that the accounts are properly kept and that the financial statements are correct. He is called to issue an evaluation report.
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