A statutory audit (revisione legale dei conti) is the independent audit of a company’s annual financial statements by a statutory auditor (revisore legale). The auditor must be registered in the Register of Statutory Auditors maintained by the Italian Ministry of Economy and Finance (MEF); registration requires, among other things, appropriate education, a three-year traineeship and the passing of a professional qualification examination.
The purpose of the statutory audit is to determine, with reasonable assurance, whether the annual financial statements (bilancio d’esercizio) as a whole are free from material misstatements and have been prepared in accordance with the applicable accounting rules. The audit is carried out in accordance with the ISA Italia auditing standards.
The annual financial statements are prepared by the company itself and contain important information about its assets, financial position and financial performance. The legally required independent audit is intended to increase the reliability of this information.
This is intended to provide the users of the financial statements, in particular shareholders, banks and other lenders, suppliers and business partners as well as public authorities, with greater assurance regarding the information contained in the financial statements. The statutory audit is therefore intended to strengthen confidence in financial reporting and increase transparency. However, it does not constitute a guarantee of the company’s solvency or future economic success.
The focus of the statutory audit is the annual financial statements as a whole. The statutory auditor assesses whether they comply with the applicable accounting rules and are free from material misstatements.
In particular, the auditor examines whether assets, liabilities, income and expenses have been recorded completely and correctly, properly valued and allocated to the correct period as of the balance sheet date or for the relevant financial year.
Errors or missing information are considered material in particular if they could influence the economic decisions of the users of the financial statements. It is therefore not decisive that the financial statements are completely free from errors, but rather that they do not contain errors that are relevant to the users’ assessment of the company. The statutory auditor determines a materiality threshold taking into account the size and circumstances of the company.
The audit is risk-based and sample-based. As a rule, not every business transaction and accounting entry is therefore examined individually. The auditor focuses primarily on those areas in which the risk of material misstatements is higher.
For an S.p.A. (joint-stock company), a statutory audit is generally required. It is carried out by a registered statutory auditor or an audit firm or – if the statutory requirements are met – by the collegio sindacale.
For an S.r.l. (limited liability company), the appointment of a supervisory body or statutory auditor is mandatory in particular if the company:
Further information can be found in our article Supervisory body or statutory auditor for Italian limited liability companies (S.r.l.).
After completing the audit, the statutory auditor prepares an auditor’s report (relazione di revisione) and issues an audit opinion on the annual financial statements.
The audit opinion shows the users of the financial statements whether, with reasonable assurance, it can be assumed that the annual financial statements have been properly prepared in all material respects.