The mandate of the statutory auditor is an essential element in the governance of French companies. This independent professional plays a crucial role in ensuring the reliability and transparency of financial information provided by companies. The statutory auditor’s role is to protect the interests of shareholders, investors and third parties. Let’s take a closer look at the fundamental aspects of this mission, its legal duration and the resulting obligations for companies.
Role and missions of the statutory auditor
The role of the statutory auditor is to audit and certify the annual financial statements of companies. His main mission is to verify the regularity, fairness and true and fair view of the financial statements. This responsibility extends to several key areas:
- Auditing annual and consolidated financial statements
- Verification of consistency between the financial statements and the management report
- Detecting irregularities and inaccuracies
- Preventing financial difficulties
The statutory auditor acts as a safeguard against fraud and accounting errors. He must report any anomalies or irregularities to the Board of Directors or Executive Board. In the event of the discovery of a criminal offence, the statutory auditor must inform the public prosecutor.
The Pacte Act of 2019 redefined the scope of intervention of the statutory auditor, by raising the statutory audit thresholds for commercial companies. This reform aims to ease the constraints on smaller companies while maintaining a high level of control for larger entities.
Mazars, one of France’s leading audit firms, stresses the importance of the statutory auditor’s role in preventing financial risks. According to their experts, rigorous certification of accounts helps to strengthen stakeholder confidence and secure economic transactions
.
Term of office and renewal
French law sets the duration of the statutory auditor’s term of office at six consecutive financial years. This relatively long period is designed to ensure in-depth knowledge of the company being audited, and continuity in the monitoring of its accounts. The term of office begins on the date of appointment and ends on the date of the Annual General Meeting called to approve the financial statements for the sixth year.
Reappointment is not automatic. At the end of the six-year term, the company may choose to :
- Reappoint the current statutory auditor
- Appoint a new statutory auditor
- Not to renew the mandate if the company is no longer subject to the legal obligation.
Mandatory rotation of statutory auditors, introduced by the 2016 European audit reform, applies to public interest entities (PIEs). The latter must change audit firms every 10 years, with the possibility of an extension to 24 years in the event of a call for tenders.
The Haut Conseil du Commissariat aux Comptes (H3C ) ensures compliance with these rules and the independence of auditors. Jean-François Pissettaz, Chairman of the H3C, stresses the importance of this rotation: ” It enables us to take a fresh look at the accounts, and to prevent the risks associated with over-familiarity between auditor and auditee
.
| Type of entity | Term of office | Mandatory rotation |
|---|---|---|
| Non PIE companies | 6 years | Not applicable |
| Public-interest entities (PIEs) | 6 years | 10 years (24 years max with call for tenders) |
Legal obligations for French companies
Legal obligations relating to the mandate of the statutory auditor vary according to the size and legal nature of the company. Since the Pacte Act, the mandatory appointment thresholds have been raised for commercial companies. The following companies are now required to appoint a statutory auditor:
- Sociétés anonymes (SA) and sociétés en commandite par actions (SCA)
- SAS, SARL and general partnerships exceeding two of the following three thresholds:
- 4 million euros in total assets
- 8 million euros in sales
- 50 employees
- Public-interest entities (PIEs): listed companies, credit institutions, insurance companies, etc.
Companies subject to compulsory appointment must facilitate the statutory auditor’s mission. This implies :
- making available all documents required for the audit
- Providing access to premises and information systems
- Responding to requests for information and explanations
- Inviting the statutory auditor to general meetings and board meetings
The French Commercial Code provides for criminal penalties for managers who obstruct the statutory auditor’s mission. These penalties can include up to five years’ imprisonment and a fine of 75,000 euros.
Pierre Moscovici, First President of the French Court of Audit, emphasizes the importance of complying with these obligations: Financial transparency is a pillar of economic confidence. The role of the statutory auditor is essential in guaranteeing this transparency and preventing abuses
.
Outlook for the future
The statutory auditor’s mandate is evolving to adapt to economic change and the new expectations of stakeholders. A number of trends are emerging for the future of this profession:
The auditor‘s scope of intervention is expanding beyond the simple certification of accounts. Statutory auditors are increasingly called upon to carry out related assignments, such as :
- certification of non-financial information (CSR, ESG)
- Information systems and cybersecurity audits
- Climate and environmental risk assessment
The digitization of auditing processes is profoundly transforming working methods. The use of artificial intelligence and Big Data means that ever greater volumes of data can be analyzed, improving anomaly detection and audit quality.
Strengthening the independence of statutory auditors remains a major challenge. Discussions are underway at European level to extend mandatory rotation rules and further limit non-audit services provided to audited entities.
Olivier Salustro, Chairman of the Compagnie Nationale des Commissaires aux Comptes (CNCC), comments on these developments: ” Our profession must adapt to new economic and social challenges. Tomorrow’s audit will be more technological, more global and more focused on risk prevention
.
In short, the statutory auditor’s mandate remains an essential pillar of corporate governance in France. The auditor’s role, its duration and the resulting obligations for companies fall within a strict legal framework, guaranteeing the quality and independence of the audit. Faced with the challenges of the future, the profession is called upon to reinvent itself, while preserving its fundamental values of integrity and rigor.
