Companies, depending on their legal form, or their size (turnover, balance sheet total, or workforce thresholds) are required to appoint an Auditor. This obligation is sometimes perceived as an additional burden with no real added value for the company. This is why Valoxy, an accounting firm in the Hauts de France, will focus in this article on the missions of the Statutory Auditor and see how they can influence the management of a company.
The Statutory Auditor, a vector of trust
The first mission of the Statutory Auditor is to ensure the accuracy of the annual accounts. This assignment, carried out by an external and independent auditor (appointment is mandatory and fees are legally fixed) is a guarantee of trust for third parties.
Indeed, the purpose of accounting is to provide reliable financial information in order to be able to inform partners and third parties of the company’s situation. The presentation of accounts is also often requested by lending organizations before obtaining a credit, it can also serve as a basis for wage negotiations, it makes it possible to determine what dividends will be paid to partners, and it is also the basis for calculating taxes….
Accounting, as an information tool, therefore has a key role in the economic life of a society; however, to have value, information must be reliable (all the more so in a world where false information tends to spread rapidly).
The mission of the Statutory Auditor is therefore to verify the reliability of accounting information Through his audit work, he will ensure that it presents a true and fair view of the economic reality of the company and will strengthen the confidence of third parties in the company’s accounting.
A partner for society
As part of his audit assignment, the Statutory Auditor is also required to intervene on a number of subjects that affect the life of a company. This is for example:
- capital transactions (increase or decrease),
- interim dividend distributions, the payment of stock dividends of the transformation of society.
- the issue of bonds convertible or exchangeable for shares
interim dividend distributions, the payment of stock dividends of the transformation of society.
the issue of bonds convertible or exchangeable for shares
These interventions make the Statutory Auditor a key partner who, through his expertise and experience, helps the company at certain important moments in its development.
However, his involvement is limited because, given his supervisory role, too much involvement in management would make him a judge and party. This is why an External Auditor makes “recommendations”, but cannot implement them.
A player in the prevention of business difficulties
The Statutory Auditor, who in the course of his assignment realizes that the company’s survival could be compromised, must initiate an alert procedure (art 234-1 of the French Commercial Code). The Statutory Auditor will therefore alert the President or the manager of the company, who will be obliged to explain the reasons for the situation and the means implemented to restore it.
If the Commissioner finds that the facts persist or if he considers that the measures taken are insufficient, he may convene a meeting of the supervisory or administrative board to discuss the situation.
As a last resort in cases of urgency and inaction by the management bodies, it may convene the general meeting to decide on the difficulties encountered.
In conclusion, the Statutory Auditor, through his various missions, is an actor who provides long-term support (for a period of 6 accounting years, renewable) for the company’s development. In addition, its missions are evolving, it may have to decide on the implementation of Corporate Social Responsibility, and it thus adapts to the new issues faced by companies.