Audit Obligations and Standards in Spain

Posted on Nov 16, 2024 in Law & Jurisprudence

Obligatory Audits in Spain

The Ley de Auditoría de Cuentas (LAC) mandates audits for companies under specific circumstances, including:

  • Publicly traded securities
  • Obligations issued during financial intermediation
  • Activities regulated by the Law on Private Insurance
  • Receipt of subsidies or provision of services to public bodies

The Companies Act requires annual accounts and management reports to be audited, with exemptions for companies meeting specific criteria for two consecutive years:

  • Assets < €2,850,000
  • Annual turnover < €5,700,000
  • Average employees < 50

The Commercial Code mandates audits upon request by a party with legitimate interest, approved by a competent court.

The Registro Mercantil (RRM) allows shareholders to request auditor appointments within three months of year-end.

The Securities Market Law requires independent audits for stock market issuers.

Consolidated accounts submitted by commercial companies must be audited.

Auditor Appointment

The Companies Act outlines appointment procedures:

  • General meeting before year-end
  • Registrar of Companies upon request
  • Judicial appointment in exceptional cases

Auditors are hired for 3-9 years, renewable after the initial period.

Technical Audit Standards

The Reglamento de Auditoría de Cuentas (RAC) defines principles and requirements for auditors, classified by the Instituto de Contabilidad y Auditoría de Cuentas (ICAC) into:

General Rules

  1. Technical and professional capacity with legal authorization
  2. Independence, integrity, and objectivity
  3. Due professional care
  4. Responsibility for compliance with auditing standards
  5. Confidentiality of information
  6. Fair professional fees
  7. No advertising for client acquisition

Rules for Audit Work

  1. Proper planning and supervision
  2. Evaluation of internal control systems
  3. Obtaining sufficient and appropriate evidence

Standards for Report Preparation

  1. Adequate information for understanding and interpretation
  2. Consistency with previous year’s accounting principles
  3. True and fair view of financial position and results
  4. Opinion on financial statements or reasons for qualified/adverse opinion
  5. Consistency of accounting information in the report with audited accounts

Note: The annual report is not an accounting document.