An entrepreneur can determine whether a statutory audit is applicable to his/her organization if it meets the three criteria of size under Dutch law.
These criteria relate to:
– the value of the assets in the company (exceeding EUR 4.4 mill)
– turnover (exceeding EUR 8.8 mill)
– the number of personnel (exceeding 50)
and are subject to annual review. The figures given above refer to the situation commencing 31st December 2010.
Should your organization meet 2 of the 3 criteria during a period of 2 years, it means that your organization qualifies as a large or medium-sized entity and therefore falls under the requirement of a statutory audit.
In practice the criteria are still often a matter for discussion. How is ‘turnover’ defined? Does it, for instance, include revenue from receipts and dividends? Does the number of personnel refer to the number of FTE on average throughout the year or does it mean the number of personnel per 31st December? Are there any exemptions by virtue of the applicability of Article 403 or Article 408 of the Dutch Civil Code?
To help you assess your situation, we have prepared a spreadsheet which will enable you to determine whether your organization is subject to the statutory audit requirement. The spreadsheet is available to you upon request free of charge. The responsibility for determining whether an organization is subject to the statutory audit requirement lies ultimately with the management of that organization. Why not let us guide you through that assessment process?
In this connection the term ‘statutory audit’ is sometimes confused with the term ‘yearly audit’ as required under a company’s Articles of Association. In principle every legal entity is required under its Articles of Association to draw up its annual financial statements. In some cases those Articles also stipulate that the annual financial statements should be examined by an external auditor. In that case it meets the requirements of the yearly audit pursuant to the Articles of Association, while in principle being conducted on a voluntary not statutory basis; if the Articles of Association were amended on that point, it would mean that the organization would no longer be obliged by law to perform a yearly audit.
If, however, your organization meets the criteria of size, then the yearly audit is the same as a statutory audit, but please bear in mind that this is not necessarily always the case.