Subsection 2: Certification of accounts

The professional practice standard relating to communications with the bodies mentioned in article L. 823-16 of the French Commercial Code, approved by the Minister of Justice, is shown below:

NEP - 260. COMMUNICATIONS WITH THE BODIES MENTIONED IN ARTICLE L. 823-16 OF THE COMMERCIAL CODE

>. Introduction

1. During the audit of the accounts carried out as part of the certification of the accounts, the statutory auditor shall communicate, in accordance with the provisions of article L. 823-16, with the collegiate body responsible for the administration or the body responsible for the management and the supervisory body, as well as, where applicable, the specialised committee.

2. Communications with the bodies referred to in Article L. 823-16 enable the statutory auditor to bring to their attention important matters relating to its engagement and the preparation of the financial statements. They also enable the statutory auditor to talk to these bodies in order to gather information that contributes to his knowledge of the entity and its environment.

3. The purpose of this standard is to specify:

- the elements covered by communications with the bodies referred to in Article L. 823-16;

- the terms and conditions of such communications;

- the implications for the statutory auditor's engagement of exchanges with the bodies referred to in Article L. 823-16.

Elements to which the communications relate

4. The statutory auditor shall inform the bodies referred to in Article L.823-16 of the general programme of work implemented and the various surveys that he has carried out.

Within this framework, it shall communicate to the bodies mentioned in Article L. 823-16:

- the scope of the audit work and the planned timetable;

- the high inherent risks identified as requiring a specific audit approach;

- any significant difficulties encountered in the course of its audit of the accounts that are likely to affect the proper performance of its work;

- its comments, if any, on the entity's accounting practices that are likely to have a material impact on the accounts, in particular accounting policies, accounting estimates and disclosures;

- where appropriate, identified events or circumstances that may cast doubt on the going concern basis in accordance with the provisions of the going concern standard;

- other matters arising during the audit which, in the auditor's professional judgement, are material to the auditor's role, in particular overseeing the preparation of the financial statements. This applies in particular to material weaknesses in internal control which the statutory auditor communicates by applying the professional practice standard relating to the communication of internal control weaknesses.

As part of these communications, the statutory auditor shall specify the elements for which he has requested written statements from the legal representative of the entity.

The statutory auditor shall also communicate to the bodies mentioned in Article L. 823-16:

- any amendments that he considers should be made to the accounts to be closed or to the other accounting documents, making any useful observations on the valuation methods used to draw them up;

- any irregularities or inaccuracies that it may have discovered;

- the conclusions reached on the basis of the above observations and corrections concerning the results for the period compared with those for the previous period;

- the reasons for any observation, qualified certification, refusal to certify or impossibility to certify that it intends to make in its report on the annual or consolidated financial statements.

5. When the statutory auditor works with a public interest entity:

- he shall communicate to the bodies referred to in Article L. 823-16 of the Commercial Code the risks of material misstatement that he considers to be key points of the audit;

- in the event of suspicions or good reason to suspect that irregularities, including fraud concerning the annual or consolidated accounts, may be committed or have been committed, he shall inform management or, where it appears that informing management is not desirable or has not been followed up, the bodies referred to in Article L. 823-16 of the Commercial Code. It asks them to conduct investigations into the matters identified and to take appropriate measures to deal with these irregularities and prevent their recurrence.

Where such investigations are not carried out, the statutory auditor shall inform the authorities responsible for investigating such irregularities.

6. In addition, when the statutory auditor works with entities subject to the provisions of article L. 823-19 or which have voluntarily set up a specialised committee within the meaning of that article, he shall:

- examine with this specialised committee the risks to its independence and the safeguards taken to mitigate these risks;

- brings to its attention significant internal control weaknesses, applying the professional practice standard relating to the communication of internal control weaknesses.

Each year it provides the specialised committee with:

- a declaration of independence;

- an update of the information mentioned in Article L. 820-3 detailing the services provided by the members of the network to which it is affiliated as well as the services other than the certification of accounts that it has itself provided.

7. When the statutory auditor communicates information to the specialised committee, it shall determine whether it also communicates it to the other bodies mentioned in Article L. 823-16.

Methods of communication

8. The statutory auditor shall specify to the bodies referred to in Article L. 823-16 the expected form and content of the information to be communicated to them and the timetable for such communication.

Regardless of the timetable for communication, the statutory auditor shall inform the bodies referred to in Article L. 823-16 of the form and content of the information to be communicated to them. 9 Regardless of the planned timetable, the statutory auditor shall make these disclosures at the time he deems appropriate depending on the importance of the subject and any action to be taken by the bodies concerned.

10. The statutory auditor shall communicate in writing:

- the important elements relating to his audit when he considers that oral communication would not be appropriate or when legal or regulatory provisions specifically provide for it;

- the elements relating to its independence defined in paragraph 6.

11. When the statutory auditor works with entities subject to the provisions of Article L. 823-19, it shall submit to the specialised committee within the meaning of that Article, or to the body performing its functions, a supplementary report including the information required by Article 11 of Regulation (EU) No 537/2014 of 16 April 2014.

Impact on the mission of exchanges with the bodies mentioned in Article L. 823-16

12. The statutory auditor shall assess whether the exchanges with the bodies referred to in Article L. 823-16 were satisfactory for the purposes of the audit.

If not, the statutory auditor shall assess whether the exchanges with the bodies referred to in Article L. 823-16 were satisfactory for the purposes of the audit. If not, the statutory auditor:

- assesses the impact, if any, on his assessment of the risk of material misstatement and on his ability to obtain sufficient appropriate evidence; and

- takes appropriate action.

Documentation

13. The statutory auditor shall include in his file:

- the formalisation of verbal exchanges with the bodies mentioned in Article L. 823-16 and the date of these exchanges;

- a copy of written communications.