Many Italian limited liability companies (S.r.l.) learn that they need a supervisory body or an auditor only when their bank or accountant points it out. Knowing the thresholds in advance allows a considered choice and a well-planned first engagement.
When the obligation applies
Under Article 2477 of the Italian Civil Code an appointment is mandatory if the S.r.l.:
- must prepare consolidated financial statements;
- controls a company subject to statutory audit;
- has exceeded for two consecutive financial years at least one of these limits: €4 million total assets, €4 million revenue from sales and services, 20 average employees during the year.
When it ends
The obligation ends when none of the limits has been exceeded for three consecutive financial years.
Auditor or board of statutory auditors
An S.r.l. may appoint a sole statutory auditor, a board of statutory auditors or a statutory auditor (an individual or an audit firm). The choice affects the role: the supervisory body also oversees the adequacy of organisational structures, while the auditor performs the statutory audit of the financial statements.
The first audit year
A first engagement also requires the opening balances to be checked. It is best to appoint the auditor before year end, so that attendance at the inventory count and confirmations from banks, customers and suppliers can be planned.
This note is for information only and is not professional advice on any specific case.