Amendment To The PACTE Bill: The Performance Of A Legal Audit Of Small Businesses, A New Task Allotted To Statutory Auditors

Author:Ms Emilie Yildiz
Profession:Soulier Avocats

In a previous article published in October 20181, we addressed the bill on business growth and transformation, known as the "PACTE Bill" in French, and commented the provisions concerning the increase of the thresholds applicable for the appointment of statutory auditors and the end of the compulsory appointment of statutory auditors in certain types of companies.

The National Assembly has passed an amendment to the Bill and adopted it in first reading. The new version of the Bill allots a new task to statutory auditors: The performance of a legal audit of small companies.

The thresholds applicable for the appointment of a statutory auditor contemplated by the PACTE Bill

In order to empower businesses to innovate and create jobs, the PACTE Bill, currently under consideration by the Senate, includes several measures aimed at simplifying the life of small- and medium-sized businesses and mid-market companies.

One of these measures is the increase of the legal certification thresholds that we addressed in the aforementioned article in order to enable companies that do not exceed two of the following thresholds:

Balance sheet assets of 4 million euros; Turnover, excluding taxes, of 8 million euros; and/or 50 employees; to be relieved from the obligation to appoint a statutory auditor, which means a drop in business of approx. 25% for statutory auditors.

In order to prevent business reorganizations aimed at dividing a company into several small entities to escape the mandatory appointment of a statutory auditor, the PACTE Bill already provides that parent companies controlling a group that exceeds as a whole the applicable thresholds will still have the obligation to appoint a statutory auditor.

This last measure was considered insufficient by the interested parties and the National Assembly has amended Article 9 of the Bill2 in order to create a legal audit designed for small businesses, known as the "SB legal audit".

A new legal audit for small businesses: When and how?

Inspired by the proposals put forward in the De Cambourg report on the future of the profession of statutory auditors3, the objective of this new audit is to limit the impact that the increase of the thresholds applicable for the appointment of statutory auditors will have on the profession.

The statutory auditor would be mandatorily appointed for a term of three years4 and its new task would be to certify the accounts of businesses that do not exceed the thresholds...

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