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    Country by Country Financial Reporting and Auditing Framework

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    Luxembourg – Crowe Horwath Luxembourg (prepared January 2015)

     

    Preparation and Filing of Statutory Annual Accounts

     

    Public companies limited by shares (sociétés anonymes), corporate partnerships limited by shares (sociétés en commandite par actions), private limited liability companies (sociétés à responsabilité limitée), co-operative companies (sociétés coopératives), economic interest groups (groupements d'intérêt économique), european economic interest groups (groupements européens d'intérêt économique), common limited partnerships (sociétés en commandite simple), special limited partnerships (sociétés à commandite spécial), and general corporate partnerships (sociétés en nom collectif) registered in Luxembourg and luxembourgish branches of foreign companies ("entities") are required to prepare annual accounts and file these at the Trade and Companies Register.

     

    All entities are required to file their annual accounts at the Trade and Companies Register within 1 month after the annual general meeting approving the accounts and deciding the profit allocation. The general meeting may not be held more than 6 months after the balance sheet date.

     

    All entities are required to prepare full annual accounts including a balance sheet, a profit and loss account and notes to the annual accounts. Non-listed small sized entities have an option to file abbreviated annual accounts. Abbreviated annual accounts provide for condensed balance sheet and less notes disclosures.

     

    Large and medium sized entities are required to prepare a management report. Small sized entities are not obliged to prepare a management report, provided that they include in their notes to the accounts the information concerning any acquisition of their own shares. Listed entities are required to prepare a management report regardless of their size. It is permitted not to publish the management report but the report has instead to be made available to the public at the registered office of the entity, and a copy of all or part of such report has to be made available free of charge upon request.

     

    Parent companies of groups are required to prepare and file consolidated annual accounts, besides their annual accounts, that also comprise a group management report, unless they are granted a consolidation exemption.

     

    Consolidation Exemptions

    • Private asset Management Company (sociétés de gestion de patrimoine familial) - A consolidation exemption is granted under special conditions not detailed here, to this form of financial holding as annual accounts are deemed sufficient regarding the information needs of shareholders and third parties.
    • Small group exemption - A parent company shall be exempt from the consolidation obligation if at the balance sheet date of the parent company, the undertakings who would have to be consolidated do not together, on basis of their latest annual accounts, exceed over two consecutive years the limits of two of the following three criteria:
    • Balance sheet total: 17,5 million Euro
    • Net turnover: 35 million Euro
    • Average number of full-time staff employed during the financial year: 250 employees.

    The criteria relating to the balance sheet total and net turnover may be increased by 20% if intercompany balances have not been cancelled. This exemption does not apply to EU listed companies.

    • EU Parent exemption - When a parent company is also a subsidiary undertaking that is governed by the law of a Member State of the EU and if this parent undertaking publishes its consolidated accounts, its consolidated management report and its audit report in Luxembourg, this parent undertaking is exempt from the consolidation obligation. This exemption does not apply to EU listed companies.
    • Non EU Parent exemption - There is an additional condition compared to the EUR Parent exemption: the accounts of the parent undertaking have to be drawn up in accordance with Luxembourg Law or in an equivalent manner.

    Financial Reporting Framework

     

    Listed entities are required to prepare their consolidated annual accounts in accordance with International Financial Reporting Standards (IFRS). IFRS is that adopted by the EU. However they have an option to prepare their annual accounts in accordance with LUX GAAP (as defined below) or IFRS.

     

    All other entities in Luxembourg, subject to any other requirements which may be otherwise specified, have the option to prepare their annual accounts and consolidated annual accounts in accordance with accounting principles promulgated by Luxembourg Company Law (Law of 10 August 1915 on commercial companies, as amended) and Law of 19 December 2002 on the Trade and Companies Register and on the accounting records and annual accounts of undertakings, as amended) and the Standard Chart of Accounts ("LUX GAAP") or in accordance with IFRS. Even if IFRS are used, some LUX GAAP requirements still apply (i.e. additional mandatory disclosures have to be included in the notes to the accounts).

     

    The Minister of Justice may on a case by case basis accept other foreign GAAPs for the preparation of the consolidated annual accounts.

     

    Audit Requirements for Companies Registered in Luxembourg

    In Luxembourg, all entities must have their annual accounts audited by one or more approved statutory auditors ("Réviseur d'entreprises agréé"), member(s) of the "Institut de réviseurs d'entreprises (IRE)", unless they are exempted.

     

    Audit Exemptions

    • Small sized companies - Entities are exempted from the obligation to have their annual accounts audited, if, for two consecutive financial years  date, they  do not exceed the limits of two of the following three criteria:
    • Balance sheet total: 4,4 million euro
    • Net turnover: 8,8 million euro
    • Average number of full-time staff employed during the financial year: 50 employees.
    • Legal Form - General corporate partnerships and co-operative companies are exempted from the obligation to have their annual accounts audited whatever the size of the company.

    Companies subject to the supervision of the Commission de Surveillence du Secteur Financier ("CSSF") or Commissariat aux Assurances ("CAA") must have their annual accounts audited regardless their size and legal form of companies

     

    Audit Appointment and Rotation

     

    Auditors are appointed by the general meeting of shareholders or members of the entity or at the constitution of the entity, for a period laid down by contract.

     

    In all listed companies, the key audit partner(s) responsible for carrying out a statutory audit shall rotate from the audit engagement within a maximum period of seven years from the date of appointment and shall not be authorised to participate in the audit of the audited entity again until after a period of at least two years.

     


     

    Auditing Standards

     

    All audit firms in Luxembourg are required to carry out their audits and express an opinion on the (consolidated) annual accounts in accordance with International Standards on Auditing (ISAs) as adopted for Luxembourg by the CSSF.

     

    Ethical Framework

     

    Crowe Horwath Luxembourg is bound by the IESBA Code of Ethics for Professional Accountants. Additional guidance has been issued by the CSSF to reflect local or legal requirements in Luxembourg.

     

    Audit Regulation

     

    Audit firms in Luxembourg are subject to quality assurance review conducted by the CSSF at least every six years. Audit firms which perform audits for public interest entities are subject to these inspections every three years.

     

    Transparency Report

     

    Audit firms that carry out the statutory audit of public-interest entities are required to publish on their website, within three months of the end of each financial year, an annual (transparency) report that includes amongst other the respective audit firm's governance and ownership structure, its quality control and monitoring system, its independence policies and measures, its continuing professional education processes and its partners 'remuneration information.


     


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