Italian law sets out 3 conditions under which auditing and corporate governance are mandatory for a limited liability company:
In addition, in Italy there are laws that extend mandatory auditing activity to the following industries or companies:
The two most common auditing systems adopted in Italy are:
There are 3 alternative models for corporate governance that can be chosen by the company at its point of incorporation. Most companies choose the Ordinary Model which states that the company management is entrusted to a Board of Directors and that the controlling power over the Board of Directors is attributed to the Board of Statutory Auditors (“Collegio Sindacale”) who must ensure the legality and effectiveness of the companies governance.
The companies must appoint an auditing firm for general accounting control and the assessment of financial statements, including consolidated and extraordinary balance sheets. The Auditing Company also verifies the regular keeping of the company accounts and the consistency of the financial statements with the company’s book and accounting records. The Shareholders Meeting appoints the AC, whose mandate runs for 3 financial years.
The auditing of the accounts can be exercised directly by the Board of Auditors without the appointment of an Auditing Company if the following 2 conditions are respected: