Accountancy in Italy

>> Audit Requirements in Italy

Corporate governance  and accounting control

Italian law sets out 3 conditions under which auditing and corporate governance are mandatory for a limited liability company:

  1. 2 of the following 3 parameters are exceeded for at least 2 accounting periods:
    • total assets are worth more than 4.4 million euros;
    • profits are greater than 8.8 million euros;
    • the company has more than 50 employees;
  2. the company has to draw up a consolidated balance sheet;
  3. the holding company controls a subsidiary that is required to have a legal audit of its financial statements.

In addition, in Italy there are laws that extend mandatory auditing activity to  the following industries or companies:

  • listed companies;
  • investment funds;
  • stock brokerage companies;
  • open-end investment companies;
  • corporations taken over by the municipality; insurance brokers;
  • some others.

The two most common auditing systems adopted in Italy are:

Corporate governance

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.

Accounting control

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:

  1. the company does not collect capital from the market;
  2. the company does not draw up  a consolidated balance sheet.

Latest version updated 31st October 2017

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