SARLs with more than 60 partners who do not exceed 2 of the following 3 limits can have their accounts audited by an internal auditor only (commissaire):

• balance sheet total: EUR 4.4 million;
• net turnover: EUR 8.8 million;
• average number of full time staff during the financial year: 50.

Companies that exceed 2 of these limits must have their accounts audited by a statutory auditor.

The crossing of these limits must:

• be of a certain stability;
• continue for 2 consecutive financial years.

Internal auditor

Mandate of an internal auditor

Internal auditors are an organ of the company. They are appointed in the the company's constitutional documents and are reelected at intervals determined in the same.

An SARL can appoint one or more internal auditors, whether they are partners or not. In practice, the mandate as internal auditor cannot be held concurrently with the mandate as manager of the same company.

There are no specific requirements in terms of competence or qualification to carry out the mandate as an internal auditor.

Competencies of an internal auditor

In principle, internal auditors have 2 main assignments:

• monitoring the operations of the company;
• auditing the annual accounts and the management report.

The supervision of business operations extends through the financial year. The auditor has unlimited rights of supervision: he/she can, at any time, access:

• the accounting books;
• the correspondence;
• the minutes and reports;
• any document established by the company.

The internal auditor can carry out regular checks without prior authorisation.

The auditor's report must be made available to all partners during the 15 days prior to the general meeting.

The internal auditor also has the right to call a general meeting if he deems it necessary.

Responsibilities of the internal auditor

The internal auditor is liable towards the company for the implementation of the mandate he was given and for the management errors he committed. We speak of contractual responsibilities. Internal auditors have an obligation of means (input based obligation) but not an obligation of result (output based obligation). He may turn to the courts of justice (juge des référés) should the company not allow him to perform his duties properly.

Besides, the internal auditor is liable towards the company and third parties for damages resulting from any legal infractions or infractions to the company’s articles of association.

An internal auditor remains liable for errors committed during his/her mandate, even after his/her resignation.

Internal auditors are deemed to have committed an error if they fail to report, during the general meeting, that the following elements were missing:

• the publication of the balance sheet;
• the management organ of the company.

An internal auditor can be discharged by the shareholders' general meeting.

Approved statutory auditor

Mandate of an approved statutory auditor

In opposition to the internal auditor, the approved statutory auditor is not an organ of the company. The general meeting appoints one or more approved statutory auditors for the statutory audit of accounts, when it exceeds 2 out of 3 of the following criteria for 2 consecutive financial years:

• balance sheet total: EUR 4.4 million;
• net turnover: EUR 8.8 million;
• average number of full time staff during the financial year: 50.

The statutory auditor is bound to the company by a fixed-term service agreement. It can only be cancelled for serious grounds.

The approved statutory auditor must be independent of the company he is auditing. Statutory auditors can be a legal or a natural person, registered with the Luxembourg institute of registered auditors (Institut des Réviseurs d'Entreprises - IRE).

Competencies of statutory auditors

In particular, the approved statutory auditor is responsible for advising whether the management report is in line with the financial statements for the year and has been prepared in accordance with legal requirements.

The statutory auditor's mission only begins after the annual financial statements and the management report have been established by the managers.

A statutory auditor is not entrusted with the monitoring of the operations of the company as is the case for the internal auditor.

Responsibilities of approved statutory auditors

A statutory auditor has an obligation of means and not an obligation of result.

The service agreement between the company and the approved statutory auditor protects the latter from the consequences of unintentional errors. Nevertheless, statutory auditors cannot be completely relieved from their responsibilities.

Civil or professional litigation against a statutory auditor can only be undertaken within 5 years of the date of the auditor's report.

The statutory auditor is bound by professional secrecy towards third-parties and his peers.

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