Intent Declared Summary

According to a 2006 self-assessment prepared by the Institute of Companies' Auditors (IRE) as a part of the International Federation of Accountants' (IFAC) Member Body Compliance Program, audit of financial statements in Luxembourg is conducted in accordance with International Standards on Auditing (ISAs) issued by the Auditing and Assurance Standards Board (IAASB). The IRE adopted the pronouncements of the IAASB without any modifications and, as explained in the self-assessment, ISAs are supplemented with additional guidance for application in Luxembourg. However, the self-assessment noted that not only there was a timing difference between the IFAC’s and IRE’s effective dates, but also some of the amendments to the ISAs had not been adopted in Luxembourg, although the IRE was working on addressing these shortcomings. Luxembourg complies with the European Union Directive No. 2006/43/EC which requires all statutory audits of annual and consolidated accounts to be carried out in accordance with international auditing standards as adopted by the European Commission (EC). Although it is not specified which standards constitute international auditing standards, it is widely anticipated that ISAs, as issued by the IAASB, will be adopted. Per a 2009 EC publication, Luxembourg has fully transposed the above-mentioned Directive into its national legislation.

General Overview

According to the description of the legal framework provided in the 2005 Institute of Companies' Auditors (IRE) self-assessment, financial reporting requirements in Luxembourg are governed by the Law on Commercial Companies. Additionally, listed companies must comply with the 1998 Law Concerning the Supervision of the Markets of Financial Assets, and the Rules and Regulations of the Luxembourg’s Stock Exchange (LSEX). Listed companies must also have their annual accounts audited by one or more registered auditors appointed by the IRE. Apart from listed companies, entities operating within the financial and insurance sector - irrespective of size and legal form - must also be audited. Other companies that fulfill the required size criteria may be exempted from the auditing requirement.

According to a 2006 IRE self-assessment, the audit of financial statements is conducted in accordance with International Standards on Auditing (ISAs), which are adopted without any modifications as issued by the International Auditing and Assurance Standards Board (IAASB). The self-assessment explained that the IRE had enacted ISAs into its national auditing standards albeit at the time of the report there was a timing gap between the effective dates of the national standards and those of their international equivalents. Luxembourg thus complies with the Directive 2006/43/EC of the European Parliament and Council require all statutory audits of annual and consolidated accounts to be carried out in accordance with international auditing standards as adopted by the European Commission (EC). Although it is not specified which standards constitute international auditing standards, it is widely anticipated that ISAs as issued by the IAASB will be adopted. Per a 2009 EC publication, Luxembourg has fully transposed the above-mentioned Directive into its national legislation.

Per the 2005 IRE self-assessment, the financial sector is governed by the 1993 Law Regarding the Financial Sector, the 1988 Law Regarding Undertakings for the Collective Investment for Transferable Securities and the 1999 Law Regarding Pension-Funds. Further, the insurance sector must comply with requirements laid out in the 1991 Law Modifying Law on Insurance Services, and the 1994 Law Regarding the Annual Accounts and Consolidated Annual Accounts of Insurance Companies. Insurance companies are supervised by the Luxembourg’s Insurance Commission (CAA). The Commission for the Supervision of the Financial Sector (CSSF) is the financial market regulator that supervises listed companies (including listed financial institutions and insurance companies), and banks. The CSSF reports to the Ministry of Finance. Experts from the legal, auditing, and accounting professions and representatives of the business are invited to discuss developments in the CSSF committees. These committees have an advisory role to the government agency. Appointment/dismissal of auditors of companies operating in the financial or insurance sector must be authorized by the related supervisory body. As noted in the self-assessment, although the applicable authorities do not set any auditing standards, they can extend the scope of the audit.

According to the 2005 self-assessment, the IRE, empowered by Article 22 of the law of June 28, 1984, is responsible for setting auditing standards in Luxembourg, and is accountable to the Ministry of Justice. With regard to the national ethics requirements, the 2006 self-assessment noted that the IRE had adopted the IFAC Code of ethics, with modifications. As explained in the self-assessment, "the Institute [IRE] has enacted into its national standards the IFAC Code of Ethics completed with: (1) some specific aspects of national legislation; (2) some provisions of the EU Recommendation on the Independence of the Statutory Auditors when more stringent" (p. 47). The IRE is listed as a member on the International Federation of Accountants website.

The Principles

IIISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (effective 2009)

According to its 2006 self-assessment, the IRE adopted ISA 200 effective for periods beginning on or after December 15, 2004. However, the IAASB subsequently revised ISA 700 which led to conforming amendments in ISA 200. As explained in the 2006 IRE self-assessment "ISA 700 revised version is currently being analyzed. It is planned to be adopted in June 2007 with an effective date of July 1, 2007 or January 1, 2008" (p. 84). As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 200 in Luxembourg.

IIISA 210 Agreeing the Terms of Audit Engagements (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 210 in effect as of September 2005, and “there is additional national guidance to address Luxembourg engagement letter and general conditions” (p. 77). However, the IAASB subsequently revised ISA 700 which led to conforming amendments in ISA 210. As explained in the self-assessment "ISA 700 revised version is currently being analyzed. It is planned to be adopted in June 2007 with an effective date of July 1, 2007 or January 1, 2008" (p. 84). As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 210 in Luxembourg.

ENISA 220 Quality Control for an Audit of Financial Statements (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 220R in effect as of September 2005.

IIISA 230 Audit Documentation (effective 2009)

According to the 2006 self-assessment, the IRE has adopted ISA 230 in effect as of September 2005, with additional national guidance. However, the IAASB subsequently revised ISA 230. At the time of the self-assessment, as explained by the IRE, "ISA 230 revised version is currently being analyzed. It is planned to be adopted in June 2007 with the effective date of July 1, 2007 or January 1, 2008" (p. 84). As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 230R in Luxembourg.

ENISA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements (effective 2009)

According to the 2006 self-assessment, the IRE has adopted ISA 240 in effect as of September 2005 with additional national guidance to address Luxembourg legal requirements on money laundering and terrorism financing.

ENISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2009)

According to the 2006 self-assessment, the IRE has adopted ISA 250 in effect as of September 2005.

ENISA 260 Communications of Audit Matters with Those Charged With Governance (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 260 in effect as of September 2005.

ENISA 300 Planning an Audit of Financial Statements (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 300 in effect as of September 2005.

ENISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 315 in effect as of September 2005.

ENISA 320 Materiality in Planning and Performing an Audit (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 320 in effect as of September 2005.

ENISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 330 in effect as of September 2005.

ENISA 402 Audit Considerations Relating to an Entity Using a Service Organization (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 402 in effect as of September 2005.

ENISA 500 Audit Evidence (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 500 in effect as of September 2005.

ENISA 501 Audit Evidence—Specific Considerations for Selected Items (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 501 in effect as of September 2005.

ENISA 505 External Confirmations (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 505 in effect as of September 2005.

ENISA 510 Initial Audit Engagements—Opening Balances (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 510 in effect as of September 2005.

ENISA 520 Analytical Procedures (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 520 in effect as of September 2005.

ENISA 530 Audit Sampling (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 530 in effect as of September 2005.

ENISA 540 Audit of Accounting Estimates (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 540 in effect as of September 2005.

ENISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004, superseded by ISA 540 in December 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 545 in effect as of September 2005.

ENISA 550 Related Parties (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 550 in effect as of September 2005.

IIISA 560 Subsequent Events (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 560 in effect as of September 2005. As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 560 in Luxembourg.

ENISA 570 Going Concern (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 570 in effect as of September 2005.

ENISA 580 Written Representations (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 580 in effect as of September 2005.

ENISA 600 Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors) (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 600 in effect as of September 2005. As explained in the self-assessment," there is additional national guidance to address Luxembourg legislation." (p. 80).

ENISA 610 Using the Work of Internal Auditors (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 610 in effect as of September 2005.

ENISA 620 Using the Work of an Auditor’s Expert (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 620 in effect as of September 2005.

IIISA 700 Forming an Opinion and Reporting on Financial Statements (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 700 in effect as of September 2005. However, the IAASB subsequently revised ISA 700. At the time of the self-assessment, as explained by the IRE, "ISA 700 revised version is currently being analyzed. It is planned to be adopted in June 2007 with the effective date of July 1, 2007 or January 1, 2008" (p. 84). As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 700 in Luxembourg.

IIISA 705 Modifications to the Opinion in the Independent Auditor’s Report (effective 2009)

According to its 2006 self-assessment, ISA 701 has not been adopted. However, at the time of the self-assessment, as explained by the IRE, "ISA 701 is currently being analyzed. It is planned to be adopted in June 2007 with the effective date of July 1, 2007 or January 1, 2008" (p. 84). As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 701 in Luxembourg.

ENISA 710 Comparative Information—Corresponding Figures and Comparative Financial Statements (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 710 in effect as of September 2005.

ENISA 720 The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 720 in effect as of September 2005.

IIISA 800 Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (effective 2009)

According to its 2006 self-assessment, the IRE has adopted ISA 800 in effect as of September 2005. However, the IAASB subsequently revised ISA 700 which led to conforming amendments in ISA 800. As explained in the 2006 IRE self-assessment "ISA 700 revised version is currently being analyzed. It is planned to be adopted in June 2007 with an effective date of July 1, 2007 or January 1, 2008" (p. 84). As of December 2009, there is insufficient information publicly available as to the adoption of the latest version of ISA 800 in Luxembourg.