The statutory audit of financial statements is a legal requirement for certain companies in Luxembourg, in accordance with current legislation. Its purpose is to ensure financial transparency, the reliability of accounts, and the protection of stakeholders (investors, creditors, business partners).

Which Companies Are Subject to an Audit?

Under Luxembourg law, a company is required to undergo an audit if it exceeds two of the following three thresholds for two consecutive financial years:

✔ Total balance sheet exceeding €7.5 million
✔ Net turnover exceeding €15 million
✔ Average of 50 employees

Companies that meet these criteria must have their accounts certified by an approved statutory auditor (Réviseur d’Entreprises Agréé – RA) registered with the Commission de Surveillance du Secteur Financier (CSSF).

💡 Real-life example: A fast-growing SME recently exceeded these thresholds for two consecutive years. Without a statutory audit, it risked penalties and a loss of investor confidence. By implementing a compliant audit, it was able to demonstrate its solid financial management and attract new funding.

💡 Good to know: Companies in the financial sector and certain regulated entities must undergo an audit, regardless of their size.

📌 Source: Commission des Normes Comptables du Luxembourg (CNC)

What Are the Penalties for Non-Compliance?

Failing to carry out a statutory audit when required exposes the company and its executives to various types of penalties.

Financial Penalties

Non-compliance may result in substantial fines imposed by the relevant authorities. The amount of these fines depends on the severity of the infraction and the size of the company.

Administrative and Legal Penalties

  • Company executives may be held personally liable for failing to comply with audit obligations.
  • Regulators may impose measures such as the forced dissolution of the company or the freezing of assets.
  • Financial sector companies risk operational restrictions, or even the suspension or revocation of their business license.

What Are the Risks and Benefits of Compliance and Transparency?

Beyond official sanctions, failing to meet audit obligations can pose serious risks to a company’s financial health and reputation.

Loss of Investor and Partner Confidence: An audit assures stakeholders that financial statements are reliable and compliant with regulations. Without an audit, investors and banks may hesitate to provide funding.

Risk of Fraud and Undetected Irregularities: Without independent oversight, accounting errors may go unnoticed, and fraudulent practices may develop without detection.

Damage to the Company’s Reputation: A company that fails to meet its audit obligations may suffer reputational damage, particularly in the event of legal disputes or tax inspections.

Conclusion

Is your company compliant with these requirements? Take the time to assess your situation to avoid potential penalties and maintain your credibility.

Failing to comply with audit obligations can have serious consequences—not just financial penalties, but also a loss of trust from partners and a weakened financial position.

By working with qualified experts, you ensure legal compliance, strengthen your credibility, and promote your company’s growth.

Need expert advice on your audit obligations? Contact us.