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Compliance vs Audit: Understanding the Requirements in Spain
Spain’s accounting audit law requires all companies and entities to have their financial statements audited under specific circumstances. The Additional Provision no. One of Accounting Audit Law 22/2015 of July 20, 2015 outlines these requirements.
Who Needs an Audit?
Companies that issue securities on official secondary markets or multilateral trading systems, engage in financial intermediation activities, or receive government grants are required to have their financial statements audited. Additionally, entities whose corporate purpose includes regulated activities, such as insurance and pension funds, must also undergo an audit.
The Objective of the Audit
The objective of the audit is to verify whether the financial statements provide a true and fair view of the company’s equity, financial position, and results. The auditor must issue a detailed report on the outcome of the audit work, which includes:
- An absence of material misstatements
- Provision of services other than audit services
- Directors’ report
- Declaration of responsibility
- Description of the audit objective
- Mention of the auditor’s name and address
Circumstances that May Prevent Audit Report Issuance
The regulations also outline circumstances that may prevent the issuance of the audit report or result in withdrawal from the contract. In such cases, the auditor must provide a detailed statement to the audited entity within 15 calendar days.
Royal Decree 2/2021: Additional Provisions
Spain’s Audit Law is further expanded upon in Royal Decree 2/2021, which sets out provisions on:
- Content of audit contracts
- Joint audits
- Payment of audit fees
- Measures to avoid conflicts of interest or commercial relations that may compromise the independence of the auditor
Conclusion
Understanding compliance vs. audit requirements in Spain is crucial for companies and entities subject to these regulations. Failure to comply can result in penalties and other consequences. It is essential to ensure compliance with these regulations to avoid any negative outcomes.