BUSINESS CRISIS LAW: THE APPOINTMENT OF THE AUDITOR BETWEEN OBLIGATIONS AND OPPORTUNITIES

BUSINESS CRISIS LAW:
THE APPOINTMENT OF THE AUDITOR BETWEEN OBLIGATIONS AND OPPORTUNITIES
With today's article we continue our overview of the new Code of Business Crisis and Insolvency (CCI) : this legislation has since the current year and will have even more from 2020 a profound impact on the way the company is managed and on the entrepreneur's approach to the possible indicators of an alleged crisis.

In this context,  management control provides a solid basis on which to build a series of KPIs and indices  that on the one hand are concrete help to business decisions, on the other they can unequivocally constitute a complete fulfillment with respect to the new stringent regulations on business crisis.

In this context, the appointed auditor will find in management control, and in the indicators that come from this system, the necessary tool to put into practice the checks that the law imposes.



MANDATORY INTRODUCTION OF MANAGEMENT CONTROL AS AN INSTRUMENT FOR MONITORING THE ONCE OF THE CRISIS
SUPERVISORY BODY: BOARD OF STATUTORY AUDITORS, SINGLE AUDITOR AND AUDITOR
CONCLUSIONS


MANDATORY INTRODUCTION OF MANAGEMENT CONTROL AS AN INSTRUMENT FOR MONITORING THE ONCE OF THE CRISIS

We have already seen ( see the article LAW ON THE BUSINESS CRISIS: WHAT CHANGES FOR THE ENTREPRENEUR ) how it is mandatory, pursuant to the new Law on the Business Crisis, also for small and medium-sized enterprises to have a system of internal management control: in fact, the entrepreneur must necessarily have an operating procedure that allows him to prepare an early warning system that identifies the warning elements and the relevant anomalies which, together with the accounting and balance sheet data, allow verification of the going concern assumption.

In this sense, art. 13 of the CCII (Corporate Crisis Code) provides that crisis, income, equity and financial imbalances related to the specific characteristics of the company and the business activity carried out, detectable through specific indices, constitute crisis indicators KPI) which show the sustainability of the debts and the going concern prospects for the current year.

It is therefore clear that companies, in particular small and medium-sized ones, must take immediate action to establish, if it does not already exist, an adequate organizational structure, preferably developed by a controller external or internal to the company, capable of measuring and evaluating economic-financial balance and therefore business continuity.

For this purpose, the typical techniques of a management control system, allowing the preparation of budgets, business plans, business plans and interim financial statements, become fundamental for the entrepreneur in order to analyze the foreseeable management trend and to justify, possibly in future, its own work.

However, the introduction of an adequate control system is not the only obligation faced by companies based on the new law: in many cases it is necessary to provide for the (mandatory) appointment of a control body, be it a collegiate body, a single auditor or an auditor .



SUPERVISORY BODY: THE CHOICE BETWEEN BOARD OF STATUTORY AUDITORS, SINGLE AUDITOR AND AUDITOR

The Crisis Code has modified the limits for the obligation in the srl of the appointment of the control body or the auditor ( see the article LAW ON THE COMPANY CRISIS: MANAGEMENT CONTROL AND ROLE OF THE AUDITOR ).

Limited liability companies may choose to appoint the sole auditor or the single auditor, although the differences between the control body and the auditor are not insignificant.

In fact, the board of statutory auditors is a true corporate body, which actively participates in corporate life by being part of the meetings of the administrative body and the shareholders' meeting. The mayor has control and inspection powers, with the possibility of making reports and complaints; conversely, the powers of article 2403 of the Italian Civil Code cannot be extended to the auditor, therefore, he will deal with the auditing of the accounts

As is known, a limited degree of flexibility is allowed in srls, and in fact article 2477 provides that the articles of association may provide for the appointment of a control body or determine its competences and powers, including the statutory audit of the accounts. of an auditor. Unless otherwise provided in the articles of association, the supervisory body is made up of only one standing member .

Limited liability companies can therefore choose to appoint the sole auditor or the single auditor, even if the differences between the control body and the auditor are not insignificant.

It should not be forgotten that the board of statutory auditors, if required or more normally the sole auditor, is a true corporate body, which actively participates in corporate life by being part of the meetings of the administrative body and the shareholders' meeting.

So let's see what are the possible options:

- if the appointment is envisaged by the articles of association or by the articles of association, the company may opt for the control body or the auditor and if the articles of association do not provide otherwise, the control body is made up of only one effective member. The control body may be entrusted with the statutory audit of the accounts;

- if the appointment is foreseen to comply with the provision of article 2477 (new limits set by the ICCI), the company can choose between the control body or the auditor, but the control body, which can be monochrome, must be entrusted also of the statutory audit . If the company is obliged to draw up the consolidated financial statements or controls a company that is obliged to audit the accounts, the auditing of the accounts must be entrusted to an auditor and in this case we will have the coexistence between the control body and the auditor.

Lastly, it must be remembered that a specific statutory provision is essential to acquire the collegiate body.



CONCLUSIONS

Therefore, a new possibility for the auditor to actively “supervise” corporate governance emerges from the regulatory provisions, being able to intervene with reporting powers on the omissions of the administrative body.

In fact, according to the new Corporate Crisis Law, the corporate control bodies, the auditor and the auditing company, each within its own functions, have the obligation to verify that the administrative body constantly evaluates, assuming the consequent suitable initiatives, if the organizational structure of the company is adequate, if there is an economic and financial equilibrium and what is the foreseeable performance of the management, as well as to report immediately to the same administrative body the existence of well-founded indications of the crisis.

A new way of being an auditor is therefore outlined, with which companies will have to confront each other in the coming months.


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All this entails for companies, especially for small and medium-sized enterprises, not only a new obligation, as mentioned, but also an important opportunity: the confrontation by the entrepreneur with professional figures such as a statutory auditor, who must necessarily acquiring new and advanced tools for assessing the economic and financial balance in the company, will only lead to an overall growth of internal processes and the introduction of advanced management control systems which will not only allow compliance with regulatory obligations but will constitute the basis for a more aware corporate governance and for the development of a forecast phase still unknown in many medium-small businesses.

If you want to evaluate the role of auditor for your company with matchdrive professionals, ask our experts for free advice through the contact section of our site.