What the statutory audit covers
The statutory auditor audits a company’s accounts on behalf of its shareholders and third parties. The engagement is permanent, but it excludes any interference in management (Article 166 of Law 17-95): the auditor checks, but does not decide. Each year it ends with a report to the meeting that approves the accounts, in which the auditor certifies the accounts, certifies them with qualifications or refuses to certify them (Article 175).
Only a chartered accountant registered on the roll of the Order can carry out this engagement (Article 160).
Who must appoint a statutory auditor?
- All public limited companies (SA), whatever their size (Article 159 of Law 17-95). Companies that make public offerings, banks, and credit, investment, insurance, capitalization and savings companies appoint at least two.
- SARLs whose turnover, at the close of a financial year, exceeds 50 million dirhams excluding tax (Article 80 of Law 5-96). Below this threshold, an appointment remains possible at the request of the partners. Our article on the statutory auditor threshold for SARLs details this point.
- General partnerships (SNC) above the same threshold (Article 12 of Law 5-96) and partnerships limited by shares (Article 34).
The term of office covers three financial years (Article 163 of Law 17-95). Managers who have not arranged for the appointment of the statutory auditor face criminal penalties (Article 403), and resolutions passed without a duly appointed statutory auditor can be annulled (Article 178).
How the engagement runs
Acceptance and the engagement letter. Before accepting, we review the business, the organization and the prior-year accounts. The engagement letter then sets the timetable, the contacts and the documents expected.
The interim fieldwork. It takes place during the financial year. We examine internal control over the main cycles (sales, purchases, payroll, cash, inventories) and test the controls we intend to rely on. Weaknesses identified are reported to management at this stage, while there is still time to correct them.
The final fieldwork. After the year-end, we audit the financial statements: confirmations from banks, customers and suppliers, observation of the physical stock count, review of estimates and provisions. Law 17-95 provides that the financial statements and the management report must be made available to the statutory auditor at least sixty days before the notice convening the annual general meeting (Article 173). Our article on preparing for the statutory auditor’s fieldwork lists the documents to gather.
The reports. We issue the general report on the accounts and, where applicable, the special report on regulated agreements, filed at the registered office at least fifteen days before the meeting (Article 174).
What you receive
- The statutory auditor’s general report on the financial statements.
- The special report on regulated agreements, when the company has entered into any.
- A management letter setting out the internal control weaknesses and the proposed corrections. This document is not required by law, but it is often the one management uses most.
Other audit engagements
Contribution and merger appraisal. When a company receives a contribution in kind, or merges, an appraiser assesses the value of the assets contributed or the terms of the transaction, so that existing and new shareholders are treated fairly.
Conversion appraisal. When a company converts into an SA, a conversion auditor (commissaire à la transformation) assesses the value of its assets and liabilities and certifies that its net assets at least cover its share capital (Article 36 of Law 17-95).
Contractual audit. At the request of the shareholders, a group or a lender, we audit accounts that the law does not require to be certified: accounts of an SARL below the threshold, a subsidiary’s consolidation package, interim accounts. Subsidiaries of foreign groups are often in this situation; our article on the audit of a Moroccan subsidiary of a foreign group presents their obligations. For the purchase or sale of a business, the appropriate engagement is due diligence.
Frequently asked questions
When should an SARL that crosses the threshold appoint its statutory auditor?
The threshold is assessed at the close of a financial year. An SARL whose turnover exceeds 50 million dirhams excluding tax must therefore plan the appointment at the meeting that approves those accounts, so that the auditor can act on the following financial year.
Can the statutory auditor be changed during the term of office?
Not freely. The auditor is appointed for three financial years. The auditor may be removed from office by the president of the court in the event of misconduct or incapacity (Article 179), or resign following the procedure in Article 179 bis. Our article on choosing and changing the statutory auditor details the steps.
What happens if certification is refused?
The auditor gives the reasons for the refusal in the report (Article 175). The report is sent to the shareholders before the meeting and filed with the court registry together with the financial statements. Banks and partners who ask for it therefore become aware of it. The management letter issued during the engagement serves precisely to correct what can be corrected before the year-end.
How are the statutory auditor’s fees set?
They depend on the company’s size, its sector, the quality of its internal control and the time needed for the audit work. They are proposed after an initial review of the company and its accounts.
