Institut des Réviseurs d'Entreprises
Member | Established: 1984 | Member since 1995
IRE was established by Law in 1984 and is a mandatory membership organization for auditors and audit firms. IRE attributions are: (i) to defend the rights and interests of the profession; (ii) to issue standards for the fields of activity other than statutory audits; (iii) to ensure respect for professional standards and duties, except for those applicable to statutory audits; (iv) to ensure respect by its members of their professional obligations arising from the legislation relating to the fight against money laundering and terrorist financing; (v) to forestall and conciliate any disputes, other than those related to statutory audits, between its members, on the one hand, and between its members and third parties, on the other hand; (vi) to perform certain duties entrusted to it by the Commission de Surveillance du Secteur Financier (CSSF); (vii) to make any proposals in the interest of the profession to the CSSF; (viii) to exercise disciplinary authority by its Disciplinary Board; and (ix) to publish the list of statutory auditors and audit firms. Apart from IFAC, IRE is also a member of Accountancy Europe. IRE actively participates in the work of the CNC, CSSF, CAA and various other authorities and local professional associations.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
While IRE has no direct responsibility for the adoption and implementation of the QA review system for statutory audits in Luxembourg, IRE is involved in the Commission de Surveillance du Secteur Financier’s (CSSF) committees and working groups where it provides technical guidance and promotes best practices to those responsible for the QA system and assists in its implementation. The CSSF’s QA system complies with the EU Audit Directive and is in line with SMO 1 requirements.
Furthermore, as required by the Audit Law, IRE has implemented its own peer review system to ensure that its members respect their legal obligations and professional rules, other than those related to statutory audit, as well as their professional obligations arising from legislation relating to anti-money laundering and terrorism financing.
The peer review system is risk-based. There is no fixed frequency for the reviews in order to adapt to changing environment and risks, but it does not go beyond 6 years. In case of unsatisfactory results, the statutory auditor and statutory audit firm may be subject to follow-up measures or to a disciplinary procedure which may give rise to disciplinary sanctions in accordance with the Audit Law. IRE has established an ongoing process to maintain its peer review system in compliance with SMO 1 requirements. In addition, IRE Education Committee delivers continuing professional development programs to its members on subjects including quality control standards.
SMO 2: International Education Standards
The following laws and regulations organize the initial professional development (IPD) and continuing professional development (CPD) requirements for statutory auditors in Luxembourg: (i) the Audit Law, (ii) the grand-ducal regulation determining the requirements for the professional qualification of statutory auditors and approved statutory auditors and (iii) the Commission de Surveillance du Secteur Financier (CSSF) regulation organizing continuing education of statutory auditors and approved statutory auditors. CSSF is responsible for establishing CPD requirements. It also monitors the CPD requirements for approved statutory auditors while IRE is responsible for monitoring the CPD requirements for statutory auditors.
Statutory auditors are required by law and regulation to undertake at least 120 hours of CPD training over a period of 3 years (minimum 20 hours per year) with mandatory training in AML/FT matters. Approved statutory auditors are required by law and regulation to undertake at least 120 hours of CPD training over a period of 3 years (minimum 20 hours per year) with mandatory training in subjects as AML/FT, international accounting standards, audit, commercial law, tax, etc.
The Audit Law and regulations requirements concerning IPD and CPD are compliant with the Audit Directive and are converging to latest IES requirements. IRE uses its best endeavors to ensure all the recent IES requirements will, at some point, be incorporated into national legislation and regulations.
Through its membership with Accountancy Europe, IRE participates in providing comments to exposure drafts as issued by IAESB. IRE does not have the resources to contribute directly to the standard-setting bodies’ exposure drafts.
IRE CPD activities are available on its website.
SMO 3: International Standards on Auditing
According to the Audit Law, the application of ISA is required in all statutory audits and the Commission de Surveillance du Secteur Financier (CSSF) may issue standards in the field of statutory audit for matters that are not covered by the auditing standards. The CSSF has published add-ons / carved-out related to ISA, ISQC 1 and the Code of Ethics. Those add-ons / carved-out are available on the CSSF website, many in English. Currently in force is the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements—2016–2017 Edition.
IRE is empowered to issue standards on various activities except for those applicable to statutory audit. It has therefore adopted other applicable IAASB pronouncements such as ISAE, ISRE, and ISRS for its members. IRE has established an ongoing process to adopt new and revised relevant IAASB pronouncements albeit with a slight delay. Pronouncements are adopted in the original English text with no add-ons/carve-outs.
The Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements—2016–2017 Edition—is published on IRE’s website.
IRE provides technical support to both its members and the CSSF. To support its members, the IRE provides continuing professional development on ISA and other IAASB pronouncements.
IRE also monitors changes to ISA to provide advice to the CSSF and strives to ensure that regulation is regularly up-dated to comply with the most recent IAASB standards.
IRE indirectly contributes to the work of the European Group of Auditors Oversight Bodies through its technical assistance to the CSSF.
SMO 4: Code of Ethics for Professional Accountants
The Audit Law stipulates that the Commission de Surveillance du Secteur Financier (CSSF) is responsible for the adoption of standards on professional ethics. The code of ethics of the audit profession in Luxembourg, which corresponds to the code of ethics as issued by the IESBA in its version 2016 as amended and published on 21 September 2016, is mandatory. The CSSF has published add-ons / carved-out related to the Code on its website.
The 2016 IESBA Code of Ethics is available on IRE website.
IRE uses its best endeavors to promote and support the implementation of the 2016 IESBA Code of Ethics to its members. Additionally, through the IRE Education Committee, IRE ensures that its yearly continuing education program include trainings on new and revised IESBA Code of Ethics provisions. Recent new provisions are currently on the agenda of the CSSF “Comité Technique d’Audit” (Audit Technical Committee) with the objective to implement them before the end of the first 2019 semester.
SMO 5: International Public Sector Accounting Standards
Public sector accounting standards are set by the Ministry of Finance through regulations and circulars and Luxembourg is currently using a modified cash accounting system. While IRE has no responsibility for the adoption of public sector accounting standards, the institute reports it has an ongoing process to promote and raise awareness of IPSAS adoption. This includes involvement in the different technical committees of various government ministries including the Ministry of Finance. At a regional level, IRE also participates in Accountancy Europe initiatives.
SMO 6: Investigation and Discipline
The Audit Law empowers the Commission de Surveillance du Secteur Financier (CSSF) to investigate and discipline auditors, individuals and audit firms. In addition to the system maintained by the CSSF, the law also grants the IRE the power to carry out controls and operate a system which includes investigative, disciplinary, and appeals processes. Both systems are compliant with the EU Audit Directive and SMO 6.
Within the framework of IRE responsibilities as conferred to by law, the IRE Disciplinary Board has the power to impose sanctions on any of its members including monetary fines, prohibition to exercise specific activities or permanent prohibition on the right to practice. Decisions of the Disciplinary Board may be challenged through appeal both by the member found guilty and by the General State Prosecutor. The appeal is then brought before the Civil Chamber of the Court of Appeal which will give its decision by way of a final judgment.
IRE has established an ongoing process to keep its members informed of the disciplinary and administrative mechanisms via its annual report and website.
SMO 7: International Financial Reporting Standards
In accordance with the EU Accounting Directive, EU-endorsed IFRS are mandatory for the preparation of consolidated financial statements of listed entities. In accordance with Luxembourg law, listed entities are also allowed—but not required—to prepare and publish their statutory annual financial statements under IFRS-EU. If such option is not exercised, statutory annual financial statements of listed entities are prepared in accordance with domestic provisions (“LuxGAAP”).
In addition, non-listed entities are permitted to apply EU endorsed IFRS for their consolidated financial statements. Upon authorization from the Luxembourg accounting advisory board (“CNC”), other non-listed entities have the choice between using EU endorsed IFRS or LuxGAAP for the preparation of their statutory financial statements
IRE actively participates in the activities of CNC specifically through its representatives in all CNC working committees. Through its involvement in the subgroups, IRE provides advice to the CNC on the application of the EU and national accounting laws and regulations as well as the implementation of IFRS. IRE CPD offerings to its members include a full range of IFRS trainings. The CPD offering is available on IRE website.
IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.