Institut des Réviseurs d'Entreprises- Luxembourg

The Institut des Réviseurs d’Entreprises (IRE) actively participates in the Commission de Surveillance du Secteur Financier (CSSF)’s committees and working groups, where it provides technical guidance, promotes best practices, and supports the implementation of the quality assurance (QA) system. The CSSF’s QA system complies with the requirements of the European Union Audit Directive and is aligned with SMO 1 requirements.

In addition, as required under the Law of 23 July 2016 concerning the audit profession, as amended, the IRE has implemented its own peer review system to ensure that its members comply with their legal obligations and professional rules in areas outside the statutory audit scope, as well as their obligations under anti-money laundering and counter-terrorist financing legislation.

The peer review system is risk-based. While there is no fixed review cycle in order to adapt to changing risks and circumstances, the review period does not exceed six years. Where the results of a review are unsatisfactory, the statutory auditor or statutory audit firm may be subject to follow-up measures or disciplinary procedures that may result in sanctions in accordance with the Audit Law.

The IRE reports that it maintains an ongoing process to ensure that its peer review system remains aligned with SMO 1 requirements. In addition, its Education Committee supports members through continuing professional development programs covering relevant professional standards. Accordingly, SMO 1 continues to be assessed as Sustain.

Current Status: Sustain

The Law of 23 July 2016 concerning the audit profession, as amended (Audit Law), together with the applicable grand-ducal regulation on professional qualifications and the Commission de Surveillance du Secteur Financier (CSSF) regulation on continuing education, establishes the initial professional development and continuing professional development requirements for statutory auditors and approved statutory auditors in Luxembourg.

The CSSF is responsible for establishing continuing professional development requirements. It also monitors compliance for approved statutory auditors, while the Institut des Réviseurs d’Entreprises (IRE) is responsible for monitoring compliance for statutory auditors.

Statutory auditors and approved statutory auditors are required by law and regulation to complete at least 120 hours of continuing professional development over a three-year period, with a minimum of 20 hours per year. Mandatory training areas include anti-money laundering and counter-terrorist financing, international accounting standards, auditing, commercial law, taxation, and other relevant technical subjects. The IRE makes its continuing professional development activities available to members through its website and ongoing education program.

The Audit Law and related regulations concerning initial professional development and continuing professional development are aligned with the European Union Audit Directive and the latest International Education Standards requirements applicable to the profession. The IRE also uses its best endeavors to support the incorporation of updated International Education Standards requirements into national legislation and regulation.

In addition, through its membership in Accountancy Europe, the IRE contributes comments on exposure drafts and consultations related to the International Education Standards. Accordingly, SMO 2 continues to be assessed as Sustain.

Current Status: Sustain

Under the Law of 23 July 2016 concerning the audit profession, as amended (Audit Law), the application of International Standards on Auditing (ISA) is required for all statutory audits in Luxembourg, and the Commission de Surveillance du Secteur Financier (CSSF) may issue standards in the field of statutory audit for matters not otherwise covered by the auditing standards. The CSSF also issues Luxembourg-specific add-ons and carve-outs where necessary.

The Institut des Réviseurs d’Entreprises (IRE) is empowered to issue standards for engagements outside the statutory audit scope. Accordingly, it has adopted other applicable International Auditing and Assurance Standards Board pronouncements, including International Standards on Assurance Engagements, International Standards on Review Engagements, and International Standards on Related Services, for auditors and audit firms. These pronouncements are adopted in the original English text without add-ons or carve-outs.

The IRE reports that it has established an ongoing process to adopt new and revised relevant International Auditing and Assurance Standards Board pronouncements and to monitor developments in ISA issued by the International Auditing and Assurance Standards Board. It also provides technical advice to the CSSF to support the timely updating of regulations in line with the most recent standards. In addition, the IRE indirectly contributes to the work of the European Group of Auditors Oversight Bodies through its technical assistance to the CSSF.

To support implementation, the IRE disseminates the currently applicable International Auditing and Assurance Standards Board Handbook and provides technical support to both its members and the CSSF. It also offers continuing professional development on ISA and other International Auditing and Assurance Standards Board pronouncements. Accordingly, SMO 3 continues to be assessed as Sustain.

Current Status: Sustain

The Commission de Surveillance du Secteur Financier (CSSF) has adopted the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants through CSSF regulation. The regulation includes Luxembourg-specific add-ons and carve-outs, and the CSSF maintains an ongoing process to incorporate new and revised ethical requirements as issued by the International Ethics Standards Board for Accountants.

The Institut des Réviseurs d’Entreprises (IRE) supports and promotes implementation among its members. For example, it makes the latest applicable handbook available to members through its website and includes training on new and revised ethical requirements in its annual continuing professional development program.

While the IRE maintains an established process to support implementation and timely dissemination of updates, the currently evidenced ethical requirements are not yet aligned with the latest 2025 edition of the International Code. Accordingly, SMO 4 is assessed as Review & Improve.

The IRE should focus on supporting the timely incorporation of the latest 2025 ethical requirements into the CSSF regulatory framework and continue strengthening member training and guidance to support implementation of future updates.

Current Status: Review & Improve

Public sector accounting standards in Luxembourg are established by the Ministry of Finance (MoF) through laws, regulations, and administrative circulars, and the jurisdiction continues to apply a national modified cash accounting framework.

While the Institut des Réviseurs d’Entreprises (IRE) does not have direct responsibility for the adoption of public sector accounting standards, it reports that it actively promotes and raises awareness of International Public Sector Accounting Standards (IPSAS). This includes participation in technical committees and working groups of various government ministries, including the Ministry of Finance.

At the regional level, the IRE also contributes to relevant initiatives through its participation in Accountancy Europe. Accordingly, given the nature of its mandate and its ongoing best endeavors to support awareness and reform discussions, SMO 5 continues to be assessed as Sustain.

Current Status: Sustain

The Law of 23 July 2016 concerning the audit profession, as amended (Audit Law), empowers the Commission de Surveillance du Secteur Financier (CSSF) to investigate and discipline approved statutory auditors and approved audit firms. In addition to the system maintained by the CSSF, the law also grants the Institut des Réviseurs d’Entreprises (IRE) authority to operate an enforcement system for statutory auditors, including investigative, disciplinary, and appeals processes. Both systems are aligned with the requirements of the European Union Audit Directive and SMO 6.

Within the framework of its legal responsibilities, the IRE Disciplinary Board has the authority to impose sanctions on members, including monetary fines, temporary prohibition from carrying out specific activities, and permanent prohibition from the right to practice.

Decisions of the Disciplinary Board may be appealed by both the member concerned and the General State Prosecutor. Appeals are brought before the Civil Chamber of the Cour d’Appel, which issues a final judgment.

The IRE reports that it maintains an ongoing process to keep members informed of disciplinary and administrative mechanisms through its annual report and website. Accordingly, SMO 6 continues to be assessed as Sustain.

Current Status: Sustain

In accordance with the European Union (EU) Accounting Directive, International Financial Reporting Standards (IFRS Accounting Standards) as adopted by the EU are mandatory for the preparation of consolidated financial statements of listed entities. In addition, non-listed entities may apply IFRS Accounting Standards as adopted by the EU for their consolidated financial statements. Upon authorization from the Commission des Normes Comptables (CNC), other non-listed entities may choose between IFRS Accounting Standards as adopted by the EU and Luxembourg generally accepted accounting principles for the preparation of their statutory financial statements.

The Institut des Réviseurs d’Entreprises (IRE) actively participates in the work of the CNC through its representatives on the Commission’s working committees. Through this involvement, the IRE provides technical advice on the application of EU and national accounting laws and regulations, as well as on the implementation of IFRS Accounting Standards.

The IRE also supports implementation through its continuing professional development program, which includes a full range of IFRS-related training for its members. These training offerings are made available through the IRE’s website and annual education program. Accordingly, SMO 7 continues to be assessed as Sustain.

Current Status: Sustain