Deontologie et independence du reviseur d’entreprises et de l’expert comptable
Prof. Stephane Cousin (EY Luxembourg)
Exam: 14 November 2023.
o Multiple choice questions.
o In French, English, or German.
• Règlement CSSF 22-01: the CSSF has the responsibility to determine rules about legal audit
and deontology.
The CSSF has published a Regulation (CSSF Regulation no. 22-01 of 11 January 2022 relating
to (a) the adoption of auditing standards in the field of statutory audit under the Law of 23 July
2016 concerning the audit profession and (b) the adoption of standards on professional ethics
and internal quality control or on quality management, respectively, under the Law of 23 July
2016 concerning the audit profession) in which it confirms the adoption of international
auditing standards as presented in the Code of Ethics of the International Ethics Standards
Board for Accountants (“IESBA”), which shall be considered and used as reference.
This Regulation also confirms the applicability in Luxembourg of (a) International Standard
on Quality Management 1 (“ISQM 1” – applicable to both réviseurs d'entreprises and experts
comptables) and (b) International Standard on Quality Management 2 (“ISQM 2” – mainly
applicable to réviseurs d'entreprises) (and their Luxembourg supplements), published by the
International Auditing and Assurance Standards Board (“IAASB”).
• In Luxembourg there are a Code de Déontologie Luxembourgeois du réviseur d'entreprises (CD
2022-02) and a Code de Déontologie Luxembourgeois des experts-comptables (OEC Volume 3
du 25 juin 2019).
Law of 23 July 2006: concerning the audit profession.
- Chapter 4 and Chapter 8 of Title 1 are relevant for the purposes of this course (deontology).
- Art. 1: “Sans préjudice des dispositions des articles 18 à 23, l’exercice des fonctions prévues
aux lettres a) et b) du présent point (i.e., le contrôle légal des comptes et toutes missions qui
sont confiées par la loi à titre exclusif aux réviseurs d’entreprises) n’est pas incompatible avec
l’exercice d’autres activités telles qu’effectuer la domiciliation, le contrôle contractuel des
comptes, donner des conseils en matière fiscale, organiser et tenir les comptabilités et
analyser par les procédés de la technique comptable la situation et le fonctionnement des
entreprises sous leurs différents aspects économique, juridique et financier”.
Theoretically, no incompatibility.
- Art. 19: Incompatibility with: (a) any activity that could undermine the principles of
independence of the profession and (b) when carrying out activities reserved to the auditors,
the company auditor cannot hold salaried employment, except with an audit firm – “[…] le
réviseur d’entreprises ou le réviseur d’entreprises agréé ne peut occuper un emploi salarié si
ce n’est qu’auprès d’un cabinet de révision, d’un cabinet de révision agréé ou d’un cabinet
d’audit”.
In order to be auditor and to perform the auditing profession, auditors can only be employed by
an auditing firm.
- Art. 20: to be noted that – in the context of the performance of the legal audit of the accounts
of a company – auditors need to be impendent in relation to the entities under review. However,
such requirement is not needed in the context of the performance of other activities by the
auditor. For instance, an auditor needs to be independent to deliver an opinion but does not need
to be independent to perform a missions de procédures convenues (agreed-upon procedures
“AUP” standards), where the auditor does not express an assurance conclusion, but instead
performs the procedures that have been agreed with the engaging party as being appropriate for
the purpose of the agreement. Users of the AUP report consider the findings based on the
procedures performed and draw their own conclusions.
, - Art. 27: the audit fees cannot have a conditional character (e.g., not possible to agree that audit
fees amount to EUR X if the audit activity is closed by 31 January and to EUR Y if audit activity
is closed by 31 December).
- Art. 28: for instance, if the Regulators (CSSF or IRE) open a dossier on company X in the
context of a quality control and ask for certain documents/information, it is not possible to
oppose their request by virtue of art. 28.
o CSSF: Commission de Surveillance du Secteur Financier.
o IRE: Institut des Réviseurs d'Entreprises.
- Art. 49-54: specific rules for the public-interest entities.
- Art. 61-87: specific rules concerning the IRE. It is specified that the IRE should ensure
compliance by its members with their professional obligations arising from AML (anti-money
laundering) and terrorism-financing legislation.
Thus, the CSSF is in charge of the control on the application of audit rules whereas the IRE is
in charge of the control of the application of AML and terrorism-financing regulations.
Code d’Ethique.
- By means of CSSF Regulation 22-01, the CSSF has adopted the Code of Ethics for the Audit
Profession, which corresponds to the Code of Ethics issued by the IESBA in its version
published in the “Handbook of the International Code of Ethics for Professional Accountants
– 2021 Edition” of the International Federation of Accountants (“IFAC”).
- The Code of Ethics issued by the IESBA is largely based on the Recommendation issued by the
European Commission on 16 May 2002.
- In Europe the Code of Ethics of the IESBA is largely applied and it is based on fundamental
principles. In the USA – on the contrary – the Code of Ethics of the IESBA is not applied, but
more stringent and detailed rules have been implemented.
- One of the guiding principles of the Code d’Ethique (IFAC) is the rotation of the associates:
this principle is applicable above all to those members of the team who establish the verification
strategy.
- Structure of the Code of Ethics (IFAC):
o Part 1: General application of the Code (including the definitions).
o Part 2: Professional accountants in business (professionnels comptables exercant en
enterprise) i.e., professional accountants working in areas such as commerce, industry,
service, the public sector, education, the not-for-profit sector, or in regulatory or
professional bodies, who might be an employee, contractor, partner, director (executive
or non-executive), owner-manager or volunteer.
o Part 3: Professional accountants in public practice (professionnels comptables exercant
en cabinet) i.e., professional accountants, irrespective of functional classification (e.g.,
audit, tax, or consulting) in a firm that provide professional services.
However, the rules of Part 2 are applicable to professional accountants in public
practice when performing the professional activities pursuant to their relationship with
the accountant’s firm (whether as a contractor, employee, or owner).
o Part 4: Independency.
- Sub-structure of the Code of Ethics (IFAC):
o Fundamental principles
o List of threats
o Systems of safeguards (separation between systems of safeguards for public-interest
entities and systems of safeguards for entities which are not of public-interest).
- The CSSF Regulation 22-01 introduces a series of exceptions and additional provisions to the
Code of Ethics (IFAC): for instance, the CSSF Regulation 22-01 states that it is possible to
assist an audit client with the preparation of its tax returns if and only if the tax returns have an
insignificant effect on the client’s financial state (according to the European Regulation of 2014
– implemented in Luxembourg in 2016 – it is not possible to perform this type of service to an
audit client).
In practical terms: based on its tax returns, a company has a tax liability of EUR 100,000.00 in
2022. First question: does this tax liability have a significant effect on the client’s financial
Prof. Stephane Cousin (EY Luxembourg)
Exam: 14 November 2023.
o Multiple choice questions.
o In French, English, or German.
• Règlement CSSF 22-01: the CSSF has the responsibility to determine rules about legal audit
and deontology.
The CSSF has published a Regulation (CSSF Regulation no. 22-01 of 11 January 2022 relating
to (a) the adoption of auditing standards in the field of statutory audit under the Law of 23 July
2016 concerning the audit profession and (b) the adoption of standards on professional ethics
and internal quality control or on quality management, respectively, under the Law of 23 July
2016 concerning the audit profession) in which it confirms the adoption of international
auditing standards as presented in the Code of Ethics of the International Ethics Standards
Board for Accountants (“IESBA”), which shall be considered and used as reference.
This Regulation also confirms the applicability in Luxembourg of (a) International Standard
on Quality Management 1 (“ISQM 1” – applicable to both réviseurs d'entreprises and experts
comptables) and (b) International Standard on Quality Management 2 (“ISQM 2” – mainly
applicable to réviseurs d'entreprises) (and their Luxembourg supplements), published by the
International Auditing and Assurance Standards Board (“IAASB”).
• In Luxembourg there are a Code de Déontologie Luxembourgeois du réviseur d'entreprises (CD
2022-02) and a Code de Déontologie Luxembourgeois des experts-comptables (OEC Volume 3
du 25 juin 2019).
Law of 23 July 2006: concerning the audit profession.
- Chapter 4 and Chapter 8 of Title 1 are relevant for the purposes of this course (deontology).
- Art. 1: “Sans préjudice des dispositions des articles 18 à 23, l’exercice des fonctions prévues
aux lettres a) et b) du présent point (i.e., le contrôle légal des comptes et toutes missions qui
sont confiées par la loi à titre exclusif aux réviseurs d’entreprises) n’est pas incompatible avec
l’exercice d’autres activités telles qu’effectuer la domiciliation, le contrôle contractuel des
comptes, donner des conseils en matière fiscale, organiser et tenir les comptabilités et
analyser par les procédés de la technique comptable la situation et le fonctionnement des
entreprises sous leurs différents aspects économique, juridique et financier”.
Theoretically, no incompatibility.
- Art. 19: Incompatibility with: (a) any activity that could undermine the principles of
independence of the profession and (b) when carrying out activities reserved to the auditors,
the company auditor cannot hold salaried employment, except with an audit firm – “[…] le
réviseur d’entreprises ou le réviseur d’entreprises agréé ne peut occuper un emploi salarié si
ce n’est qu’auprès d’un cabinet de révision, d’un cabinet de révision agréé ou d’un cabinet
d’audit”.
In order to be auditor and to perform the auditing profession, auditors can only be employed by
an auditing firm.
- Art. 20: to be noted that – in the context of the performance of the legal audit of the accounts
of a company – auditors need to be impendent in relation to the entities under review. However,
such requirement is not needed in the context of the performance of other activities by the
auditor. For instance, an auditor needs to be independent to deliver an opinion but does not need
to be independent to perform a missions de procédures convenues (agreed-upon procedures
“AUP” standards), where the auditor does not express an assurance conclusion, but instead
performs the procedures that have been agreed with the engaging party as being appropriate for
the purpose of the agreement. Users of the AUP report consider the findings based on the
procedures performed and draw their own conclusions.
, - Art. 27: the audit fees cannot have a conditional character (e.g., not possible to agree that audit
fees amount to EUR X if the audit activity is closed by 31 January and to EUR Y if audit activity
is closed by 31 December).
- Art. 28: for instance, if the Regulators (CSSF or IRE) open a dossier on company X in the
context of a quality control and ask for certain documents/information, it is not possible to
oppose their request by virtue of art. 28.
o CSSF: Commission de Surveillance du Secteur Financier.
o IRE: Institut des Réviseurs d'Entreprises.
- Art. 49-54: specific rules for the public-interest entities.
- Art. 61-87: specific rules concerning the IRE. It is specified that the IRE should ensure
compliance by its members with their professional obligations arising from AML (anti-money
laundering) and terrorism-financing legislation.
Thus, the CSSF is in charge of the control on the application of audit rules whereas the IRE is
in charge of the control of the application of AML and terrorism-financing regulations.
Code d’Ethique.
- By means of CSSF Regulation 22-01, the CSSF has adopted the Code of Ethics for the Audit
Profession, which corresponds to the Code of Ethics issued by the IESBA in its version
published in the “Handbook of the International Code of Ethics for Professional Accountants
– 2021 Edition” of the International Federation of Accountants (“IFAC”).
- The Code of Ethics issued by the IESBA is largely based on the Recommendation issued by the
European Commission on 16 May 2002.
- In Europe the Code of Ethics of the IESBA is largely applied and it is based on fundamental
principles. In the USA – on the contrary – the Code of Ethics of the IESBA is not applied, but
more stringent and detailed rules have been implemented.
- One of the guiding principles of the Code d’Ethique (IFAC) is the rotation of the associates:
this principle is applicable above all to those members of the team who establish the verification
strategy.
- Structure of the Code of Ethics (IFAC):
o Part 1: General application of the Code (including the definitions).
o Part 2: Professional accountants in business (professionnels comptables exercant en
enterprise) i.e., professional accountants working in areas such as commerce, industry,
service, the public sector, education, the not-for-profit sector, or in regulatory or
professional bodies, who might be an employee, contractor, partner, director (executive
or non-executive), owner-manager or volunteer.
o Part 3: Professional accountants in public practice (professionnels comptables exercant
en cabinet) i.e., professional accountants, irrespective of functional classification (e.g.,
audit, tax, or consulting) in a firm that provide professional services.
However, the rules of Part 2 are applicable to professional accountants in public
practice when performing the professional activities pursuant to their relationship with
the accountant’s firm (whether as a contractor, employee, or owner).
o Part 4: Independency.
- Sub-structure of the Code of Ethics (IFAC):
o Fundamental principles
o List of threats
o Systems of safeguards (separation between systems of safeguards for public-interest
entities and systems of safeguards for entities which are not of public-interest).
- The CSSF Regulation 22-01 introduces a series of exceptions and additional provisions to the
Code of Ethics (IFAC): for instance, the CSSF Regulation 22-01 states that it is possible to
assist an audit client with the preparation of its tax returns if and only if the tax returns have an
insignificant effect on the client’s financial state (according to the European Regulation of 2014
– implemented in Luxembourg in 2016 – it is not possible to perform this type of service to an
audit client).
In practical terms: based on its tax returns, a company has a tax liability of EUR 100,000.00 in
2022. First question: does this tax liability have a significant effect on the client’s financial
