News 15/06/26

Central position and decisive influence required for auditors within audit firms

Sections 16 and 16b of the Dutch Audit Firms Supervision Act (Wta) ensure that Auditors occupy a central position within the audit firm, enabling them to act in the public interest. Auditors must have a decisive influence within the audit firm. Following market consultation, the Netherlands Autoriteit Financiële Markten (AFM) provides further clarity on the application of these provisions in its supervisory approach. These requirements also apply to audit firms that admit external investors.

In short

Following market consultation, the interpretation of both sections has been refined
Key principles: auditors must occupy a central position and exercise decisive influence
We expect audit firms to structure their organization in accordance with these principles

Refinement of the interpretation following market consultation

There are different interpretations of the application of Articles 16 and 16b of the Wta, as became clear from the discussions we held with several audit firms, external investors and legal advisors. The increase in audit firms involving private equity investors led to the decision to consult the market on an interpretation of these provisions. We appreciate the responses received from all stakeholders.

The AFM received several consultation responses expressing support for an interpretation. At the same time, feedback indicated that the consulted interpretation could be further refined and clarified in certain respects. These refinements have been incorporated, along with additional examples to provide clearer guidance. The AFM provides further explanation in its feedback statement. In this way, we contribute to clarity and consistency regarding the application of laws and regulations.

Key principles: auditors must occupy a central position and exercise decisive influence

The interpretation provides further clarification of the principles embedded in Sections 16 and 16b of the Wta. The AFM maintains the principles as set out in the consulted interpretation. In essence, this means that auditors must occupy a central position within the audit firm so that they can act at all times in the public interest and, where necessary, offer counterpressure against the financial incentives of external investors. Auditors must therefore have a decisive influence within the audit firm.

We expect audit firms to structure themselves according to these principles

We expect all audit firms to structure their organizations in accordance with the principles embedded in applicable legislation. Such a structure must actively enable both the audit firm and the statutory auditors employed by or associated with it, to safeguard their responsibility to act in the public interest. These principles are further elaborated in the AFM’s interpretation.