Associations play an essential role in our society, supporting a wide range of causes and initiatives. To ensure the transparency and legitimacy of their financial operations, some are required by law to call on and appoint an auditor.
Explore the situations that require the intervention of this professional, and understand his or her role, responsibilities and impact on governance, as well as his or her importance in maintaining the trust of members, donors and the public.
Which associations need a statutory auditor?
Associations that reach a certain income or asset threshold, as well as those engaged in certain activities, are required by law to appoint a statutory auditor. Failure to comply with this obligation carries penalties.
There are several factors to consider when appointing a statutory auditor:
- The size of the association: those exceeding two of the following three thresholds (balance sheet total in excess of 1,550,000 euros, sales or revenue excluding VAT in excess of 3,100,000 euros, or more than 50 employees);
- The amount of public subsidies: a sum exceeding €153,000 in subsidies excluding European subsidies;
- Donation amounts: annual donations in excess of €153,000 entitle donors to a tax reduction;
- The amount of financial resources: a sum in excess of €200,000 used to remunerate between 1 and 3 managers;
- The association's activities: those managing a housing solidarity fund, those authorized to grant certain loans, those monitoring air quality, those subscribing to popular retirement savings plans, national military professional associations with resources in excess of €230,000, those collecting funds for employers' participation in the construction effort, and those issuing bonds.
- The decision of the general meeting: even if an association does not exceed the above-mentioned thresholds, the general meeting may decide to appoint an auditor if it deems this necessary. If the articles of association provide for the appointment of an auditor, it is imperative that the directors comply with these provisions.
Good to know: the rules for appointing a statutory auditor differ depending on the entity (association, federation or foundation).
What is a statutory auditor?
A statutory auditor is a professional responsible for verifying and attesting the regularity and fairness of a company's or association's accounts. His or her mission is to ensure that the annual accounts, drawn up by the accounting department, accurately reflect the entity's financial situation, and to verify that accounting operations comply with current laws and regulations.
The statutory auditor examines the balance sheet, income statement and notes. He checks the accuracy of the figures, compliance with accounting standards and the presence of legal information. He or she also checks that transactions comply with the association's bylaws.
Once all the checks have been carried out, the statutory auditor draws up a report setting out his findings. The auditor issues an attestation on the regularity and sincerity of the accounts. This report is generally presented to the association's members at the Annual General Meeting.
The importance of a statutory auditor for your association
Neglected financial management can cause major problems for your association. The statutory auditor plays akey role in ensuring financial stability. His examination reinforces transparency, crucial to building trust with your members, donors and public. When large sums are at stake, this professional can detect signs of fraud, mismanagement or accounting irregularities preventively, minimizing the risks.
Certifying your association's financial health enhances its credibility with partners, donors and the authorities, encouraging the acquisition of financial and human resources. In addition to auditing your association's accounts, the statutory auditor provides you with invaluable advice on how to improve your accounting procedures, optimize your management, make savings and set realistic financial targets, with a positive impact on the growth and sustainability of your organization.
Working with an auditor is an invaluable investment for your association. Recognizing the importance of this function and working closely with this professional are essential to the long-term success of your organization.