Auditor's report

What does auditor's report mean?

The accountant's report on audited annual accounts (controleverklaring), with an opinion on true and fair view. Required where the audit requirement applies.

A qualified accountant describes the opinion from a statutory or voluntary audit engagement. The exact tenor may differ from an unqualified opinion. So read the text, and not only whether a report is present.

How does it work?

The law calls it the accountant's report (accountantsverklaring): the statement on true and fair view in which the accountant reports the outcome of his examination (art. 2:393(5) DCC). It states which annual accounts were examined, which standards were followed for the audit, the opinion on whether the annual accounts give the required insight and comply with the law, an opinion on the consistency of the management report with the annual accounts and a statement on material uncertainties about continuity.

Paragraph 6 knows four forms: an unqualified report, a qualified report, an adverse report and a disclaimer of opinion. With a qualification, one part is incorrect or could not be audited. With an adverse opinion, the annual accounts as a whole do not give a true and fair view. With a disclaimer, the accountant received too little information to form an opinion. The opinion gives reasonable assurance, not absolute. The report belongs with the other information (art. 2:392(1)(a) DCC) and is made public with the annual accounts.

Example

A medium-sized BV (turnover € 22 million, result before tax € 900.000) values its inventory at € 3,4 million. The accountant finds that € 300.000 of it is slow-moving and has not been written down. The board refuses the correction. The deviation is material, a third of the result, but does not affect the annual accounts as a whole. The accountant issues a qualified report: the annual accounts give a true and fair view, except for the inventory, which is stated € 300.000 too high.

In the annual accounts

For audited annual accounts of medium-sized and large legal entities, subject to exemption.

Difference from a compilation report

With a compilation report the accountant helped prepare the annual accounts from the board's data; he did not audit that data and gives no opinion. With an auditor's report he collected evidence himself, at the bank, from debtors and in the warehouse, and gives an opinion. Only the auditor's report satisfies the statutory audit requirement.

Common mistakes

• Calling every report unqualified
• Treating a compilation report as an auditor's report

What should you watch for?

• Read the opinion and any paragraph on continuity; the existence of an auditor's report says nothing about its tenor.
• If you also publish the annual accounts another way, for example on your website, you add the report. With an abridged presentation that is not allowed and you state only the tenor (art. 2:395(1) and (2) DCC).
• A large legal entity files the accountant's report with the KVK in the same format as the annual accounts. For micro and small the report is not mandatory; if a small BV has an audit anyway, the same four forms apply.

Legal basis and source

art. 2:393 DCC

• Dutch Civil Code Book 2, article 393
• NBA: explanation of accountant's reports
• KVK: filing annual accounts, large company class

Read more