Contractual Audit in Luxembourg: When and Why to Conduct One?
Mickaël LOC
Certified Auditor ·
Contractual Audit in Luxembourg: When and Why to Conduct One?
A contractual audit in Luxembourg is recommended before any M&A transaction, fundraising, or restructuring: it allows you to verify the reliability of the financial statements over a scope and depth freely defined by the parties, without going through the formal authorisation of an approved statutory auditor (REA). Unlike the mandatory statutory audit, it is a voluntary approach, tailored to your needs and your schedule.
When to conduct a contractual audit?
- Before an acquisition (financial due diligence)
- Before a fundraising round or investor entry
- When transferring a business
- In the event of a dispute between partners
- To validate the reliability of financial information before a strategic decision
Scope and methodology
The contractual audit may cover the entire financial statements or specific areas: cash, trade receivables, inventory, provisions. The auditor issues an opinion on the fairness and regularity of the information examined, without necessarily giving an opinion on all of the accounts.
Difference with the statutory auditor
The statutory audit is a legal assignment, mandatory above certain thresholds, carried out by an approved statutory auditor (REA). The contractual audit is a voluntary assignment, often less formal, that may be entrusted to a chartered accountant or a REA depending on needs.
Do you need a contractual audit? Our certified auditors carry out bespoke assignments tailored to your needs and your schedule.
Frequently Asked Questions
What is the difference between a contractual audit and a statutory audit?
A statutory audit is a legal obligation for companies exceeding certain thresholds, performed by an approved statutory auditor (REA). A contractual audit is a voluntary engagement, commissioned by directors or shareholders, with a scope and objectives freely defined.
When should a contractual audit be performed before an acquisition?
A contractual audit (financial due diligence) is recommended before any acquisition of a company. It allows the reliability of the financial statements to be validated, potential risks to be identified (hidden liabilities, litigation, accounting anomalies) and the acquisition price to be negotiated on an informed basis.
Who can perform a contractual audit in Luxembourg?
A contractual audit can be performed by a chartered accountant or by an approved statutory auditor (REA). For certain specific engagements, using a REA may be preferred for credibility with investors or banks.
How long does a contractual audit take?
The duration of a contractual audit varies with the scope: 2 to 6 weeks on average for a standard due diligence engagement. Focused engagements (cash, inventory) can be shorter, while a full audit of a large company can take several months.
Is the contractual audit report public?
No, the contractual audit report is a confidential document, delivered only to the commissioning party (directors, shareholders). Unlike the statutory audit report attached to the annual accounts, it is not filed with the RCS or made public.
