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    Country by Country Financial Reporting and Auditing Framework

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    Spain – Horwath Auditores España, S.L.P. (prepared May 2014)

    Preparation of and Filing of Statutory Financial Statements

    Regardless of its size, all companies are required to prepare annual financial statements and file these with the Mercantile Register (www.rmc.es). Companies are required to file their financial statements within a month after their approval in the General Meeting. The approval must not be later than 6 months after the balance sheet date.

    Listed companies are required to file their financial statements with the Spanish Securities Market Commission (www.cnmv.es) within 2 months after the balance sheet date, regardless of the requirement to file in the Mercantile Register.

    The financial statements are comprised of various documents, which are a balance sheet, an income statement, a statement of changes in equity, a statement of cash flows, and explanatory notes. These documents, which form part of a unit, should be drafted with clarity and show the true and fair image of equity, the financial position and the results of the company, always following regulation. It is also required that a management report accompany the financial statements.

    Companies, within certain limits, have an option to file abbreviated financial statements. Abbreviated financial statements provide for some reduced disclosure, e.g. condensed balance sheet, no statement of cash flows is required and less notes disclosures. It is also not required to file a management report. Companies falling within 2 of the 3 limits listed below for two consecutive years can file abbreviated financial statements. These limits are:

    1. Balance sheet total not exceeding 4.000.000 €.
    2. Net turnover not exceeding 8.000.000 €.
    3. Average employees during the year not exceeding 50.

    Financial Reporting Framework

    Since 2005, listed companies are required to prepare their consolidated financial statements in accordance with International Reporting Standards (IFRS). All other companies are obligated to prepare their financial statements in accordance with accounting principles promulgated by the Code of Commerce, the Spanish General Accounting Plan, and other applicable regulations (Spanish GAAP).

    Also, the Spanish GAAP statutory financial statements are the starting point for determining the  taxable income of an entity for corporation and trade tax purposes in Spain.

    Audit Requirements for Corporations in Spain

    Companies falling within 2 of the 3 limits listed below for two consecutive years are not required to audit their financial statements:

    1. Balance sheet total not exceeding 2.850.000 €.
    2. Net turnover not exceeding 5.700.000 €.
    3. Average employees during the year not exceeding 50

    Regardless of the size of the company, whether a company may be required to be audited, if it is contained in its charter, or audit is requested by at least 5% of the capital stock of the same.

    Audit Appointment, Rotation and Joint Audits

    Auditors are selected by the partners or shareholders in General Meeting. In addition, the board of trustees must appoint the auditor before the end of the year to be audited and for a certain period of time which shall not be less than 3 years or more than 9.


    The audit law states that mandatory rotation of the auditor of the audit report on the financial statements is required when seven years have elapsed from the first year or period those statements were audited, and correspond to the group of companies which have the status of public interest entity or the net turnover of the group exceeds 50.000.000 euro.

    Whilst not prohibited, joint audits are very rare in Spain.

    Auditing Standards

    All audit firms in Spain are required to carry out their audits and express an opinion on the financial statements in accordance with the auditing standards issued by the Institute of Accounting and Account Audits (www.icac.meh.es).

    These standards affect both technical and ethical aspects of the audit. Auditing standards issued by the ICAC are largely ISA issued by the IAASB, adapted in some ways to the Spanish legislation.

    Ethical Framework

    All Crowe Horwath International member firms in Spain are bound by the Code of Ethics promulgated by the Institute of Accounting and Account Audits (ICAC). This is based on the IFAC Code of Ethics (IESBA) with additional commentary for Spain.

    Audit Regulation

    All Crowe Horwath International member firms in Spain are subject to the following external and internal monitoring processes with regard to their audit practice.

    External monitoring

    The ICAC, through agreements with professional associations of auditors, makes plans to review the work of audit firms in Spain, with special emphasis on firms that perform audits of companies considered in the public interest.

    Internal monitoring

    All Spanish companies perform two types of internal controls over the work.

    Revision by a second partner

    As stated in the audit regulations in Spain, all the audit work of companies considered in the public interest, must be reviewed by a second partner prior to the issuance of the report.

    Review by an external expert

    The quality control manual indicates that certain jobs of each partner will be reviewed by an external expert to verify their quality. This external expert will also examine the proper application of internal control procedures established by the firm.

    Transparency report

    The audit law indicates that the Spanish audit firms that audit companies considered as public interest, shall be required to issue an annual transparency report (which will be available on their website) that collects, at least, the legal form of the company, owners of the firm, governing bodies, description of quality control procedures, personnel training policies, public interest entities audited, procedures to ensure their independence and compensation policies for partners.


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