With the approval of Law no. 162/2017 on the statutory audit of annual financial statements and consolidated annual financial statements and amending some normative acts, new requirements have been introduced regarding the organization of internal audit activity at entities whose annual financial statements are subject statutory audit and the organization of the audit committee at public interest entities. Failure to comply with these requirements constitutes a contravention and is sanctioned according to art. 44 of Law no. 162/2017 with a fine from 50,000 lei to 100,000 lei.
The entities whose annual financial statements are subject, according to the law, to the statutory audit (respectively the public interest entities defined according to art. 2 point 12 of Law no. 162/2017 and the entities that meet the size criteria for auditing) are obliged to organize and to ensure the exercise of the internal audit activity, according to art. 65 para. (7) of Law no. 162/2017. At the same time, for the entities of public interest, the obligation to organize an audit committee is provided, according to the law.
The internal audit, through the activities carried out, monitors the implementation of the internal control procedures, of those for risk management and, last but not least, of the governance processes.
“Internal audit is an independent activity of objective assurance and/or counseling designed to add value and improve the operations of an organization. Helps an organization meet its objectives through a systematic and methodical approach that evaluates and improves the effectiveness of risk management, control, and governance processes ”(IIA, 2017)
We recommend that those responsible for governance within the audited entities take steps to avoid sanctions, noting that the application of contraventions for non-compliance with the requirements presented by law enforcement authorities does not exempt them from further compliance with the regulated requirements regarding the organization and ensuring the performance of the internal audit activity for the period in which the sanctions were applied.