According to the 2006 National Organization of Registered Auditors (CNCC) self-assessment, statutory audits are conducted in accordance with French standards issued by the CNCC. The self-assessment noted that, since 2000, French standards have been transposed directly from the International Standards on Auditing (ISAs), adding that the process of transposition entailed "strict translation [and] adaptation to the national context." However, since August 2003, French law has mandated that the CNCC standards require the endorsement of the Ministry of Justice in order to be enforceable. At the time of the self-assessment, the deadline for the endorsement was September 30, 2006. There is no further publicly available information on whether the Ministry of Justice has provided this endorsement. Nevertheless, in May 2006, Directive 2006/43/EC of the European Parliament and Council came into force. Per this regulation, all statutory audits of annual and consolidated accounts must be carried out on the basis of ISAs as adopted by the European Commission. European Union member states must adopt and publish the provisions necessary to comply with this Directive before June 29, 2008. Member states may impose additional requirements relating to the statuary audits of annual and consolidated accounts for periods expiring on June 29, 2010.

General Overview

The legal framework for financial reporting requirements in France is governed by the Commercial Code and supplemented by the Monetary and Financial Code. According to the 2005 National Organization of Registered Auditors (Compagnie Nationale des Commissaires aux Comptes, or CNCC) self-assessment, listed, private, governmental, and not-for-profit companies are covered by the Commercial Code, which requires the statutory audit of listed companies (certain size criteria apply), private companies, and not-for-profits.

The CNCC is the national auditing standard-setter and, per its 2006 self-assessment, "from December 2000 the CNCC had transposed (strict translation and adaptation to the national context) the ISAs as the professional standards for use in France" (p. 44). The self-assessment reported that the CNCC, by law, establishes auditing standards, which are then subject to endorsement by the Minister of Justice (MJ). The law requires that the MJ endorse the standards upon consultation with the oversight body. The first endorsement deadline was September 20, 2006. According to the 2006 CNCC report, "it is not yet clear what the new drafting style including structure and content of the endorsed standard will be" (p. 41). However, in May 2006, Directive 2006/43/EC of the European Parliament and the Council came into force. Per this directive, all statutory audits of annual and consolidated accounts must be carried out on the basis of ISAs as adopted by the European Commission (EC). European Union (EU) member states shall adopt and publish the provisions necessary to comply with this Directive before June 29, 2008. Member states may impose additional requirements relating to the statuary audits of annual and consolidated accounts for periods expiring on June 29, 2010.

According to the description of the regulatory framework provided in the 2005 CNCC self-assessment, the Financial Markets Authority (Autorité des marchés financiers, or AMF) is empowered by the Monetary and Financial Code to regulate the securities market. The AMF is entitled to publish guidance on a very broad range of financial reporting requirements however it does not play any specific role in accounting and auditing standard-setting. Further, with regard to listed companies, the AMF is entitled to provide advice on the appointment of the statutory auditors. The Banking Commission (Commission Bancaire, or CB) regulates banks and similar financial institutions. As part of its regulatory role, the CB requires more frequent financial reporting (monthly or quarterly) and also more detailed financial statements by financial institutions. There are no specific auditing standards for financial institutions, and the CB monitors compliance with reporting requirements by conducting on-site inspections and examining annual reports sent by auditors. The CB and the insurance sector regulator, the French Insurance Supervisory Authority (Commission de Contrôle des Assurances, Mutuelles et Institutions de Prévoyance, or CCAMIP), provide their opinion on auditors prior to their appointment and, if need be, can also appoint an additional auditor. Also, both the regulators "require auditors to report to it in precise situations [and] removed the obligation of confidentiality so it can interview auditors. It can also impose some independence rules." Similar to the role of the AMF, the CCAMIP also conducts on-site inspections and examines the annual reports sent by auditors.

According to the Financial System Stability Assessment (FSSA) conducted by the International Monetary Fund in 2005, auditing standards are set confidentially through a technical committee of the CNCC. The MJ and the AMF participate as observers to this committee. Further, the FSSA noted that "the accounting and auditing professions are well regulated, and subject to rigorous training and entry requirements. They are subject to regulation and codes of conduct issued by the [High Counsel of Statutory Auditors] Haut Conseil du Commissariat aux Comptes (HCCC) and the CNCC" (p. 12). As described in the CNCC's 2005 self-assessment, the HCCC and the CNCC are in charge of monitoring the professional conduct and the independence of the statutory auditor. It also gives advice on professional standards, addresses appeals regarding disciplinary sanctions, and supervises the external quality assurance system. The CNCC is a member of the CRC and the CNC, and participates in the working groups of these two bodies, which are responsible for setting private sector accounting standards. The 2006 CNCC self-assessment notes that France has developed its own code of ethics which differs from the International Federation of Accountants (IFAC) code of ethics. The National Organization of Public Accountants (Ordre des Experts Comptables) and the CNCC are listed as members on the IFAC website.

The Principles

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 210 Terms of Audit Engagements (effective 2006)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 230R Documentation (effective 2006)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 320 Audit Materiality (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 500 Audit Evidence (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 505 External Confirmations (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 520 Analytical Procedures (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 540 Audit of Accounting Estimates (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 550 Related Parties (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 560 Subsequent Events (effective 2006)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 570 Going Concern (effective 2004)

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There is insufficient publicly available information as to France's compliance with this principle.

ISA 580 Management Representations (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 600 Using the Work of Another Auditor (effective)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 620 Using the Work of an Expert (effective 2005)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 710 Comparatives (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

II

There is insufficient publicly available information as to France's compliance with this principle.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

II

There is insufficient publicly available information as to France's compliance with this principle.