Italy

Italy, as a member of the European Union (EU), is subject to the accounting, auditing, financial and sustainability reporting legislation, directives, and regulations issued by the European Commission, which have been transposed into national law.

The EU Regulation EC 1606/2002 and the Legislative Decree 38/2005 required companies to apply IFRS as endorsed by the EU. Following this regulation, Legislative Decree 145/2018, restricted the scope and required that IFRS are mandatory only for listed companies monitored by the Commissione Nazionale per le Società e la Borsa (CONSOB). In addition, Legislative Decree 145/2018 established that all other companies could choose to apply IFRS or Italian Accounting Standards.

Accounting requirements set in the Civil Code (art.2423-2435-bis, c.c.)—as amended by the Legislative Decree No. 139/2015, which implements the Accounting Directive 34/2013/EU—can be applied in the preparation of financial statements of all companies that are not obliged to apply IFRS. The Civil Code requirements are interpreted and integrated into the Italian Accounting Standards issued by the Organismo Italiano di Contabilità, under Law No. 116/2014. The Italian Accounting Standards differ from IFRS; however, a convergence process is reportedly underway to align national and international standards.

The auditing requirements in Italy are set in the Legislative Decree No. 39/2010, applicable to all statutory audits— which transposes the Audit Directive and Regulation (EU) No 537/2014 and Legislative Decree 58/1998—applicable to statutory audits of Public Interest Entities (PIEs), including, among others, listed entities, financial institutions, insurance companies, and pension funds.

In Italy, all PIEs, companies and partnerships limited by shares must have audited financial statements. In addition, Limited Liability Companies are required to undergo an audit if it meets one of the following criteria: (i) is required to prepare consolidated financial statements; (ii) controls a company whose financial statements are required to be audited; and (iii) has exceeded, for two consecutive years, at least one of the three following quantitative criteria: (a) total balance sheet assets: EUR 4 million; (b) revenues from sales and services: EUR 4 million; and (c) an average number of employees in the fiscal year: 20.

In accordance with the Legislative Decree No. 39/2010, all audits must be conducted by statutory auditors (Revisori Legali) enrolled with the register of statutory auditors maintained by the Ministry of Economy and Finance (MEF) and applying national auditing standards (ISA Italia). As reported by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC), the standards are fully compliant with 2022 ISA and are prepared by a special advisory panel led by the Italian professional body—CNDCEC and professional associations (Associazione Italiana delle Società di Revisione Legale (HYPERLINK "http://www.assirevi.com/"Assirevi) and Istituto Nazionale Revisori Legali), MEF and CONSOB. The drafted standards are then formally adopted with a ministerial act issued by the MEF.

The Corporate Sustainability Reporting Directive (CSRD) Directive 2022/2464/EU is planned to be implemented in the Italian law, while the Non-Financial Reporting Directive (NFRD) Directive 2014/95/EU applicable until 2024, has been introduced by the Legislative Decree 254/2016.

The Legislative Decree No. 139/05, Legislative Decree No. 39/2010, and Decree No. 135/2016 constitute the key legislation establishing the regulatory framework for the accountancy profession.

Professional Accountants

The Legislative Decree No. 139/05 establishes the regulatory framework for professional accountants, including the responsibilities of the organizations responsible for the regulation of the accountancy profession, including the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) and the Ministry of Justice.

Professional accountants may be qualified as one of the following designations, both subject to the general supervision of the Ministry of Justice, with associated rights and responsibilities:

• Esperti Contabili—authorized to deliver accounting services, perform tax fillings, and perform limited audit functions.
• Dottori Commercialisti—authorized to perform the same services as Esperti Contabili and undertake company appraisals, insolvency procedures, defend clients before tax courts, and perform full scope audit and assurance services for non-statutory audits.

In accordance with the Legislative Decree No. 139/05, Dottori Commercialista and Esperti Contabili are subject to educational requirements delivered by the universities, practical experience requirements, and passing state final examinations in addition to the detailed requirements set by the Ministry of Education, University, and Research, and must be registered members of the CNDCEC.

The CNDCEC is designated by the Legislative Decree No. 139/05 as the responsible entity for: (i) developing ethical requirements for its members; (ii) monitoring and enforcing its members’ compliance with the profession’s technical and ethical standards; (iii) assessing and approving the continuing professional development (CPD) programs established by the territorial chapters; (iv) representing the profession at the national and international level; and (iv) formulating opinions on draft laws, as necessary.

Statutory Auditors

The Legislative Decree No. 39/2010 prescribe the initial and continuing professional development and registration requirements for statutory auditors or Revisori Legali and the main functions of the organizations charged with the public oversight of auditors, Ministry of Economy and Finance (MEF) and Commissione Nazionale per le Società e la Borsa (CONSOB).

Dottori Commercialista and Esperti Contabili can become statutory auditors or Revisori Legali if they meet the IPD requirements specified in Legislative Decree No. 39/2010. To become a Revisori Legali, individuals must hold a university degree, complete a supervised three-year practical experience requirement, and complete a national examination to register with the MEF.

The MEF’s responsibilities regarding the Revisori Legali include: (i) endorsing the auditing standards and the Code of Ethics for statutory auditors; (ii) establishing a quality assurance (QA) review system for audits of non-PIEs; and (iii) implementing disciplinary measures and possible sanctions for statutory auditors of non-PIEs.

Revisori Legali, who audit PIEs, are subject to the oversight of the CONSOB, in accordance with the Legislative Decree No. 39/2010. The CONSOB is responsible for: (i) overseeing the organization and activities of statutory auditors and audit companies of PIEs; (ii) monitoring the respective statutory auditors’ and audit companies’ independence and technical competence; (iii) establishing a QA review system for the statutory audits of PIEs; and (iv) investigating and disciplining statutory auditors of PIEs for misconduct and breach of the rules and legal requirements.

In accordance with the Legislative Decree No. 39/2010, the CNDCEC, Istituto Nazionale Revisori Legali (INRL), and the Associazione Italiana delle Società di Revisione Legale (ASSIREVI)—the latter two being voluntary associations comprised of auditors and audit firms—constitute the special advisory panel in charge of drafting the auditing standards and the Code of ethics for auditors for MEF’s endorsement.

In accordance with the Legislative Decree No. 39/2010, which transposes the requirements of the EU Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, the audit oversight system in Italy consists of the Ministry of Economy and Finance (MEF) and the Commissione Nazionale per le Società et la Borsa (CONSOB). The MEF and CONSOB responsibilities are described in the Regulation section.

The CONSOB is a member of the International Organization of Securities Commissions and the International Forum of Independent Audit Regulators.

The Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC)

The CNDCEC is a mandatory membership organization for professional accountants established by the Legislative Decree No. 139/05. Its members include Esperti Contabili (accountants who are authorized to deliver accounting services, perform tax fillings, and limited audit functions) and Dottori Commercialista (accountants who are authorized to perform the same services as Esperti Contabili and may also undertake company appraisals, insolvency procedures, defend clients before tax courts, and perform full scope audit and assurance services for non-statutory audits). According to Article 29 of the Legislative Decree No. 139/2005, the CNDCEC operates as the umbrella organization that coordinates territorial chapters.

The CNDCEC is responsible for a wide range of activities including: (i) developing ethical requirements for its members; (ii) monitoring and enforcing its members’ compliance with the profession’s technical and ethical standards; (iii) assessing and approving the continuing professional development programs established by the territorial chapters; (iv) representing the profession at national and international level; and (iv) formulating opinions on draft laws, as necessary.

In addition to being an IFAC member, the CNDCEC is also a member of Accountancy Europe, the CFE Tax Advisers Europe, the Latin Integration Committee of Europe and the Americas, and the PAEE (Professional Accountancy Education Europe).

In accordance with the Legislative Decree No. 39/2010, the Ministry of Economy and Finance (MEF) is responsible for establishing a quality assurance (QA) review system for audits of financial statements of non-Public Interest Entities (non-PIEs). The Commissione Nazionale per le Società et la Borsa (CONSOB) is responsible for the QA of audits of PIEs, including, among others, listed entities, credit institutions, insurance companies, and pension funds.

The Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) reports that CONSOB’s QA system is aligned with SMO 1 best practices. As reported by CNDCEC, quality management standards are adopted. They will become effective for audits of financial statements for periods beginning on January 1°, 2025, with the possibility of early adoption already on January 1° 2024.

As reported by the CNDCEC, the MEF is expected to design and implement a QA system for audits of non-PIEs. However, there is no clear timeline for the adoption of this system.

Current Status: Partially Adopted

The Legislative Decree No. 139/05 outlines the initial professional development (IPD) requirements. In accordance with the decree, the Ministry of Education, University, and Research is responsible for implementing IPD requirements and the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) is responsible for adopting continuing professional development (CPD) requirements.

Professional accountants—qualified as either Dottori Commercialista or Esperti Contabil—are subject to educational requirements delivered by the universities, practical experience requirements, and passing state final examinations. Both are also subject to the CPD requirements of the CNDCEC, which, as reported by the CNDCEC, are aligned with the revised IES.

The IPD and CPD requirements for statutory auditors—Revisori Legali—are established in Legislative Decree No. 39/2010 and Decree No. 135/2016. To become a Revisori Legali, individuals must hold a university degree, complete a supervised three-year practical experience requirement, and complete a national examination to register with the MEF.

Dottori Commercialista and Esperti Contabili can become Revisori Legali if they meet the IPD requirements specified in Legislative Decree No. 39/2010 and Decree No. 135/2016.

The CNDCEC reports that the revised IES have been incorporated into the national requirements.

Current Status: Adopted

In accordance with the Legislative Decree No. 39/2010, all audits must be conducted by statutory auditors (Revisori Legali) registered with the Ministry of Economy and Finance (MEF) and in accordance with national auditing standards (known as ISA Italia). As reported by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC), the standards are fully compliant with ISA and are prepared by a special advisory panel led by the CNDCEC, other professional associations (Associazione Italiana delle Società di Revisione Legale (HYPERLINK "http://www.assirevi.com/"Assirevi) and Istituto Nazionale Revisori Legali), MEF and the Commissione Nazionale per le Società et la Borsa (CONSOB). The drafted standards are then formally adopted with a ministerial act issued by the MEF.

The CNDCEC reports that the 2022 IAASB Handbook requirements are incorporated into ISA Italia. The quality management standards will become effective for audits of financial statements for periods beginning on January 1°, 2025, with the possibility of early adoption already on January 1° 2024.

Current Status: Adopted

The Legislative Decree No. 139/05 grants the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) the responsibility for setting ethical requirements for professional accountants—qualified as either Dottori Commercialista or Esperti Contabil. The CNDCEC issued its Code of Ethics in 2009 and subsequently updated it in 2015 and 2019, taking into consideration the IESBA Code of Ethics. The CNDCEC reports that the combination of the legal requirements and the rules incorporated in its Code of Ethics are set in accordance with the 2019 IESBA requirements and are more restrictive in some respects.

For statutory auditors (Revisori Legali), the ethical requirements are set by a special advisory panel led by the CNDCEC, other professional associations (Associazione Italiana delle Società di Revisione Legale (Assirevi) and Istituto Nazionale Revisori Legali), MEF and the Commissione Nazionale per le Società et la Borsa (CONSOB). The drafted standards are then formally adopted with a ministerial act issued by the MEF.

In 2023, the special advisory panel developed ethical requirements, modeled from 2018 IESBA International Code of Ethics for Professional Accountants with specific adaptations and localizations for compatibility and operability with the Italian and European regulatory frameworks.

Current Status: Partially Adopted

Public sector accounting standards are set in Law No. 196/2009. To date, the implementation of the national standards is supported by the Corte dei Conti (Auditor General) and Ragionera Generale dello Stato (State Comptroller), a Ministry of Economy and Finance unit. Most public sector entities are still using national standards on a cash-basis (IFAC/CIPFA International Public Sector Financial Accountability Index 2020), with no linkage to IPSAS.

In 2021, the decree Law No. 152 of 2021 created an ad hoc “Structure” as established by the State Comptroller under the oversight of the Ministry of Economy and Finance, with responsibility for setting public sector accounting standards. This group is the independent technical body enacting, on the initiative of the Executive Committee, proposals for accounting principles and standards based on the accrual principle according to the guidelines defined at European and international level.

The board is due to complete the issue of a new set of accrual-basis standards based on IPSAS which are to be progressively implemented starting in 2025.

Current Status: Not Adopted

The Legislative Decree No. 139/05 and the regulation adopted by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) govern the mechanisms for investigating and disciplining (I&D) professional accountants—qualified as either Dottori Commercialista or Esperti Contabil. Under the law, the territorial chapters are responsible for hearing and judging cases at the first level, while the CNDCEC acts as a secondary hearing/disciplinary mechanism (first appeals). Appeals against the decisions of the CNDCEC can be filed with the ordinary court. The CNDCEC reports that its disciplinary procedures are in line with SMO 6 requirements.

Meanwhile, the CNDCEC also assessed its territorial chapters' I&D policies and processes against the best practices of SMO 6 and identified gaps, such as no links with the results of QA reviews and no separation of investigative & disciplinary committees.

The Legislative Decree No. 39/2010 establishes the main I&D procedures applicable to statutory auditors (Revisori Legali). In accordance with the decree, the Ministry of Economy and Finance is responsible for the I&D procedures of statutory auditors of non-public interest entities (PIEs), whereas the Commissione Nazionale per le Società e la Borsa (CONSOB) is responsible for the I&D system for statutory auditors of PIEs. The CNDCEC reports that while the system fulfills many of the best practices of SMO 6, the two-tiered system is expected to be further defined by new Ministerial Decrees and will be coordinated with the QA review system established by CONSOB.

Current Status: Partially Adopted

The EU Regulation EC 1606/2002 and the Legislative Decree 38/2005 required companies to apply IFRS as endorsed by the EU. However, Legislative Decree 145/2018, restricts the scope and requires IFRS only for listed companies monitored by the Commissione Nazionale per le Società e la Borsa (CONSOB) for individual and consolidated financial statements. All other companies can choose to apply IFRS or Italian Accounting Standards.

National accounting requirements set in the Civil Code (art.2423-2435-bis, c.c.). The Civil Code requirements are interpreted and integrated into the Italian Accounting Standards issued by the Organismo Italiano di Contabilità, in accordance with Law No. 116/2014. The Italian Accounting Standards differ from IFRS; however, a convergence process is reportedly underway to align national and international standards.

Current Status: Partially Adopted

Relevant Organizations

• Associazione Italiana Revisori Contabili (ASSIREVI)
• Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC)
• Organismo Italiano di Contabilità (OIC)
• Commissione Nazionale per le Società et la Borsa (CONSOB)
• International Forum of Independent Audit Regulators (IFIAR)
• Instituto Nazionale Revisori Legali (INRL)
• Ministry of Economy and Finance (MEF)

Relevant Legislation

• Civil Code
• Law No. 116/2014
• Legislative Decree No. 38/2005
• Legislative Decree No. 127/1991
• Legislative Decree No. 136/2015
• Legislative Decree No. 139/2005
• Legislative Decree No. 39/2010
• Legislative Decree No. 135/2016

Relevant Publications

• Accountancy Europe, Structure and organization of the profession – key features, 2020
• CNDCEC, The Italian Accountancy Profession.
• CNDCEC, SMO Action Plan, June 2023.
• IFIAR, IFIAR 2022 Member Profile – CONSOB, 2022
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Italy, June 2016.