Netherlands

As a member of the European Union (EU), the Netherlands is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations. The Netherlands has fully aligned its legal framework with the EU acquis communitaire as it relates to accounting and auditing.

Accounting Framework

Annual Accounts Title 9 of the Netherlands Civil Code (NCC) of 2016 (as amended) stipulates the requirements for preparation of financial statements, including applicable accounting standards and financial reporting thresholds. In accordance with the law, the Dutch Accounting Standards Board (DASB) is responsible for enacting financial reporting standards in the Netherlands.

EU-endorsed IFRS are required for the preparation of separate and consolidated financial statements of listed companies and public interest entities (PIEs) which are defined as banks, central credit institutions, insurers, and any enterprise, institution or public body forming part of one of the categories designated pursuant to Section 2 of the Audit Firms Supervision Act that makes it possible for the legislator to expand the class of PIEs. Section 2 has not been 'used' to date.

Regulated and medium-sized companies are required to apply the Dutch Accounting Standards (Dutch GAAP).

As for small entities, they can choose one of four options/standards to prepare their financial statements: Dutch Corporation Tax Act; Dutch Accounting Standards for Small Entities; Dutch Accounting Standards for Medium-sized and Large Entities; or EU-endorsed IFRS and sections of the Dutch Accounting Standards for Medium-sized and Large entities. Small entities are defined as those that meet two of the following three criteria: (i) revenue below €8.8 million; (ii) assets below €4.4 million; and (iii) number of employees below 50.

Auditing Framework

The auditing requirements in the Netherlands transpose the Audit Directive and Regulation (EU) No 537/2014. Under the Accountancy Profession Act of 2014 (as amended), all entities except micro and small-sized entities are subject to mandatory audit requirements.

The Act specifies that the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) is responsible for setting auditing standards in the Netherlands. NBA Netherlands adopted ISA as issued by the IAASB without modifications, including the effective dates, for the conduct of all financial statement audits. The 2018 Handbook is effective, and the institute included mandatory training courses on ISA 250 (revised) and ISA 540 (revised) for members. NBA Netherlands also disseminates Dutch translations of the standards and reports that the 2016 ISA is the latest version to have been translated.

In the Netherlands, only auditors are regulated at the state level under the Audit Firms Supervision Act of 2006 (as amended), the Accountancy Profession Act of 2014 (as amended), and the Act on Disciplinary Jurisprudence of Accountants of 2008 (as amended).

The initial professional and continuing professional development (IPD and CPD respectively) requirements are established for auditors in the Accountancy Profession Act of 2014 (as amended). Responsibility for implementation is shared by the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands), the Commissie Eindtermen Accountantsopleiding (CEA), the Dutch Flemish Accreditation Organization (NVAO), and universities (academic and professional).

NBA Netherlands confers the designations of Registered Accountants (RAs) or Accounting Consultants (AAs), depending on the course of study at the university (or post university) level. Both designations are protected and are given practice rights for audit and assurance in the jurisdiction. To pursue the RA or AA designations, individuals must hold a university degree from a recognized university, complete three (3) years’ practical experience and pass NBA Netherland’s examinations. The requirements for both designations are similar, except that RAs must have master’s degrees and are further specialized in financial auditing and external reporting.

According to the above-mentioned acts, only auditors registered with the Royal NBA, that are also registered on the list of audit firms with a license from the Netherlands Authority for the Financial Markets (AFM), can perform statutory audits in the Netherlands. NBA Netherlands reports that statutory audits are mostly performed by RAs, while AAs tend to focus on small and medium-sized enterprises. As of 2018, audits of public interest entities (PIEs) are restricted to RAs. The law also provides for the acknowledgement of foreign qualifications and authorizes the AFM to recognize professional qualifications that were obtained abroad for individuals who wish to practice in the Netherlands.

The Commissie Eindtermen Accountantsopleiding (CEA), which is an independent body appointed by the Ministry of Finance, is responsible for overseeing university education of RAs and AAs, the accreditation and oversight of education providers, and establishment of work experience competencies for the profession. In line with the Act on Disciplinary Jurisprudence of Accountants of 2008 (as amended), RAs and AAs that are in violation of any rules or regulations are subject to the Ministry of Justice’s investigations & disciplinary (I&D) system. As for audit firms, the Audit Firms Supervision Act of 2006 (as amended) stipulates that they are subject to the Authority for the Financial Market’s (AFM) I&D system. Both the AFM and NBA Netherlands are required under the Audit Firms Supervision Act of 2006 (as amended) to file and forward cases against individual auditors to the Ministry of Justice’s Disciplinary Court.

In addition to the above, AFM (i) oversees the operations of NBA Netherlands; (ii) monitors the profession’s performance through its quality assurance review system for public interest entities; and (iii) maintains the audit license registry.

A summary of NBA Netherland’s responsibilities includes the following: (i) setting auditing and ethical standards for auditors; (ii) conducting quality assurance reviews of non-PIEs (delegated by the AFM); (iii) conducting continuing professional development; (iv) conducting audit licensing exams and issuing certificates; (v) undertaking any other activities that promote high professional standards and improve the quality of auditing services; and (vi) collecting and forwarding complaints to the Disciplinary Court. Accountants are not regulated at the state level, but they may voluntarily join Vereniging van Registercontrollers (the Netherlands Association of Registered Controllers, VRC) and be subject to its regulations and guidelines. VRC members offer services in management accounting, financial accounting, integrated reporting, strategic control and risk management, and corporate governance. The VRC offers a designation of Registered Controller to members who successfully complete the Executive Master of Finance and Control program. It also requires continuing professional development for its members, adherence to a Code of Ethics, and maintains an I&D system to regulate its members.

The Audit Firms Supervision Act of 2006 (as amended) established the Netherlands Authority for the Financial Markets (AFM) as the independent public audit oversight authority. The law stipulates that audit firms are subject to the AFM’s investigations & disciplinary (I&D) system. Individual auditors on the other hand, as outlined in the Act on Disciplinary Jurisprudence of Accountants of 2008 (as amended), that are in violation of any rules or regulations are subject to the Ministry of Justice’s I&D system. Both the AFM and Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) are required under the Audit Firms Supervision Act of 2006 (as amended) to file and forward cases against individual auditors to the Ministry of Justice’s Disciplinary Court.

In addition to the above, AFM (i) oversees the operations of NBA Netherlands; (ii) monitors the profession’s performance through its quality assurance review system for public interest entities; and (iii) maintains the audit license registry.

A summary of NBA Netherland’s responsibilities includes the following: (i) setting auditing and ethical standards for auditors; (ii) conducting quality assurance reviews of non-PIEs (delegated by the AFM); (iii) conducting continuing professional development; (iv) conducting audit licensing exams and issuing certificates; (v) undertaking any other activities that promote high professional standards and improve the quality of auditing services; and (vi) collecting and forwarding complaints to the Disciplinary Court.

The AFM, a member of the International Forum of Independent Audit Regulators, is also the securities regulator in the Netherlands.

Netherlands Association of Registered Controllers (VRC)

VRC was established in 1988 as a voluntary membership organization for those who offer services in management accounting, financial accounting, integrated reporting, strategic control and risk management, and corporate governance. The VRC offers a designation of Registered Controller to members who successfully complete the Executive Master of Finance and Control program. It also requires continuing professional development for its members, adherence to a Code of Ethics, and maintains an I&D system to regulate its members.

VRC’s members who are also members of the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) may perform audits and are subject to the regulations of the NBA Netherlands.

VRC is a member of IFAC and Accountancy Europe.

Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands)

NBA Netherlands was formed from the merger of two Dutch professional accountancy organizations—the Royal Dutch Institute of Chartered Accountants (Royal NIVRA) and the Dutch Association of Accountants (NOvAA)—in January 2013. The Royal NIRVA, which was established in 1895, comprised accountants and auditors in public practice, the business sector, and government. Members of the NOvAA, which was founded in 1948, were mainly accountants. In December 2012, the Accountancy Profession Act established the legal status of the NBA Netherlands as a mandatory membership organization for auditors.

The institute’s mandate includes: (i) setting auditing and ethical standards for auditors; (ii) conducting quality assurance reviews of non-PIEs (delegated by the AFM); (iii) conducting continuing professional development; (iv) conducting audit licensing exams and issuing certificates; (v) undertaking any other activities that promote high professional standards and improve the quality of auditing services; and (vi) collecting and forwarding complaints to the Disciplinary Court.

NBA Netherlands is a member of IFAC, Accountancy Europe, and the European Federation of Accountants and Auditors for small- and medium-sized entities.

In November 2018, the Netherlands Ministry of Finance (MoF) established a Commission on the Future of Accountancy in order to investigate the current business models of larger audit firms (big 4) with responsibility for audit of public interest entities. The MoF’s findings will be published by the end of 2019 and will be presented to the ministry and parliament. Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) and staff will monitor the developments and outcome of the commission. Subsequently, the regulatory impact will need to be assessed.

The Audit Firms Supervision Act of 2006 (as amended) stipulates that a quality assurance (QA) review system for all audits be established and overseen by the Authority for the Financial Markets (AFM).

AFM performs inspections of audit firms that conduct statutory audits of public interest entities (PIEs) at least once every three years. It delegated responsibility for inspections of audit firms that audit non-PIEs to the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) which conducts inspections once every six years.

NBA Netherlands accredits specific bodies to conduct QA reviews for members who provide services to the public sector, are internal auditors, or operate small- and medium-sized practices.

NBA Netherlands reports that the QA review systems operating in the jurisdiction are in line with the requirements of SMO 1.

Current Status: Adopted

The initial professional and continuing professional development (IPD and CPD respectively) requirements are established for auditors in the Accountancy Profession Act of 2014 (as amended). Responsibility for implementation is shared by the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands), the Commissie Eindtermen Accountantsopleiding (CEA), the Dutch Flemish Accreditation Organization (NVAO), and universities (academic and professional).

The CEA is an independent body appointed by the Ministry of Finance and is responsible for overseeing university education of Registered Accountants (RAs) and Accounting Consultants (AAs), the accreditation and oversight of education providers, and establishment of work experience competencies for the profession.

NBA Netherlands confers the designations of RAs or AAs, depending on the course of study at the university (or post university) level. Both designations are protected and are given practice rights for audit and assurance in the jurisdiction. All members are required to complete a minimum of 80 hours of CPD every two (2) years. To pursue the RA or AA designations, individuals must hold a university degree from a recognized university, complete three (3) years’ practical experience and pass NBA Netherland’s examinations. The requirements for both designations are similar, except that RAs must have master’s degrees and are further specialized in financial auditing and external reporting.

NBA Netherlands indicates that the professional education requirements for RAs and AAs are completely aligned with the 2015 revised IES.

Accountants may voluntarily join Vereniging van Registercontrollers (the Netherlands Association of Registered Controllers, VRC) and be subject to its regulations. VRC reports that professional education requirements for its members address all the relevant revised 2015 IES requirements.

Current Status: Adopted

The Accountancy Profession Act of 2014 (as amended) specifies that the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) is responsible for setting auditing standards in the Netherlands with oversight from the Netherlands Authority for the Financial Markets. NBA Netherlands adopted ISA as issued by the IAASB without modifications, including the effective dates, for the conduct of all financial statement audits. The 2018 Handbook is effective, and the institute included mandatory training courses on ISA 250 (revised) and ISA 540 (revised) for members.

NBA Netherlands also disseminates Dutch translations of the standards and reports that the 2016 ISA is the latest version to have been translated. The institute is in the process of implementing plans to translate the 2018 Handbook for members.

Current Status: Adopted

Auditors are subject to ethical requirements established by the Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) with oversight from the Netherlands Authority for the Financial Markets, as per the Accountancy Profession Act of 2014 (as amended).

NBA Netherlands reports that ethical requirements for the profession are based on, and are fully converged with, the 2016 IESBA Code of Ethics. The institute established plans to update its ethical requirements and will therefore converge its requirements with the 2018 Restructured IESBA Code of Ethics when it comes into effect on June 15, 2019.

Other professional accountants are regulated through their voluntary membership in the Netherlands Association of Registered Controllers (VRC). The 2018 VRC Code of Professional Conduct is based on Parts A and C of the 2016 IESBA Code of Ethics for Professional Accountants, as these sections are the most relevant to professional accountants in business. The VRC Code of Ethics is reviewed every five years.

Current Status: Adopted

The Ministry of Finance is responsible for establishing public sector accounting standards at the central government level, while the Ministry of Internal Affairs has the authority to set standards for the local government.

The central government is using a cash and commitments bookkeeping system, with two exceptions: departmental agencies that use the accrual basis, and expenditures related to “interest payments on central government debt,” which is presented on accrual basis.

There are no stated plans to adopt accrual-basis IPSAS as of the assessment date.

Current Status: Not Adopted

The Audit Firms Supervision Act of 2006 (as amended) provides the legal authority for the Netherlands Authority for the Financial Markets (AFM) to design and implement an investigations and disciplinary (I&D) system for audit firms. Individual auditors on the other hand, as per the Act on Disciplinary Jurisprudence of Accountants of 2008 (as amended), that are in violation of any rules or regulations are subject to the Ministry of Justice’s I&D system.

Both the AFM and Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands) are required under the Audit Firms Supervision Act of 2006 (as amended) to file and forward cases against individual auditors to the Ministry of Justice’s Disciplinary Court. NBA Netherlands established a Complaints Committee responsible for collecting and forwarding complaints to the Disciplinary Court.

Other professional accountants are regulated through their voluntary membership in the Netherlands Association of Registered Controllers (VRC). In accordance with its constitution, VRC established an I&D system to monitor and enforce compliance with professional standards, the Code of Ethics, and disciplinary regulations by its members who are management and financial accountants.

NBA Netherlands reports that all I&D systems are in line with SMO 6 requirements.

Current Status: Adopted

In accordance with the Annual Accounts Title 9 of the Netherlands Civil Code (NCC) of 2016 (as amended), the Dutch Accounting Standards Board (DASB) is responsible for setting applicable private sector accounting standards in the Netherlands.

EU-endorsed IFRS are required for the preparation of separate and consolidated financial statements of listed companies and public interest entities (PIEs) which are defined as banks, central credit institutions, insurers, and any enterprise, institution or public body forming part of one of the categories designated pursuant to Section 2 of the Audit Firms Supervision Act that makes it possible for the legislator to expand the class of PIEs. Section 2 has not been 'used' to date.

Regulated and medium-sized companies are required to apply the Dutch Accounting Standards (Dutch GAAP).

As for small entities, they can choose one of four options/standards to prepare their financial statements: Dutch Corporation Tax Act; Dutch Accounting Standards for Small Entities; Dutch Accounting Standards for Medium-sized and Large Entities; or EU-endorsed IFRS and sections of the Dutch Accounting Standards for Medium-sized and Large entities.

Current Status: Adopted

Relevant Organizations

• Dutch Accounting Standards Board (DASB)
• Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA Netherlands)
• Netherlands Association of Registered Controllers (VRC)
• Netherlands Authority for the Financial Markets (AFM)

Relevant Legislation

• Accountancy Profession Act of 2014 (as amended)
• Act on Disciplinary Jurisprudence of Accountants of 2008 (as amended)
• Audit Firms Supervision Act of 2006 (as amended)
• Book 2 Dutch Civil Code
• Directive 2014/56/EU 
• Judicial and Criminal Records Information Act of 2002 (as amended)
• Regulation (EU) No 537/2014

Relevant Publications

• Accountancy Europe, Definition of Public Interest Entities in Europe, November 2017.
• Accountancy Europe, Member State Implementation of Directive 2014/95/EU, 2017.
• Common Content, A Common Training Framework for Professional Accountants, December 2018.
• Deloitte, Annual Accounts in the Netherlands: A Guide to Title 9 of the Netherlands Civil Code, December 2017.
• Deloitte & Touche, IPSAS in Your Pocket, 2019.
• European Commission, Audit Directive – Transposition Status, May 24, 2018.
• FEE Qualification and Market Access Working Party, Structure and Organisation of the Accountancy Profession, Key Features: The Netherlands, February 2012.
• IFAC & OECD, Accrual Practices and Reform Experiences in OECD Countries, February 2017.
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Netherlands, July 2016.
• International Forum of Independent Audit Regulators (IFIAR), IFIAR 2018 IFIAR 2018 Member Profile-AFM, December 2018.
• NBA Netherlands, NBA Alert 27 Separation of Audit Services and Other Services and Mandatory Audit Firm Rotation, December 2012.
• NBA Netherlands, SMO Action Plan, June 2019.
• VRC, SMO Action Plan, November 2019.