Portugal

As a member of the European Union (EU), Portugal is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations.

The Decree-Law No. 262/1986, last amended by Decree-Law No. 9/2022, Código das Sociedades Comercias (Companies Code), sets basic reporting functions for all business entities and requires companies to maintain accounting books and prepare annual financial statements.

The Decree Law No. 134/2012, last amended by Decree-Law No. 84/2019, grants authority to the Comissão de Normalização Contabilística (CNC), under the purview of the Ministry of Finance, to set accounting standards for corporate and public sector entities. The Sistema de Normalização Contabilistica (SNC), established by Decree-Law No. 158/2009 and as amended by Decree-Law No. 98/2015, establishes different financial reporting requirements depending on the size and nature of the entity.

• Norma Contabilística para Microentidades (NCRF-ME), for micro entities;
• Normas Contabilísticas de Relato Financeiro para Pequenas Entidades (NCRF-PE), for small and medium-size entities;
• Norma Contabilística para Entidades do Setor Não Lucrativo (NCRF-ESNL), for non-for-profit entities; and
• Normas Contabilísticas de Relato Financeiro (NCRF), for all other entities other than listed companies, banks, and financial institutions and insurance companies.

The SNC standards are based on IFRS; however, the standards do differ from the IFRS. IFRS for Small-and Medium-Sized Entities (SMEs) has not been adopted and there are no plans to do so. The national standards for micro-entities, small and medium-size entities, and not-for-profit entities are based on NCRF. In addition, under certain circumstances, all corporate sector companies are permitted to apply IFRS for their consolidated financial statements.

The financial sector regulators, Banco de Portugal (for banks and financial institutions), Autoridade de Supervisão de Seguros e Fundos de Pensões (ASF) (overseeing insurance companies and pension funds), and Comissão do Mercado de Valores Mobiliários (CMVM) (for listed companies) are empowered to set accounting and financial reporting requirements for companies under their supervision. The regulators have adopted EU-endorsed IFRS for consolidated financial statements.

The auditing requirements are set in the Law No. 140/2015, last amended by Law No. 99-A/2021, which was issued to transpose the EU Audit Directive and Regulation (EU) No 537/2014. The Law directly adopts ISA as issued by the IAASB, and requires statutory audits to be performed according to ISA.

The Companies Code mandates that all public limited liability companies (S.A.) must have an annual audit conducted. It also requires private limited companies (LDA) to have their financial statements audited annually if they exceed two of three thresholds in two consecutive reporting periods: (i) net turnover of € 3,000,000; (ii) total assets of € 1,500,000; and/or (iii) average employees of 50 for the year. Private limited companies that do not exceed two of the previous thresholds may qualify for an exemption from the annual audit requirement. In addition, all public interest entities, defined as listed companies, credit institutions, insurance and reinsurance companies, pension funds, investment companies, and some insurance holdings companies, are required to be audited in accordance with the Law.

In Portugal, the Law No. 140/2015 and the Law No. 139/2015 recognize two segments of the accountancy profession: statutory auditors (Revisores Oficiais de Contas (ROCs)) and chartered accountants (Contabilista Certificado). The Law No. 148/2015 recognizes the Comissão do Mercado de Valores Mobiliários (CMVM) as the organization responsible for overseeing the audit profession (ROCs)) in addition to regulation at the professional level by the Ordem dos Revisores Oficials de Contas (OROC) and the Ordem dos Contabilistas Certificados (OCC), respectively.

Universities, the OROC, and the OCC—under the oversight of the Ministry of Finance (MoF)—have a role in implementing initial professional development (IPD) and continuous professional development (CPD) requirements for professional accountants, which are established in the Law No. 148/2015, Law No. 140/2015, and the Law No. 139/2015. To be eligible to practice as a statutory auditor and become a member of OROC, individuals must: have a university degree (minimum: Master’s degree), complete entrance examinations (4 written exams and 1 oral exam), have work experience of at least three years (under the supervision of a mentor with a minimum five years’ experience as statutory auditor) and pass a final assessment. Then OROC members can be registered with the CMVM to be able to sign audit reports.

To become a chartered accountant titled as Contabilista Certificado, one must be member of OCC, a qualification path that requires: university degree (minimum three years duration or 180 ECTS – European academic credits standard) obtained in the business area (e.g., accounting, management, economics); course credits (from undergraduate or postgraduate level) on specific competency areas to meet the accounting education program set by OCC; 800 hours of monitored practical experience; and pass a final professional examination. Both OROC and OCC members are subject to CPD requirements.

The CMVM, as the oversight authority for the audit profession, has the following responsibilities: (i) maintaining a registry of statutory auditors and audit firms (Sociedades de Revisores Oficiais de Contas (SROC) after being registered at OROC); (ii) establishing a quality assurance system (QA) for audits of public interest entities (PIEs); (iii) developing an investigative and disciplinary (I&D) system; and (iv) issuing regulations on matters falling within the scope of its responsibilities while consulting OROC.

Some responsibilities of the OROC overlap with responsibilities of the CMVM. OROC carries out the following regulatory activities: (i) implementing IPD and CPD requirements for statutory auditors; (ii) maintaining a registry of statutory auditors and audit firms; (iii) setting ethical requirements for its members; (iv) administering and monitoring of the CPD program; (v) establishing a QA system for audits of non-public interest entities (non-PIEs); and (vi) establishing an I&D system for its members.

Chartered accountants are regulated by the OCC, under the purview of the MoF. In accordance with the Law, the OCC’s responsibilities include the following: (i) maintaining the registry of chartered accountants and accounting firms; (ii) implementing IPD and CPD requirements for chartered accountants; (iii) enforcing ethical standards; (iv) establishing an I&D system for its members; (v) administering and monitoring of the CPD program; and (vi) establishing a quality assurance system (QA) for its members.

The Law No. 148/2015 recognizes the Comissão do Mercado de Valores Mobiliários (CMVM) as the independent audit oversight body. The CMVM is a member of IFIAR.

The CMVM has the following responsibilities: (i) maintaining a registry of statutory auditors and audit firms ((Revisores Oficiais de Contas (ROCs) and Sociedades de Revisores Oficiais de Contas (SROCs)); (ii) establishing a quality assurance system (QA) for audits of public interest entities (PIEs); (iii) developing an investigative and disciplinary (I&D) system; and (iv) issuing regulations on matters falling within the scope of its responsibilities in consultation with the Ordem dos Revisores Oficiais de Contas (OROC) – the mandatory professional accountancy organization for statutory auditors.

The Ordem dos Contabilistas Certificados (OCC)

The OCC, established in 1995, is the mandatory professional accountancy organization for chartered accountants (Contabilista Certificado (CC)) and accounting firms (Sociedades Profissionais de Contabilistas Certificados e Sociedades de Contabilidade) in accordance with Decree Law 459/99, amended by Law No. 139/2015 and Law No. 119/2019. OCC members prepare tax and financial statements and are the only members of the profession allowed to sign financial statements along with company representatives. In accordance with the Law, the OCC’s responsibilities include the following: (i) maintaining the registry of chartered accountants and accounting firms; (ii) implementing IPD and CPD requirements for chartered accountants; (iii) enforcing ethical standards; (iv) establishing an I&D system for its members; (v) administering and monitoring of the CPD program; and (vi) establishing a quality assurance system (QA) for its members.

In addition to being a member of IFAC, the OCC is a member of the Committee for Integration Europe—Latin America (CILEA), a member of the European Federation of Accountants and Auditors for SMEs (EFAA), and member of the Fédération des Experts-Comptables Mediterranéens (FCM) and member of the União dos Contabilistas e Auditores de Língua Portuguesa (UCALP).

The Ordem dos Revisores Oficiais de Contas (OROC)

The OROC, established in 1974 by Ministerial Order 83/74 of February 6, rulled by Decree Law No. 140/2015, is the mandatory professional accountancy organization for statutory auditors, (Revisores Oficiais de Contas (ROCs)) and statutory audit firms (Sociedades de Revisores Oficiais de Contas (SROCs)). OROC members are the only professional accountants authorized to provide audit or audit-related services. In accordance with the Law, OROC carries out the following regulatory activities: (i) implementing IPD and CPD requirements for statutory auditors; (ii) maintaining a registry of statutory auditors and audit firms; (iii) setting ethical requirements for its members; (iv) administering and monitoring of the CPD program; (v) establishing a QA system for audits of non-public interest entities (non-PIEs); and (vi) establishing an I&D system for its members.

In addition to being a member of IFAC, the OROC is a member of Accountancy Europe and member of the União dos Contabilistas e Auditores de Língua Portuguesa (UCALP).

In Portugal, a mandatory quality assurance (QA) review system is required for all statutory audits of financial statements. Under the Law No. 148/2015 the Comissão do Mercado de Valores Mobiliários (CMVM) is responsible for conducting the reviews.

Accordingly, the CMVM has established a QA review system for audits of all public interest entities (PIEs), which include listed companies, credit institutions, insurance undertakings, pension funds, investment companies, and some state-owned companies. As far as non-PIEs QA reviews are concerned, the Ordem dos Revisores Oficiais de Contas (OROC) is performing these inspections in accordance with the Decree Law No. 140/2015. The OROC’s QA review system is subject to supervision by the CMVM.

Lastly, in accordance with the Decree Law No. 139/2015, the Ordem dos Contabilistas Certificados (OCC) has responsibility for establishing a mandatory QA review system for chartered accountants (Contabilista Certificado). The OCC has instituted a mandatory quality control program for accountants, which involves practice review inspections and quality control regulation. The OCC reports that it has used SMO 1 as a guideline for the development of its QA system. The OCC reports it is working on a new approach for 2023, shifting the focus from quality control to quality management, considering the new suite of Quality Management standards issued by the IAASB.

Based on available information on the CMVM’s QA review system, it seems that it is aligned with SMO 1 best practices; however, additional information would be beneficial to confirm alignment. The OROC reports that its QA system fulfills all the requirements of SMO 1.

Current Status: Partially Adopted

In Portugal, the universities, the Ordem dos Revisores Oficiais de Contas (OROC) and the Ordem dos Contabilistas Certificados (OCC) —under the oversight of the Ministry of Finance (MoF)—have a role in further setting and implementing initial professional development (IPD) and continuous professional development (CPD) requirements for professional accountants, which are established in the Law No. 148/2015, Law No. 140/2015 and the Law No. 139/2015.

To be eligible to practice as a statutory auditor and become a member of OROC, individuals must: have a university degree, complete entrance examinations (4 written exams and 1 oral exam), have work experience of at least three years (under the supervision of a mentor with minimum five years’ experience) and pass a final assessment. The OROC reports that the requirements for statutory auditors comply with the revised 2015 IES.

To become a chartered accountant and become an OCC member, individuals must: have a business area (e.g., accounting, management, economics) university degree (minimum three years duration or 180 ECTS – European academic credits standard); complete course credits (undergraduate or postgraduate level) from specific competency areas to meet the accounting education program set by OCC; 800 hours of monitored practical experience or work experience of at least three years; and pass a final professional examination.

Both OCC and OROC members are subject to CPD requirements, which meet IES 7 and 8, respectively.

As reported by OCC, further review is necessary to assess the extent of alignment of their educational requirements with the 2019 IES.

Current Status: Partially Adopted

The auditing requirements are set in Law No. 148/2015, which was issued to transpose the Audit Directive and Regulation (EU) No 537/2014. The Law directly adopts ISA as issued by the IAASB.

The Ordem dos Revisores Oficiais de Contas (OROC) translates the IAASB Handbooks and is currently translating the 2018 IAASB Handbook.

Current Status: Adopted

All professional accountants in Portugal are subject to ethical requirements. The Ordem dos Revisores Oficiais de Contas (OROC) sets ethical standards for the auditing profession in accordance with its prescribed mandate in Law No. 140/2015. The OROC approved a revised Code of Ethics effective January 2012, which is aligned with the 2009 version of the IESBA Code of Ethics. OROC reported plans to translate and adopt the 2018 version of the IESBA Code of Ethics since 2019.

Law No. 139/2015 determines ethical standards for chartered accountants. The Ministry of Finance is responsible for setting the Code of Ethics for approval by the Portuguese Parliament. Then Ordem dos Contabilistas Certificados (OCC) members must adhere to the Code during their activities. The OCC states that while there is no specific reference in the Law to the IESBA Code of Ethics, the requirements of its Código Deontologico dos Contabilistas Certificados are in line and no less stringent than those in the 2020 International Code of Ethics for Professional Accountants.

Current Status: Partially Adopted

The Comissão de Normalização Contabilística (CNC), under the purview of the Ministry of Finance, is responsible for setting public sector accounting standards in accordance with Decree Law No. 134/2012.

A public sector accounting framework based on IPSAS, the Sistema de Normalização Contabilística para as Administrações Públicas, was approved by the Decree Law No. 192/2015. In addition, the CNC has developed an implementation manual.

As reported by the Ordem dos Revisores Oficiais de Contas (OROC), the framework includes specific standards that are not based on IPSAS (e.g., a standard for budgeting accounting and a standard for management accounting); however, the framework was prepared based on the 2014 IPSAS version. CNC was preparing a revised version as of 2021.

Current Status: Partially Adopted

All professional accountants are subject to investigation and discipline procedures. The investigative and disciplinary (I&D) processes for statutory auditors are defined in the Law No. 148/2015, which was issued to transpose the EU Audit Directive and Regulation (EU) No 537/2014, and the Decree Law No. 140/2015. Under the laws both the Comissão do Mercado de Valores Mobiliários (CMVM) and the Ordem dos Revisores Oficiais de Contas (OROC) have responsibility for implementing I&D mechanisms for auditors. The OROC reports an overlap in responsibilities between the two entities but confirms that both systems are aligned with the best practices of SMO 6.

With respect to chartered accountants, the Ordem dos Contabilistas Certificados (OCC) has implemented an I&D system in accordance with the requirements of Law No. 139/2015. The OCC indicates that its I&D mechanism incorporates all the requirements of SMO 6.

Current Status: Adopted

In Portugal, the financial sector regulators, Banco de Portugal, Autoridade de Supervisão de Seguros e de Fundos de Pensões (ASF), and the Comissão do Mercado de Valores Mobiliários (CMVM) are empowered to set accounting and financial reporting requirements for companies under their supervision. The regulators have adopted EU-endorsed IFRS for the preparation of consolidated financial statements of all public interest entities, including consolidated financial statements of listed companies, banks, financial institutions, insurance companies, and pension funds.

In addition, the Decree Law No. 134/2012 grants authority to the Comissão de Normalização Contabilística (CNC), under the purview of the Ministry of Finance, to set accounting standards for corporate sector entities. The Sistema de Normalização Contabilistica (SNC) establishes different financial reporting requirements depending on the size and nature of the entity such as, Norma Contabilística para Microentidades, for micro entities; Normas Contabilísticas de Relato Financeiro para Pequenas Entidades, for small and medium-size entities; Norma Contabilística para Entidades do Setor Não Lucrativo, for non-for-profit entities; and Normas Contabilísticas de Relato Financeiro, for all other entities. The SNC standards are based on IFRS, however, they do differ.

Lastly, all private sector companies are permitted to apply IFRS for their annual and consolidated financial statements. IFRS for Small-and Medium-Sized Entities (SMEs) has not been adopted, and there are no stated plans to do so.

Current Status: Adopted

Relevant Organizations

• Comissão de Normalização Contabilística (CNC)
• Comissão do Mercado de Valores Mobiliários (CMVM)
• Ordem Dos Contabilistas Certificados (OCC)
• Ordem dos Revisores Oficials de Contas (OROC)

Relevant Legislation

• Decree Law No. 148/2015
• Decree Law No. 134/2012
• Decree Law No. 98/2015
• Law No. 140/2015
• Law No. 139/2015
• Ministry of Finance, Ordinance No. 310/2009
• European Commission (EC) Directive 2014/56/EU
• Accounting Directive 2013/34/EU

Relevant Publications

• Accountancy Europe (AE), Definition of Public Interest Entities in Europe - Accountancy Europe, 2017.
• AE, Structure and Organization of the Accountancy Profession – Key Features: Portugal, 2012.
• KPMG, EU Audit Legislation in Portugal, September 2015.
• IFIAR, Member Profile: Portugal, 2018.
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Portugal, July 2016.
• OCC, SMO Action Plan, July 2021.
• OROC, SMO Action Plan, March 2019.