The birth of Luxembourg accounting law, as well as of a profession in charge of auditing companies statutory accounts
The idea of an accounting standards board in Luxembourg dates back to 1984. At that time, Luxembourg adopted an accounting law when it transposed the 4th directive on annual accounts (78/660/EEC) and the 8th directive on the approval of persons responsible for the statutory audit of accounting documents (84/253/EEC).
During discussions on the role of the “Institut des réviseurs d’entreprises” (the Professional association for statutory auditors) (doc. parl. 2734), the establishment of a body responsible for issuing generally accepted accounting standards in the country is mentioned for the first time (report of the Special Commission of 17 May 1984):
“Once established, the “Institut des réviseurs d’entreprises” will therefore be responsible for issuing a minimum set of professional rules as soon as possible. It is qualified to do so with regard to rules, standards and duties relating to auditing. It has no such power with regard to purely accounting rules. In this area, independent accountants and qualified representatives of commercial undertakings will also have an interest in expressing their views. The same may be true for those responsible for teaching accounting.
Coordination is therefore clearly necessary. In countries where state-recognised professional organisations bring together persons of equal qualifications, whether they are self-employed, employed by commercial undertakings or engaged in teaching, such coordination takes place within these organisations. These organisations then issue rules which are generally accepted and applied in these countries.
As the Luxembourg lawmaker / legislator has not provided such a global organisation, it will probably have to designate a body authorised to issue accounting standards that are generally accepted in the country.
The Commission would like the “Institut des réviseurs d’entreprises”, once established, to look into this issue, examine it with the relevant professional chambers and report back to the competent minister, proposing a solution to the problem raised.”
The modernisation of accounting law with the launch of the project of a Luxembourg Central Balance Sheet Office
Nearly fifteen years later, draft bill of law No. 4581, introduced in May 1999 and passed into law on 19 December 2002, concerning the trade and companies register as well as the bookkeeping and annual accounts of companies, proposed:
“the creation of a commission within the Ministry of Justice, similar to the “Commission des normes comptables (CNC)” (accounting standards board) established in Belgium, whose mission will be to advise the Government, develop an accounting doctrine and formulate principles for regular accounting through opinions or recommendations. Its purpose will also be to monitor developments in the field of accounting”.
The birth of the Luxembourg Accounting Standards Board (CNC)
Following the adoption / publication of the law of 19 December 2002 and after several years of preparation, CNC, established by Article 73 of this law, was founded after the adoption of the implementing measures provided for by the law, namely the Grand-Ducal Regulation of 10 November 2006 on the composition, organisation, procedures and working methods of the CNC and the Ministerial Decree of 1 February 2007 appointing the members of the said commission.
The reform of the Luxembourg Accounting Standards Board (CNC)
However, after several years of experience, it became apparent that the lack of stable human and financial resources and the absence of operational autonomy prevented CNC from functioning effectively in the public interest.
A draft bill of law was introduced in 2011 (parliamentary document 6376) to provide the Commission with stable human resources, consisting of a president and of a technical team, and to ensure its funding, based on the Belgian model, where the Accounting Standards Board is funded by a levy / tax on the filing of annual and consolidated accounts by companies.
With regard to the model chosen and given the diversity of models existing elsewhere in Europe (e.g. the Autorité des Normes Comptables (ANC) in France is an independent administrative authority (A.A.I.), the Deutsches Rechnungslegungs Standards Committee (DRSC) in Germany is a private law association (e. V.), the Commission des Normes Comptables (CNC) in Belgium is an autonomous body, the Raad voor de Jaarverslaggeving (RJ) in the Netherlands is a foundation, and the Financial Reporting Council (FRC) in the United Kingdom is a private company), it was decided – following the legislative procedure – to adopt the economic interest group (EIG) model in Luxembourg.
Following the adoption of the Law of 30 July 2013 reforming the Luxembourg Accounting Standards Board, the founding members (the State of the Grand Duchy of Luxembourg, the Central Bank of Luxembourg (BCL), the Regulator of the insurance sector (CAA), the Financial Sector Supervisory Commission (CSSF), the Chamber of Commerce (CC), the Professional Association for Statutory Auditors (IRE) and the Order of Chartered Accountants (OEC)) met on 2 October 2013 at the Ministry of Justice to establish the economic interest group (EIG) Accounting Standards Commission (CNC) and to appoint the first members of the Management Board.