The new Regulation on External Audit reduced the amounts for which a taxpayer is subject to the requirement of obtaining an opinion from external auditors.

Subjects required to contract external audit:

• National mixed economy companies and anonymous companies with participation of juridical persons of public law or of private law with social or public purpose, whose assets exceed US $100,000.
• The branches of foreign companies or companies organized as legal entities that have been established in Ecuador and the associations they form with each other or with national companies whose assets exceed US $100,000.
• National anonymous limited, limited by shares and limited liability companies, whose asset amounts exceed US$ 500,000.
• Companies required presenting consolidated balance sheets.
• Public interest companies defined in the relevant regulations.

The asset included in the statement of financial position presented in the previous fiscal year shall be considered as an asset.

External audit contracting:

External audits may only be carried out by natural or legal persons registered in the National Register of External Auditors and have a current rating by the Superintendency of Companies, Securities and Insurance.

Limitation to external audits of the same subject:

No qualified audit firm may carry out external audit for more than five consecutive years in respect of the same subject of audit, or three consecutive years in the case of public interest companies. The first year of external audit work will be the one corresponding to fiscal year 2016.

Of the reports:

In addition to the report and the communication on deficiencies in internal control, with observations and suggestions on aspects inherent to internal controls, the auditor must communicate in writing to the Superintendency of Companies, Securities and Insurance illegal acts, fraud, Abuses of trust, and other irregularities that he encountered in conducting his examination.

Source: Pérez Bustamante Ponce and associated firm TAO GROUP ADVISORS.