In brief: A contractual audit in Morocco is a voluntary examination of accounts, carried out by a chartered accountant registered with the OEC, in accordance with ISA standards. Unlike a statutory audit (mandatory above MAD 50M turnover), a contractual audit is freely defined by contract between the company and the auditor.
The term contractual audit (also known as independent audit) generally refers to a non-statutory financial audit. In this sense, it corresponds to an examination of accounts by a diligent professional, with the aim of certifying the financial statements.
Like the statutory audit, the contractual audit in Morocco is a monopoly of the chartered accountant registered with the Order of Chartered Accountants (OEC). The engagement is governed by the General Code of Accounting Standards (CGNC) and the audit standards issued by the OEC, aligned with IFAC’s ISA standards.
The examination and analysis of information are carried out according to precise criteria and methodologies. Indeed, it is an approach that complies with the standards of the Order of Chartered Accountants, set out in the audit standards manual. The OEC National Council approved the Moroccan audit standards in 2008, then updated them in 2017 to align with ISA (International Standards on Auditing). A PME-specific audit standard, adapted from the IFAC SMP Committee’s work, was published in October 2019 and remains in force in 2026.
The contractual audit is distinguished from the statutory audit by its flexibility: the scope, objectives and accounting framework are freely defined in an engagement letter between the company and the auditor. In Morocco, this engagement is governed by OEC standards, themselves aligned with ISA standards from IFAC.
In practice, the contractual audit is frequently used in the following cases:
- Due diligence for M&A (art. 232 ff. Commercial Code)
- Restructurings (SARL to SA conversion, Law 17-95 and Law 5-96)
- Company valuation for new investors
- Compliance audit before Casablanca Stock Exchange listing (under AMMC)
- Consolidated accounts audit under IFRS for international group subsidiaries
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What Is a Statutory Audit?
The statutory audit is a legally mandated examination, carried out by a statutory auditor registered with the OEC, aimed at certifying the accuracy, regularity and fairness of a company’s annual accounts. It is governed by the General Tax Code and laws on commercial companies.
Thresholds and legal obligations for audit in Morocco:
- SA (Law 17-95): statutory audit mandatory regardless of size
- SAS (Law 19-20): statutory audit mandatory in all cases
- LLC/SARL (Law 5-96): statutory audit mandatory when turnover exceeds MAD 50 million excl. tax
- Banks, insurance companies, UCITS: mandatory audit (under Bank Al-Maghrib and AMMC supervision)
- Associations and foundations recognized as being of public interest: mandatory audit above certain subsidy thresholds
The statutory auditor’s mandate duration is 3 fiscal years for SA and SAS (renewable), and appointment is made at the ordinary general meeting. The auditor files their report with the Commercial Court registry within 60 days after the general meeting (art. 177 Law 17-95).
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What Is a Contractual or Independent Audit?
The contractual audit is a voluntary engagement initiated by the company (or a third party: acquirer, bank, investor) to address a specific need. Unlike the statutory audit, it is not imposed by law and offers total flexibility on scope, framework and objectives.
Key characteristics of the contractual audit in Morocco:
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Engagement letter: formalized per ISA 210
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Fees: freely negotiated between the parties (unlike statutory audit where fees follow OEC recommendations)
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Common contexts: due diligence (M&A), restructurings, company valuations, introduction of new investors
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Auditor: chartered accountant or statutory auditor registered with the OEC, per code of ethics (Law 15-89, art. 25-31)
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Framework: CGNC, IFRS, US GAAP or any contractually agreed standard
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Independence: same rules as statutory auditor (ISA 200)
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The independent or contractual audit is defined by an agreement between the company and the auditor, and the terms are set out in an engagement letter. This allows for customization of the audit according to the specific needs of the company.
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It can be carried out by a chartered accountant or a statutory auditor, but must always comply with professional standards and the code of ethics of the accounting profession.
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Comparison Between the Statutory Audit and the Independent Audit
| Criterion | Statutory Audit | Contractual Audit |
|---|---|---|
| Nature | Mandatory (Law 17-95 SA, Law 5-96 SARL) | Voluntary, at the company’s request |
| Threshold | Turnover > MAD 50 million or SA regardless of size | No threshold — any company can benefit |
| Appointment | General meeting of shareholders | Free contract between the company and the auditor |
| Performed by | Statutory auditor registered with the OEC | Chartered accountant or statutory auditor registered with the OEC |
| Scope | Full annual accounts (balance sheet, income statement, notes) | Defined in the engagement letter (annual accounts, interim statement, specific section) |
| Standards | Audit standards manual OEC / ISA in full | ISA audit standards, with possible contractual adjustments |
| Specific verifications | Mandatory (related-party agreements, management report) | Not required unless contractually stipulated |
| Accounting framework | CGNC only | CGNC, IFRS or group standards |
| Report | General report + special report to the GM | Contractual audit report per agreed terms |
| Indicative cost | MAD 30,000 to 150,000/year depending on size | Variable depending on scope and complexity |
- In the context of a statutory audit, certain specific verifications and related checks are mandatory (related-party agreements, management report, subsequent events). This is not the case with the contractual audit, unless expressly stipulated in the engagement letter.
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Roles and Responsibilities in the Contractual Audit
Who can carry out an independent audit and what are the selection criteria?
- A contractual audit can be carried out by a chartered accountant or a statutory auditor, depending on the needs of the company.
- The auditor selection criteria include expertise in the relevant field, understanding of the company’s objectives, and adherence to professional and ethical standards.
Scope and Limitations of the Contractual Audit:
- The scope of the contractual audit is defined in the engagement letter and can vary considerably depending on the company’s objectives.
- The limitations of this type of audit include compliance with accounting and ethical standards, as well as clarity of objectives and expectations between the company and the auditor.
Practical Cases of Contractual Audit
Examples of situations where a contractual audit is typically required:
- Company valuations in the context of mergers and acquisitions.
- Company restructurings aimed at improving operational efficiency or profitability.
- Specific audits to assess operational risks or information system compliance.
Impact and Benefits for Companies:
- The contractual audit offers flexibility and adaptability that allow it to meet precise needs and contribute to informed strategic decisions.
- It can also provide new perspectives and recommendations for improving the company’s financial and operational performance.
Conclusion
Summary: contractual audit vs statutory audit in Morocco
- The statutory audit is mandatory for SA, SAS and SARL exceeding MAD 50M turnover — it certifies the annual accounts under CGNC standards
- The contractual audit is voluntary, defined by contract, and covers a freely agreed scope (due diligence, IFRS accounts, interim statement, specific section)
- Both engagements are reserved for professionals registered with the OEC and must comply with the ISA audit standards issued by the National Council of the Order
- The cost of a contractual audit varies depending on the complexity of the scope, compared to MAD 30,000 to 150,000/year for a standard statutory audit
A distinction must be made between:
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First, the financial contractual audit. In this case, audit standards apply in all their aspects. However, the auditor does not carry out specific verifications;
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Second, the examination according to agreed-upon standards with the client. Indeed, the contractual auditor may be required, depending on the contract, to prepare the following reports:
Report on the annual statutory or consolidated financial statements;
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Certificate for an interim financial statement;
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Report following a limited review;
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A compilation engagement;
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Certificate following an engagement based on agreed-upon procedures.
The various aspects relating to the certification of financial statements set out for statutory audit also apply to the contractual audit.
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Contractual Audit: What Due Diligence Is Required?
In the context of this engagement, the auditor must carry out:
- First, initial due diligence before accepting the engagement;
- Second, audit planning and the development of an audit plan;
- Third, an evaluation of the company’s internal controls;
- Fourth, an examination of the company’s accounts.
The contractual auditor follows the same due diligence procedures as those required in a statutory audit. Indeed, the only difference lies in the manner in which the auditor is appointed. In a statutory audit, the audit is a legal obligation. Conversely, in a contractual audit, the company decides of its own volition to appoint an auditor.
As a result, this difference in the source of appointment may have an impact on the objectives assigned to the audit.
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Main Practical Differences Between the Statutory Audit and the Contractual Audit
The statutory auditor is appointed to comply with legal provisions. In Morocco, any company with turnover exceeding 50 million dirhams must appoint a statutory auditor (statutory auditor).
Conversely, when a company appoints a contractual auditor, adjustments to the objectives may be agreed upon.
Adjustments to the Accounts to Be Audited
In the case of a statutory audit, it is the statutory accounts under Moroccan standards (CGNC) that are subject to the audit.
In the case of a contractual audit, it may be conventionally agreed that the financial statements will be restated to align with other standards:
- First, international accounting standards
- Second, accounting standards of a specific country
- Third, accounting standards of a specific entity or group of entities
Nevertheless, whenever the report mentions the term “audit,” the generally accepted audit working standards must be respected.
Adjustments to the Materiality Threshold
When the auditor carries out a contractual engagement, the client may require the materiality threshold to be adjusted based on their needs. In such cases, the auditor must mention this adjustment in their report.
Missions of the Contractual Auditor
The contractual auditor (like the statutory auditor) may be called upon to carry out specific missions. These include:
- First, a limited review of the financial statements. This engagement requires lighter due diligence. However, it does not constitute a certification, but merely negative assurance. Indeed, the auditor expresses an opinion stating that “they did not identify any anomalies during their work”;
- Second, the examination of financial information based on agreed-upon verification procedures. In this case, the report clearly defines the agreed-upon procedures and their conclusions;
- Third, the examination of a specific section of the financial statements. The auditor must indicate in the report which section of the financial statements is the subject of their work;
- Finally, the examination of forecast accounts.
Do Not Confuse the Accounting Engagement with the Audit Engagement
The accounting engagement consists of preparing the client’s accounts. It may also consist of carrying out a review to propose modifications to these accounts (accounting supervision). As a result, the chartered accountant participates in the preparation of the accounts.
Given that an auditor must be independent, the following chartered accountants cannot act as contractual auditors:
- Those who perform bookkeeping work for the client;
- Those who carry out an accounting supervision engagement.
An auditor has an obligation of independence. They cannot be both judge and party to the financial statements they have prepared or assisted in preparing.
Frequently Asked Questions
What is a contractual audit and how does it differ from a statutory audit in Morocco?
A contractual audit is commissioned voluntarily by a company or its stakeholders for a specific purpose (M&A, restructuring, risk assessment), while a statutory audit is legally required for certain companies under Moroccan law. The contractual audit scope is defined by the engagement terms, offering greater flexibility.
When should a company request a contractual audit in Morocco?
A contractual audit is recommended before mergers and acquisitions, when seeking external financing, during shareholder disputes, for internal control assessments, or when preparing for a statutory audit. It provides independent assurance on specific financial or operational aspects of the business.
Who can perform a contractual audit in Morocco?
A contractual audit should be performed by an independent professional, typically a chartered accountant or audit firm registered with the Ordre des Experts-Comptables du Maroc. The auditor must be independent of the company being audited and cannot have performed bookkeeping or accounting supervision for the same client.
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Upsilon Consulting: Your Independent Contractual Auditor
In the complex landscape of financial auditing, Upsilon Consulting stands out as an independent contractual auditor. Thanks to our deep expertise and tailored approach, we provide contractual audit services adapted to the specific needs of each company. At Upsilon Consulting, we understand that every organization is unique, with its own challenges and objectives. That is why we adopt a personalized approach, focusing on delivering strategic insights that support our clients’ key decisions.
Our team of experts, with significant experience across various sectors, is equipped to handle a wide range of contractual audit engagements. Whether for mergers and acquisitions, company restructurings, risk assessments, or the improvement of internal control systems, we offer rigorous analysis and practical recommendations. Our goal is to deliver tangible added value to your company, ensuring not only compliance but also illuminating pathways to operational efficiency and strategic growth.
By choosing Upsilon Consulting for your audit, you benefit from a trusted partner committed to maintaining the highest standards of integrity and professional quality. We are committed to working closely with you to understand your unique needs and to deliver audit solutions that precisely meet your expectations and requirements.
Source: Law 17-95 (SA), Law 5-96 (SARL), Law 15-89 (Accounting profession), OEC Audit Standards Manual — analyzed by Salaheddine Yatim, Chartered Accountant — Upsilon Consulting
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