differences in the structure of shareholding, with more family-owned businesses in Italy lowering the perceived importance of independence; (iii) traditionally less concern for independence as a governance characteristic in Italy.

No countries within the EU, with the exception of Italy, currently have a system of mandatory audit firm rotation.

In recent years, auditing of financial reports, i.e. the activity aimed at certifying “substantial reliability” of the financial statements, has been regulated both as a consequence of Europeans Union (EU) Directives, and as a consequence of domestic initiatives aimed at rebuilding public confidence in financial reports after the wellknown financial scandals.

Furthermore, the reform of the Italian Company Act
(Legislative Decree no.5 of 17 January 2003) requires that financial reports of all listed companies as well as limited liability companies (above a given size threshold) be audited by an independent auditor. It is required that the auditing be carried out by either an audit firm, by a Board of statutory auditors or by an individual auditor.

According to art. 2409-bis of the Civil Code, the by-laws of unlisted companies which are not required to prepare consolidated financial reports can delegate the accounting audit to a Board of statutory auditors. As a consequence, under this regulation, it was required that the audit of private Italian companies’ financial reports be made by the
Board of statutory auditors or by another body that may be selected among3: 1. Chartered auditors who are members of the Registro dei Revisori;
2. Audit firms that are members of the Registro dei Revisori or of the register kept by
CONSOB (the Italian equivalent of US SEC)
** Current Italian regulation allows private companies respecting certain criteria to have their accounts audited by either an audit firm, by