Key Points
- The AFM has supervised Dutch audit firms since the Wta took effect in 2006 and is a member of the International Forum of Independent Audit Regulators (IFIAR).
- Every firm performing statutory audits in the Netherlands must hold a Wta licence issued by the AFM.
- The AFM inspected 14 non-PIE audit firms in 2024, with significant findings persisting across the majority of those inspections.
- From financial year 2025, the number of Dutch companies requiring CSRD assurance rises from roughly 95 to 3,000, expanding the AFM's oversight scope.
What is AFM (Authority for the Financial Markets)?
The AFM operates under a "Twin Peaks" model. De Nederlandsche Bank (DNB) handles prudential supervision of financial stability. The AFM handles conduct-of-business supervision, covering market integrity, transparency, consumer protection, and fair financial markets across savings, investment, insurance, pensions, capital markets, and accountancy. Audit oversight is one arm of that mandate.
Under the Wta, every firm performing statutory audits (wettelijke controles) must obtain and maintain a licence from the AFM. The Wta distinguishes between firms that audit public interest entities (Organisaties van Openbaar Belang, or OOBs) and non-PIE firms. PIE audit firms face additional requirements under EU Regulation 537/2014, including mandatory firm rotation and restrictions on non-audit services. Non-PIE firms operate under the base Wta requirements but remain subject to periodic AFM inspection. The AFM selects non-PIE firms for risk-based inspection cycles, examining both the firm's quality management system and a sample of completed engagements.
When the AFM identifies breaches, it can impose administrative fines, issue instructions to cease specific conduct, appoint a supervisory trustee, or (in the most severe cases) revoke the Wta licence. It also forwards cases involving individual auditors to the Ministry of Justice's Disciplinary Court. The AFM publishes its findings through annual reports and thematic reviews. Those inspection results are the primary reference point for Dutch practitioners assessing their own compliance posture.
Worked example
Client: Dutch real estate holding company, FY2025, revenue €130M, IFRS reporter. The statutory audit is performed by Vermeer & Co Accountants, a 30-person non-PIE audit firm based in Rotterdam holding a Wta licence from the AFM.
Step 1 — Confirm Wta licence status and scope
Before accepting the De Wit engagement, the engagement partner verifies that Vermeer & Co's Wta licence remains active in the AFM's public register. The licence does not cover PIE audits. De Wit Vastgoed is not an OOB, so the firm's licence scope is sufficient.
Documentation note: record the licence verification date, the register search result, and the confirmed non-OOB status of De Wit Vastgoed per Wta Article 5.
Step 2 — Apply Wta independence requirements
Wta Article 24 requires the external auditor to be independent from the audit client. The engagement partner confirms that Vermeer & Co holds no financial interest in De Wit Vastgoed and has not provided valuation or internal audit services to the entity during the current or preceding period. Two advisory engagements (tax compliance for a De Wit subsidiary) are evaluated against the threat-and-safeguard framework.
Documentation note: record the independence assessment, the identified threats from the tax compliance engagements, the safeguards applied, and the engagement partner's conclusion that threats are reduced to an acceptable level per Wta Article 24 and the NBA Code of Ethics (ViO).
Step 3 — Prepare for potential AFM inspection
Vermeer & Co was last inspected by the AFM in 2022. The managing partner expects the next inspection within the current cycle. The quality management partner checks that the firm's ISQM 1 documentation reflects the current quality objectives, that root cause analysis on prior internal inspection findings has been completed, and that the De Wit engagement file meets the firm's archival standards within the 60-day completion deadline required by COS 230.
Documentation note: record the pre-inspection readiness review performed, the status of the ISQM 1 documentation, the archival completion date for the De Wit file, and any open remediation items from prior internal inspections.
Conclusion: Vermeer & Co's approach is defensible because the licence verification, independence assessment, inspection readiness review, and file archival steps create a documented trail that satisfies both Wta requirements and the AFM's demonstrated inspection focus areas.
Why it matters in practice
- The AFM's 2025 State of the Auditing and Reporting Industry report found that engagement quality review policies at non-PIE firms remain inadequate: 13 of 15 assessed firms had deficient EQR policies, and 26 of 30 reviewed EQRs lacked sufficient depth. The AFM specifically flagged that reviewers at non-PIE firms focused on documentation completeness rather than evaluating the substance of significant judgments. This mirrors the engagement quality review deficiencies the AFM has flagged in successive inspection cycles.
- Non-PIE firms frequently treat the Wta licence as a static credential rather than an ongoing compliance obligation. The AFM can attach conditions to an existing licence or revoke it following an adverse inspection outcome. Firms that do not update their quality management systems in response to AFM findings risk escalating enforcement action, including public sanctions visible in the AFM's register.
AFM vs. NBA
| Dimension | AFM | NBA |
|---|---|---|
| Legal basis | Wta (Audit Firms Supervision Act) | Wet op het accountantsberoep (Wab) |
| Scope | Audit firms performing statutory audits | All registered accountants (RA and AA title holders) |
| Primary function | Public oversight: licensing, inspection, enforcement | Professional body: standard-setting, education, quality review for non-Wta firms |
| Enforcement tools | Administrative fines, licence conditions, licence revocation, referral to Disciplinary Court | Disciplinary proceedings, membership sanctions, quality review follow-up |
| International affiliation | IFIAR (International Forum of Independent Audit Regulators) | IFAC (International Federation of Accountants) |
The practical distinction: if a non-PIE audit firm receives an AFM inspection finding, the AFM can impose binding enforcement measures. If the same firm receives a quality review finding from the NBA's SRA programme, the consequences follow the professional body's disciplinary track. Both can result in sanctions, but the AFM route carries public-register visibility and direct licensing consequences.
Related terms
Frequently asked questions
Does the AFM supervise all Dutch accountants?
No. The AFM supervises audit firms that perform statutory audits under the Wta. The NBA (Royal Netherlands Institute of Chartered Accountants) regulates the profession more broadly, including accountants who perform compilation and advisory work. An accountant who holds an RA or AA title but works at a firm without a Wta licence falls outside the AFM's direct supervisory scope.
What triggers an AFM inspection of a non-PIE audit firm?
The AFM uses a risk-based selection model. Factors include time elapsed since the last inspection, the firm's client portfolio (sector concentration, entity size), prior inspection results, and market signals such as disciplinary rulings or complaints. Wta Article 15 gives the AFM broad authority to request information and conduct on-site examinations at any licensed firm. Non-PIE firms typically face an inspection cycle of three to six years, though the AFM can accelerate that schedule if risk indicators warrant it.
How does AFM oversight change for CSRD assurance engagements?
The AFM announced in November 2024 that the number of companies requiring sustainability assurance under the CSRD will rise from approximately 95 to 3,000 starting with financial year 2025. Audit firms providing limited assurance on sustainability reports must hold a Wta licence and fall within AFM inspection scope. The AFM expects firms to demonstrate adequate resources and competence in ESRS requirements, backed by a quality management system covering sustainability assurance alongside financial statement audits.