This chapter examines how reporting and disclosure requirements have evolved in the SOE sector, including financial and non-financial disclosures, and information on SOEs’ commercial and non-commercial activities. It also considers disclosure of control structures, board composition and remuneration, material risk factors and risk management. Further elements include equitable treatment of shareholders and the role of audit practices in strengthening SOE oversight and accountability.
Ownership and Governance of State‑Owned Enterprises 2026
Abstract
As part of broader national governance and accountability frameworks, SOEs are expected to meet high standards of integrity, transparency and accountability. This includes disclosure requirements for financial and non-financial reporting, governance arrangements, risk management, related party transactions, and audit and control practices. This chapter reviews how these requirements are applied across countries, and resulting implications, with findings pointing to the following trends:
Financial reporting and transparency requirements are broadly established, with varying scope and application. Nearly all jurisdictions require SOEs to use international or equivalent accounting standards, with reporting requirements differentiated according to SOE size, legal form and listing status. Broader transparency requirements cover commercial and non-commercial objectives and material risks, with 91% of jurisdictions requiring all or some SOEs to report on material risks. Requirements increasingly extend to risk management systems, applying to at least some SOEs in 83% of jurisdictions, and to related party transactions.
Governance‑related disclosures and shareholder protections are common, although some information on state control and board participation is less consistently available. In particular, disclosure of major shareholders (89%) and corporate group structures (73%) is common. Other mechanisms through which control is exercised, such as special voting rights (46%) and shareholder agreements (36%), are less consistently disclosed. Disclosure of board composition is also widespread, while requirements relating to board independence, qualifications and remuneration vary. Minority shareholder protections are similarly well established, with over 90% of jurisdictions guaranteeing voting rights, access to information and legal recourse in non-listed SOEs.
Audit and control frameworks are broadly established, with more systematic coverage for larger, listed or economically significant SOEs. Ninety-three per cent of jurisdictions report that all or some SOEs are subject to independent external audit, while a majority also require mandatory audit firm rotation. Internal audit functions are widely established, with 87% of jurisdictions requiring them for all SOEs or for at least some, generally larger or listed, SOEs.
4.1.1. Financial disclosure
A central aspect of SOE transparency is the preparation of financial statements in accordance with high-quality internationally recognised accounting standards (IAS), such as the IFRS framework, or an equivalent national standard. The use of such standards helps to promote consistency, comparability and reliability in financial reporting. Among the respondents, the vast majority indicated that all or some of their SOEs report in line with IAS or an aligned national standard (Figure 4.1).
Note: The sample comprises 57 jurisdictions (Hungary not included).
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Despite a high level of alignment, reporting frameworks remain heterogeneous in practice. Most jurisdictions apply a tiered approach, whereby listed or larger SOEs follow IFRS or equivalent national standards, while other entities apply alternative national frameworks that are not equivalent to internationally recognised accounting standards. The use of internationally recognised accounting standards does not, in itself, determine the extent of public disclosure; rather, it provides the basis for the preparation and presentation of financial information that may then be publicly disclosed through applicable transparency and reporting requirements which vary by country.
At the same time, several jurisdictions are in the process of transitioning towards greater alignment with internationally recognised accounting and reporting standards, suggesting a continued, albeit gradual, trend towards convergence. This is particularly evident in jurisdictions such as Uzbekistan and Viet Nam, where adoption processes are ongoing, as well as in jurisdictions such as Kazakhstan, Morocco and Saudi Arabia, where IFRS application is expanding progressively across the SOE sector.
4.1.2. Disclosing commercial and non-commercial objectives
Beyond financial reporting, SOEs are often required to disclose their commercial and non-commercial objectives. Among those surveyed, approximately half report that SOEs are required to disclose all main commercial and non-commercial objectives, while a further 40% require disclosure of at least some objectives (Figure 4.2). These responses relate to the disclosure of the objectives themselves and do not necessarily imply disclosure of performance against, or achievement of, those objectives. In practice, disclosure frameworks vary across jurisdictions in terms of scope, consistency and presentation.
This variation stems from two main factors. First, jurisdictions differ in the level at which disclosure takes place: some rely primarily on disclosures made by individual SOEs, while others complement this with aggregate reporting frameworks at the state‑ownership level. Second, disclosure practices often differ between commercial and non‑commercial objectives. While commercial objectives are more frequently available through existing financial and non-financial disclosures in line with the SOE’s main line of business, non-commercial objectives assigned to SOEs are less systematically disclosed as they are dispersed across sector legislation, national development plans, shareholder expectation letters, public service mandates or other sources.
Note: The sample comprises 58 jurisdictions.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
In certain jurisdictions, SOEs are tasked with delivering specific public policy objectives (PPOs), including public service obligations (PSOs). Clear disclosure of these objectives is therefore critical, particularly where they have a material impact on enterprise performance or where SOEs receive support measures to ensure their effective delivery. Transparent reporting is especially important in cases where SOEs operate in competitive markets. Among the respondents, over half require all SOEs to disclose PPOs or PSOs in annual reporting, while about a quarter require at least some SOEs to disclose this information. However, approximately one‑fifth do not mandate or do not have an established practice of such reporting (Table 4.1). Key trends are also elaborated under Box 4.1.
Note: The sample comprises 58 jurisdictions.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Key trends
In practice, disclosure of PPOs and PSOs typically begins at the enterprise (SOE) level. SOEs report on their mandates, implementation and financial implications through annual reports and financial statements. In many jurisdictions, this is supported by applicable financial reporting standards (e.g. IFRS or national equivalent) and, in some cases, supranational frameworks. For example, EU state aid rules and transparency requirements require that PSOs are properly recorded, disclosed and, where relevant, accounted for separately from commercial activities.
Beyond core financial reporting, a range of additional disclosure frameworks has emerged. These include sustainability-related reporting requirements (e.g. EU Corporate Sustainability Reporting Directive (EU CSRD)), which are increasingly linked to PPO delivery, as well as national or SOE‑specific disclosure frameworks tailored to monitoring public policy performance. In some jurisdictions, SOEs are subject to dedicated reporting obligations on PPO achievement, governance and stakeholder engagement. At the same time, disclosure approaches continue to evolve, particularly in response to crises or temporary public interventions, where enhanced transparency requirements may be introduced.
Alongside SOE‑level reporting, many jurisdictions are strengthening owner-level (portfolio-wide) disclosure frameworks. Aggregate reporting by the state owner is becoming more common, providing a strategic overview of PPO and PSO implementation across the SOE portfolio. These frameworks are increasingly supported by digital tools and centralised platforms, which enhance data accessibility, comparability and oversight for policymakers, oversight bodies and the public.
Good practices
Align PPO and PSO-related reporting with recognised financial and non-financial disclosure frameworks. A growing number of jurisdictions require their large and listed SOEs to align financial and non-financial reporting with international standards, improving comparability and information quality. For example, in Austria, PPO-related disclosures are linked to sustainability reporting obligations under the EU CSRD framework.
Ensure consistent disclosure of PSO‑related costs, compensation and funding arrangements. Clear reporting of compensation methodologies, public support and associated costs strengthens transparency and accountability, while reducing risks related to opaque financing or hidden cross-subsidisation. For example, in the United Kingdom, subsidy-control frameworks cover PPO and PSO reporting, while in the EU transparency requirements mandate separate accounts for entities entrusted with special obligations. Enhanced disclosure is particularly important in the context of emergency support measures or temporary public interventions.
Combine SOE‑level disclosures with aggregate state‑owner reporting. Portfolio-wide reporting frameworks support strategic oversight of PPO and PSO implementation across the SOE portfolio. For example, Korea’s ALIO dashboard provides centralised disclosure of SOE performance, enhancing transparency vis‑à‑vis the public, legislature and state audit bodies.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
4.2.1. Control structures
SOEs are expected to disclose information about their governance, ownership and control structures. This includes information on ownership, voting rights, special rights (such as golden shares or veto powers), the legal ownership of state shares, and how responsibilities for exercising ownership rights are organised. Such transparency is essential to clarify who ultimately exercises control over the enterprise and to strengthen accountability, particularly in complex group structures.
Among the respondents, most disclose major shareholders and corporate group structures, suggesting that transparency regarding ownership, control and significant influence is relatively well established across jurisdictions, particularly with respect to corporate group structures, often reflecting standard company law and internationally recognised financial reporting requirements. By contrast, disclosure is less widespread in areas relating to more specific control mechanisms, including voting rights and shareholder agreements. This may indicate that, although ownership structures are generally visible, governance information on how control is exercised in practice is not always systematically reported (Table 4.2).
This points to a relative transparency gap regarding the mechanisms of control, such as special voting rights, shareholder agreements or legal or governance arrangements (such as board nomination powers or veto rights) that provide effective control. This gap may be more evident for non-listed SOEs or in contexts where disclosure frameworks are less standardised.
At the same time, many jurisdictions are putting in place transparency practices that strengthen visibility over governance and control structures. These include the publication of corporate governance statements or reports (e.g. France, Japan, Slovenia), centralised ownership or reporting platforms providing portfolio-level information (e.g. Brazil, Israel, Lithuania), the disclosure of corporate group structures, and the parent’s interests in subsidiaries and other controlled entities (e.g. Argentina, Canada), as well as disclosure of related party relationships and transactions that shed light on operational and financial links within the SOE group and with the state.
In some cases, these elements are embedded in formal disclosure requirements and applied systematically across the SOE portfolio, while in others they are addressed more indirectly (e.g. through general legal frameworks, inferred from the corporate bylaws or ad hoc disclosures). As a result, although these practices improve overall transparency, they do not always provide a consistent or comprehensive picture of control or other governance arrangements across jurisdictions.
Note: The sample comprises 56 jurisdictions (Hungary and the Philippines not included). Multiple responses were allowed.
KEY
■ A Major shareholders
■ B Corporate group structures
■ C Special voting rights
■ D Shareholder agreements
■ E Other
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
4.2.2. Related party transactions
Effective oversight of related party transactions (RPTs) is particularly important in SOEs given the potential overlap between the state’s roles as owner, regulator and policymaker, as well as the complexity of relationships within networks of state‑owned and controlled entities. These arrangements may blur the distinction between commercial and policy objectives and increase the risk that transactions are conducted on non-market terms. Transactions between the state and SOEs, and among SOEs and within corporate groups, should take place on an arm’s‑length basis whenever applicable and be subject to transparency and disclosure requirements. In practice, RPTs in SOEs may take various forms, such as inter-company lending, asset transfers, service agreements or procurement arrangements, highlighting the need for clear identification of related parties and effective oversight to ensure that transactions are conducted on market-consistent terms.
Across surveyed jurisdictions, disclosure of material RPTs is required among the vast majority, though the underlying frameworks vary (Figure 4.3). In particular, responses show that:
Most jurisdictions (66%) require SOEs to disclose material RPTs in accordance with IAS 24 or IAS‑aligned standards, typically through general financial reporting obligations.
National frameworks are also prevalent, with around 29% of jurisdictions relying on national accounting standards, which may be broadly aligned with IAS principles.
Disclosure of SOE-to-SOE transactions is limited, with a subset of jurisdictions (such as Finland, Japan, Lithuania and the United Kingdom) requiring disclosure of transactions between SOEs, going beyond standard related party definitions.
Gaps remain, as around 12% of jurisdictions do not mandate comprehensive disclosure of such transactions or only require it in limited cases.
These findings are broadly consistent with earlier data. In 2024, 89% of responding jurisdictions (out of 45) reported some form of disclosure of related party transactions, whether applying to all enterprises, to certain SOEs (often large or listed), or in specific circumstances. Some, such as Costa Rica, Denmark, Norway and Poland, have strengthened their frameworks over time and now report requirements aligned with IAS-based standards.
Note: The sample comprises 58 jurisdictions. Multiple responses were allowed. Some jurisdictions such as China, Ireland, Poland, the Slovak Republic, Switzerland and the United States indicated that SOEs may be subject to either IAS/IFRS-based and/or national accounting standards.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Despite this overall convergence, disclosure practices in SOEs remain less standardised than in listed companies. According to the OECD Corporate Governance Factbook 2025, all jurisdictions reporting on listed markets require periodic disclosure of related party transactions in financial statements under IAS 24 or equivalent standards, and 94% mandate timely or immediate disclosure. By contrast, SOE frameworks exhibit greater heterogeneity in scope, coverage, and timing, particularly for non‑listed entities and for transactions within the state ownership perimeter (OECD, 2025[2]).
4.2.3. Board composition
Disclosure requirements for board composition remain widespread among the surveyed jurisdictions, in particular on individual board members. Over half of those surveyed also require disclosure of board member independence and qualifications, with fewer requiring disclosure of aspects such as tenure and committee membership. Moreover, half of those surveyed identified additional elements that should be disclosed as part of the “Other” category, such as nationality, gender, age, and positions held within other SOEs. While a few do not require disclosures related to SOE board composition, disclosure remains either a common practice or is encouraged (Figure 4.4).
Note: The sample comprises 58 jurisdictions. Multiple responses were allowed.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
4.2.4. Board and executive remuneration
Disclosure practices relating to board and executive remuneration vary across jurisdictions, although the overall patterns are broadly similar. Individual and aggregate remuneration disclosure are the most common requirements for both boards and executives. These categories are not mutually exclusive, as some jurisdictions require more than one type of disclosure. For example, both individual and aggregate remuneration disclosure apply to boards in Austria, Finland, Greece, Iceland, Latvia, South Africa and Sweden, and to executives in Finland, Greece, Ireland (chief executives only) and South Africa. A smaller group of jurisdictions require disclosure of remuneration policies only, while disclosure of average remuneration remains rare. Only a limited number of jurisdictions report having no formal requirements for the disclosure of board or executive remuneration. Where disclosure requirements are more limited, confidentiality provisions may further restrict the publication of individual remuneration data, such that only aggregate or average figures are disclosed, sometimes on an ad hoc basis (Table 4.3).
Note: The sample comprises 57 jurisdictions regarding executive remuneration (Hungary not included) and 54 jurisdictions regarding board remuneration (Hungary, Peru, Poland and Portugal not included). Multiple responses were allowed. Jurisdictions listed as disclosing individual remuneration including bonuses may reflect practices in relation to supervisory boards and/or boards of directors. For Ireland, under the Executives category, “Individual” refers to Chief Executives, while “Aggregate” to other executives.
KEY
■ Individual
■ Average
■ Aggregate
■ Policy only
– None
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
SOEs should establish risk management systems to identify, manage, control and report on material risks. Comprehensive disclosure of foreseeable risk factors, and the measures taken to address them, enables investors and stakeholders to assess an SOE’s financial position, performance and risk profile. Disclosure requirements often do not distinguish between financial and non-financial risks, instead referring broadly to “material” or “principal” risks. Some jurisdictions, however, specify particular categories of risk to be disclosed. For example, Morocco, Spain and Ukraine require disclosure across categories such as financial, operational, compliance, political, technological, legal, social, reputational and corruption-related risks.
Disclosure of material risks and disclosure of risk management systems are closely related but distinct. The former concerns transparency about the risks facing the company, while the latter concerns the governance structures and processes in place to manage them. Disclosure of material risk factors is widely required across surveyed jurisdictions: 55% require all SOEs to report on material risks, while 36% apply this requirement only to certain SOEs, most often large or listed companies. Requirements to disclose the existence or operation of risk management systems or frameworks are also common, applying to all or some SOEs in 83% of jurisdictions. Overall, the disclosure of material risk factors appears to be somewhat more widely required than disclosure of risk management systems or frameworks (Figure 4.5 and Table 4.4). These trends are broadly consistent with global listed company practices, with the OECD Corporate Governance Factbook 2025 finding that enterprise‑wide internal control and risk management systems are required in 63% of jurisdictions, and recommended in one-third (OECD, 2025[2]). Further discussion of the design and scope of risk management systems, including their relationship to sustainability-related risk frameworks, is provided in Chapters 5 and 6.
Note: The sample in both panels comprises 58 jurisdictions.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Note: The sample comprises 58 jurisdictions.
KEY
■ All SOEs
■ Some SOEs
■ No requirements
– Not reported
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
State owners and SOEs are expected to recognise the rights of all shareholders, including minority and foreign shareholders, and ensure their equitable treatment. Recognition of the rights and fair treatment of minority shareholders is particularly relevant for partially privatised SOEs. Among respondents, the most commonly reported rights afforded to minority shareholders in non-listed SOEs include the right to vote at general shareholders’ meetings, the right to receive timely and sufficient information ahead of meetings, and the right to bring legal action against the company or its directors (Table 4.5).
This is consistent with trends reported in the OECD Corporate Governance Factbook 2025, which recognises that a growing number of jurisdictions have amended their frameworks to guarantee longer shareholder meeting notice periods for listed companies. The report also found that more jurisdictions now allow multiple voting rights or fractional shares, and that 90% permit listed companies to issue shares with no voting rights. Several countries, including Brazil, India, Israel, Italy, Portugal, Spain and Türkiye either allow or require board representation of minority shareholders (OECD, 2025[2]).
In most cases, for non-listed companies these rights derive from general company law, and minority shareholders in SOEs are typically treated in a similar manner to those in privately held companies. For example, in Chile, France, Italy and Türkiye, rights stem directly from general corporate legislation, covering voting, access to pre‑meeting documentation, and judicial remedies. Similarly, Australia and Canada provide well‑established statutory protections, including derivative actions, oppression remedies, and formal disclosure requirements. For listed SOEs, these rights are reflected in securities regulation and other applicable listing requirements and/or corporate governance codes.
The main point of divergence concerns board representation, as approximately one-third report that minority shareholders in non-listed SOEs have the right to representation on boards. Unlike core shareholder rights, such representation is not systematically guaranteed and is often conditional. Where it exists, board representation typically depends on ownership thresholds or governance arrangements. In some jurisdictions, mechanisms such as cumulative voting (e.g. Brazil, Romania) or proportional representation rules (e.g. Poland, Spain) may facilitate minority participation on boards. In others, such as the Netherlands and Portugal, representation may arise through company statutes or shareholder agreements. However, in most, there is no general legal entitlement to board representation for minority shareholders in non-listed SOEs.
Note: The sample comprises 55 jurisdictions (Hungary, Saudi Arabia and the United States not included). Multiple responses were allowed. In some jurisdictions (e.g. Chile), the ability of minority shareholders to secure board representation may depend on company-specific factors, including ownership stakes, board composition and voting arrangements. Reported arrangements reflect the frameworks and practices in place at the time of data collection and may evolve over time.
KEY
■ A The right to vote at general shareholders’ meetings
■ B The right to receive timely and sufficient information ahead of shareholder meetings
■ C The right to bring legal action against the company or its directors
■ D Representation on the board of directors or supervisory board
■ E Other
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Beyond these core rights, a number of jurisdictions provide additional (and more heterogeneous) protections. These include the ability to call shareholder meetings, propose agenda items, inspect company records, or exercise pre‑emptive and withdrawal rights. For example, in Argentina, Japan and Spain, minority shareholders meeting certain thresholds may requisition meetings or submit proposals, while in Brazil and Mexico additional safeguards such as tag‑along rights and enhanced remedies against controlling shareholder abuse are available.
More broadly, variation is shaped by the institutional context of SOEs and applicable securities regulation and other legal requirements. In corporatised entities operating under general company law, minority rights tend to be clearly defined. Differences in enforcement and implementation also remain an important factor. Even where legal protections are broadly aligned, their effectiveness may vary depending on ownership concentration, the role of the state as controlling shareholder, and the functioning of judicial systems. In some contexts, such as Ukraine, formal rights broadly mirror private‑sector standards, but their practical enforceability may be more uneven.
4.5.1. External audit
SOEs are expected to be as transparent as publicly traded companies and, regardless of their legal form or listing, they should adhere to best‑practice accounting and auditing standards. In particular, external audits conducted by independent, competent and qualified auditors, in line with internationally recognised auditing, ethical, and independence standards, provide reasonable assurance to boards, shareholders and other stakeholders on the accuracy and completeness of financial and non‑financial information.
The data point to growing reliance on external audit mechanisms in SOEs. In 2026, 71% of responding economies report that all SOEs are subject to independent external audits, compared to just over half in 2024 (Figure 4.6). Differences may reflect a combination of changes in national frameworks, survey coverage and the classification of responses across survey editions. This approach is common across many European jurisdictions, as well as others such as Chile, Korea and South Africa. A further group of jurisdictions (22%) report that only some SOEs are subject to external independent audits, typically larger enterprises or those that are listed or commercially oriented. This is the case, for example, in Austria, Italy, Japan and Kazakhstan, where thresholds based on size or economic relevance determine coverage.
Note: The 2026 survey covers 58 jurisdictions and the 2024 edition included 40 jurisdictions. Multiple responses were allowed.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance; OECD (2024[3]), Ownership and Governance of State-Owned Enterprises 2024, https://doi.org/10.1787/395c9956-en.
In many jurisdictions, independent external audits coexist with audits by Supreme Audit Institutions (SAIs), which most often focus on compliance, performance, and the use of public funds. While SAI audits enhance public accountability, they should not replace independent financial audits. The share of jurisdictions indicating that SOEs are subject to an audit by an SAI appears to have declined slightly. This may reflect changes in reporting practices, differences in the survey sample, or a shift in some jurisdictions towards relying more systematically on independent external auditors rather than on public audit bodies.
Another important component is the rotation of audit firms, aimed, among other reasons, at reinforcing audit independence and reducing risks of conflicts of interest. A majority require mandatory rotation of audit firms after a fixed period, as compared to the rotation of the lead audit partner or the recommended rotation of the firm (Figure 4.7). In practice, several approaches to audit rotation can be observed across jurisdictions:
Mandatory audit firm rotation after a fixed period. In most jurisdictions, audit firms must be replaced after a defined number of years, typically between five and ten years, often with cooling‑off periods before reappointment. This model is particularly prevalent in European jurisdictions, reflecting EU audit rules, and is also observed in jurisdictions such as Brazil, Chile and India. In some cases, the rotation period can be extended subject to safeguards such as competitive tendering or joint audits.
Rotation of the lead audit partner only. Some jurisdictions rely on partner-level rotation as the primary safeguard, requiring the lead audit partner, and sometimes key audit team members, to rotate periodically (commonly every five to seven years), while allowing the audit firm to remain in place. This approach (e.g. in Japan, Korea and Switzerland) is often seen as a lighter mechanism to preserve institutional knowledge while addressing familiarity risks.
Combined rotation of both audit firm and lead audit partner. A number of jurisdictions apply a more stringent framework by combining firm rotation with mandatory partner rotation. This dual approach (e.g. in Finland, Greece, Iceland, Italy, Romania and South Africa) reflects a more comprehensive effort to strengthen auditor independence and mitigate long-term familiarity between auditors and audited entities.
Recommended (non-binding) rotation practices. In some cases, rotation is not legally required but encouraged through corporate governance codes or supervisory expectations.
A few jurisdictions do not require or recommend rotation, though several jurisdictions are moving towards stronger frameworks. For example, Latvia and Spain have introduced mandatory rotation following the absence of requirements reported in 2024, pointing to a broader trend towards formalising auditor independence safeguards, particularly in systems aligning with EU or international standards. To compare, Box 4.2 elaborates further on practices outlined in the OECD Corporate Governance Factbook 2025, focussing on listed companies.
Note: The sample comprises 56 jurisdictions (Hungary and Saudi Arabia not included). Multiple responses were allowed. Some jurisdictions, including Finland, Greece, Iceland, Italy, Romania and South Africa require the rotation of both the audit firm and lead partner. Other jurisdictions require the rotation of the audit firm and also recommend rotation in guidelines or codes.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Corporate governance frameworks across jurisdictions establish safeguards to ensure the independence and quality of external audits. In most jurisdictions covered in the Corporate Governance Factbook 2025, shareholders are responsible for appointing or approving the external auditor (47 of 52 jurisdictions), often based on a recommendation from the audit committee. In some jurisdictions, this responsibility is shared with the board, while in a small number of cases, the board alone may appoint the auditor. These categories are not mutually exclusive.
Audit committees play a central role in practice. In 41 of the 47 jurisdictions where shareholders appoint the auditor, the audit committee is required to recommend suitable candidates. More broadly, audit committees are involved in the selection, appointment or removal of auditors in all but one jurisdiction. They are also commonly responsible for overseeing the scope and adequacy of the audit, monitoring auditor independence and performance, and, in many jurisdictions, reviewing audit fees.
To safeguard independence, most jurisdictions require audit firm rotation and nearly all require audit partner rotation. Where firm rotation is mandated, the maximum engagement period is typically around 10 years, sometimes with possible extensions.
External audits are further supported by independent public oversight bodies, which are responsible in almost all jurisdictions for audit inspections and quality assurance, and frequently for enforcement and auditor registration.
Source: OECD (2025[2]), OECD Corporate Governance Factbook 2025, https://doi.org/10.1787/f4f43735-en.
4.5.2. Internal audit
Internal audit functions are widely recognised as a core component of SOE internal control and risk management systems, but their application varies across jurisdictions. A majority of respondents require internal audit functions for large or listed SOEs, with 34% mandating internal audit across all SOEs. These results suggest a tiered approach in many jurisdictions, where internal audit requirements are calibrated to the size, complexity and risk profile of SOEs. Large, listed, or economically significant SOEs are more likely to be subject to mandatory internal audit requirements, often aligned with broader corporate governance and internal control obligations. By contrast, 10% of jurisdictions recommend internal audit through guidelines or codes without making it a legal requirement, and only a minority report no requirement (Figure 4.8 and Table 4.6). In practice, in jurisdictions where internal audit is not mandated, it is nevertheless widely encouraged as good practice, including through corporate governance codes or ownership expectations.
Note: The sample comprises 58 jurisdictions. Percentages may not sum to 100% due to rounding. For reporting line, multiple responses were allowed. The “Other” category covers internal-audit reporting arrangements that do not fit the standard reporting lines captured by the survey. Examples include reporting to Party committees, external government oversight bodies, ministry-led audit functions and dual reporting structures.
KEY
Requirement
■ All SOEs
■ Some (large or listed) SOEs
■ Guidelines – recommended only
■ None
– Not required
Reporting line
AC – audit committee
BD – board/supervisory board
Exec – CEO/Management board
Other – alternative arrangements*
– None reported
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Where internal audit functions exist, they generally report to oversight bodies rather than management. The most common reporting line is to the board, or its audit committee or equivalent body, while a smaller share indicate that the internal audit function has a direct reporting line to the CEO or executive management. In some jurisdictions (e.g. France, Ireland and Italy) internal audit operates under dual reporting arrangements, with functional reporting to the board or its audit committee, while maintaining administrative reporting to the CEO.
Note: The sample comprises 58 jurisdictions. Multiple responses were allowed.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
In addition, arrangements may vary by governance system. In two‑tier systems, internal audit more often reports to the supervisory board or its audit committee, while in one‑tier systems it typically reports through the board audit committee. Overall, however, practices point to a common emphasis on positioning internal audit close to the board or equivalent oversight body, supporting its independence, objectivity and accountability.
4.5.3. State audit
State auditors are principally tasked with reviewing the use of public resources, but the scope of state audit procedures varies across jurisdictions. For example, some state audit procedures supplement external independent audits, whereas others occur on an ad hoc basis and are not intended to duplicate existing independent external audits of the financial statements. In most surveyed jurisdictions, the state audit body looks at both financial and non-financial information (Figure 4.9).
Note: The sample comprises 52 jurisdictions (Chile, France, Germany, Hungary, Malaysia and Saudi Arabia not included).
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
For several jurisdictions (for example, Austria, Ireland, Kazakhstan, Korea, Luxembourg, Poland, Slovenia and Spain), only financial information (e.g. state support measures) has been audited by the state audit body over the past five years. In nearly all surveyed jurisdictions, state audit bodies are not permitted to serve as the internal audit function for SOEs. This institutional separation reinforces the independence of external state audit and aligns with good governance practices, whereby internal control systems remain the responsibility of the enterprise.
References
[1] OECD (2026), “OECD Survey on State Ownership and Corporate Governance”.
[2] OECD (2025), OECD Corporate Governance Factbook 2025, OECD Publishing, Paris, https://doi.org/10.1787/f4f43735-en.
[3] OECD (2024), Ownership and Governance of State-Owned Enterprises 2024, OECD Publishing, https://doi.org/10.1787/395c9956-en.