Auditing is regulated by Act on Auditors from 2009, as amended (93/2009 Coll.). This act, among others, determines the auditor’s obligation to perform the audit in compliance with International standards on auditing. Act on Auditors also regulates the position of the Chamber of Auditors of the Czech Republic, competences of the Council for public supervision over an audit or establishment of an Audit Committee for public interest companies.
Act on Accounting (Article 20) regulates the obligation to have annual financial statements audited by a statutory auditor. The following entities must have their financial statements audited:
a.accounting units, where this obligation is required by other regulation;
b.large and medium sized entities;
c.small entities, which are joint-stock companies or trustee funds and have exceeded at least one of the following criteria for the current and immediately preceding period:
I.net annual turnover of CZK 80 million;
II.total assets of CZK 40 million;
III.average recalculated number of 50 employees;
d.other small entities that have, for the current and immediately preceding period, met or exceeded at least two of the three criteria stated
in letter c. above.
While the criteria for mandatory audit remain the same, there is a change in their calculation. Total assets category is newly represented by a net instead of a gross amount. In terms of turnover, implicit change was implemented by moving activations items and changes in inventory from own business from revenues to costs. Such calculation used for 2016 will be applied also for the previous period.
Annual reports containing audited financial statements must also be audited by an auditor. Newly, effective for all audit reports prepared after 3 December 2015, the auditor has to report on the fact, that information included within the annual report that relates to information included in the audited financial statements is stated in all material respects consistently with the financial statements and that the annual report has been prepared in accordance with the accounting regulation and does not contain material misstatements of fact. As Corporations Act does not require the report on relations to be specifically reviewed by the auditor, the auditor reviews the report on relations only as part of their review of the annual report. In addition, the auditor also verifies the consistency of the consolidated annual report with the consolidated financial statements.
The amendment of Act on Accounting from September 2015 also requires the auditor to issue only one report, where they opine on the true and fair presentation of the financial statements and the consistency of the annual report with the audited financial statements.
All entities with a compulsory audit must have an auditor approved by its general body. If the entity does not have a general body or its general body does not determine the auditor, then the auditor is determined by the entity’s Supervisory Board. The entity can only conclude a contract on a compulsory audit if an auditor is appointed as described above, and only after an appointment to this role.
Marek Richter – Partner
nám. Svobody 20, 602 00 Brno
+420 542 520 170
Petr Mališ – Director
nám. Svobody 20, 602 00 Brno
+420 542 520 210
- I.South Moravia: Geography, Labour Force, Economy
- II. Legal Regulation of Business Activities, Establishment of Business Entities
- III. Accounting and Auditing
- IV. Tax System in the Czech Republic
- V. Employment and Labour Regulations
- VI. Visa and Integration after Arrival
- VII. Co-operation with South Moravian Institutions
- VIII. Practical Information: Working and Living in South Moravia