Auditing obligations 2014
- When is an audit mandatory?
- Who appoints the auditor?
- Who can be appointed as auditor?
Several laws may require an audit in Hungary and the first and most important of these is the Accounting Law. It is for sure that an enterprise which is subject to a compulsory audit on the basis of the Accounting Law has to entrust an auditing company with the audit of their annual or abbreviated annual financial statements.
When is an audit mandatory?
The Accounting Law prescribes an audit for every enterprise, but provides an exemption from this requirement depending on a threshold. An audit is non-mandatory if the average net revenue of the enterprise in the previous two financial years does not exceed HUF 300 million and average number of employees in the previous two years does not exceed 50 persons.
Example 1:
In 2012 the revenue of the enterprise was HUF 100 million, the average number of employees was 10 persons.
In 2013 the revenue of the enterprise was HUF 600 million, the average number of employees was 15 persons.
The average revenue for the previous two years was (100 + 600) / 2 = HUF 350 million > HUF 300 million
The average number of employees: (10 + 15) / 2 = 12,5 persons < 50 persons
In this example the average revenue of the enterprise exceeds HUF 300 million, so the enterprise is subject to an audit as of 2014.
Example 2:
In 2012 the revenue of the enterprise was HUF 100 million, the average number of employees was 10 persons
In 2013 the revenue of the enterprise was HUF 400 million, the average number of employees was 15 persons
The average revenue for the previous two years was (100 + 400) / 2 = HUF 250 million < HUF 300 million
The average number of employees: (10 + 15) / 2 = 12,5 persons < 50 persons
In this example the average revenue of the enterprise does not exceed HUF 300 million, so the enterprise is not subject to an audit as of 2014.
» What happens if the average revenue of the previous two years is exactly HUF 300 million?
The Accounting Law exempts the enterprise from the audit requirement if the average revenue of the previous two years does NOT exceed HUF 300 million, so this enterprise is not subject to an audit.
» What happens if the enterprise was established within two years?
In such cases data for the year fraction shall be annualized and requirement shall be determined accordingly. If the enterprise was established in 2014, the enterprise is subject to an audit if its annualized revenue exceeds HUF 300 million or the average number of employees exceeds 50 persons.
Example 3:
The enterprise was established on September 1, 2014. In 2014 the revenue is HUF 150 million.
So the revenue of the enterprise was HUF 150 million in 4 months, which means that if it had been operating throughout the year, then 150 / 4 x 12 = 450 > 300
So the 2014 annual financial statements of the enterprise is subject to an audit.
Example 4:
The enterprise was established on September 1, 2013. The revenue in 2013 was HUF 150 million. In 2014 the revenue was HUF 120 million.
150 / 4 x 12 = 450 + 120 = 570 / 2 = 285 < 300
Please note that other laws may require the audit of the annual/abbreviated annual financial statements or other financial reports such as balance sheet of transformations or grants, etc. of certain enterprises.
We do not examine these cases in the present article.
Who appoints the auditor?
The auditor shall be appointed by the supreme body of the enterprise in all cases. The appointment is made on a members’ meeting or general assembly (the main body) depending on the structure of ownership and in the form of a decision or a resolution. Under the new Civil Code requirements, the decision of the members’ meeting or general assembly includes the conditions and remuneration of the contract concluded with the auditor and authorizes the management to conclude this contract, for which the parties have 90 days
The conditions and remuneration of the contract to be concluded with the auditor can be included in the decision as illustrated in the following example:
Until the approval of the Company’s annual financial statements of 2014, but no later than May 31,
2014 the Members/Shareholders of the Company appoints as auditor :
BPO-AUDIT AUDITING AND Management Consulting Ltd.
(1146 Budapest, Zichy Géza u. 5. III. em. 1-2.; Company Registration Nr: Cg.01-09-728938)
Registration Nr at the Chamber of Hungarian Auditors: 002331
Responsible auditor designated by the Auditing Company: Miszori Ildikó
Registration Nr. at the Chamber of Hungarian Auditors: 003327
Remuneration of the Auditor: XXX HUF + VAT / year
Who can be appointed as Auditor?
An Auditing Company or a natural person registered at the Chamber of Hungarian Auditors can be appointed as auditor, which is a member of the Chamber of Hungarian Auditors. In case an enterprise chooses an Auditing Company to be the auditor, a natural person shall also be appointed who is responsible for the audit in person as well and also a member of the Chamber f Hungarian Auditors.
In certain cases an auditor with special certificates must be appointed as in the case of financial institutes, governmental authorities.
Where can you check if an auditing company or a natural person auditor is a member of the Chamber of Hungarian Auditors?
On the website of the Chamber of Hungarian Auditors.
You can check our Company on the following link: http://www.mkvk.hu/tarsasag?id=2614
By clicking on our auditors, you can check our membership on the official website of the Chamber of Hungarian Auditors:
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