Accounting Estonia, Estonia

When Estonian company should be subject to an audit?

2020-06-26

An audit is a detailed examination of the company. The auditor assesses correctness of the annual financial statement, which represents the economic situation of the company in a reliable and credible way.

 

Criteria that determine the audit obligation

 

The matter of audit and Review is regulated in the Estonian “Audit Activities Act”. 

Mandatory audit concerns entities which have shown at least two of the following values in their annual report:

  1. Sales revenues of more than EUR 4 000 000;
  2. Total assets of more than EUR 2 000 000;
  3. Average number of employees at least 50.

Furthermore, the obligation also applies to entities which showed in their annual reports at least one of the indicators listed:

  1. Sales revenues of more than EUR 12 000 000;
  2. Total assets of more than EUR 6 000 000;
  3. Average number of employees at least 180.

An entity will always be subject to an audit obligation if it is, inter alia, a public limited company with at least two shareholders.

>>The full list of entities which are required to carry out an audit can be found in §91 of the Act, which can be found here.<<

 

What is the Review and what is it about?

 

Review is a simplified form of control commonly called a mini audit. Compared to an audit, it is conducted in a much less complex way. It consists in examining only selected elements of financial statements and the company’s business methodology.

The review concerns entities that meet at least two of the following values (taking into account the financial statements for the previous financial year):

  1. Sales revenues of more than EUR 1 600 000;
  2. Total assets of more than EUR 800 000;
  3. Average number of employees at least 24.

Furthermore, the obligation also applies to entities which showed in their annual reports at least one of the indicators listed:

  1. Sales revenues of more than EUR 4 800 000;
  2. Total assets of more than EUR 2 400 000;
  3. Average number of employees at least 72.

 

How to choose the right auditor?

 

When starting the process of searching for an audit company, it is recommended to use the list available on the website of the Estonian Association of Auditors. It is a good practice to submit a request for quotation to several different entities in order to compare the terms and conditions and the execution date. The cost of conducting an audit varies and depends on many conditions. It is not legally regulated in any way.

 

Board of Auditors

 

Estonia’s Audit Activities Act regulates the business activities of all audit firms. They are supervised by the specially appointed Board of Auditors. Its purpose is to maintain high standards of operations and to act in accordance with applicable law.