WHO IS REQUIRED TO HAVE AN INDEPENDENT FINANCIAL STATEMENT AUDIT UNDER THE SLOVAK LAW?
The Slovak accounting act under § 19 imposes an obligation on certain entities (accounting units) to have their financial statement audited by a certified auditor.
The §19 of the Slovak accounting act only mentions the audit of ordinary and extraordinary financial statement, therefore the audit obligation does not apply to interim financial statements, both the individual or consolidated.
According to §19 of the Slovak accounting act, the audit obligation only applies to individual financial statement. The obligation to audit the consolidated financial statement is addressed in other provisions of the Slovak accounting act -- most notably in § 22 section 13 and in § 22a section 5.
Entities that have the audit obligation are listed in § 19 of the Slovak accounting act in section 1 and 4.
More detailed information about the statutory audit obligation
Entities that have statutory audit obligation are listed in § 19 of the Accounting Act in two sections, more notably in section 1 and 4. Statutory audit obligation under the § 19 section 1 of the Accounting Act has:
1. LIMITED LIABILITY COMPANY, JOINT STOCK COMPANY AND COOPERATIVE (UNDER THE ACT IT IS STIPULATED: THE COMMERCIAL COMPANIES THAT CREATE SHARE CAPITAL AND A COOPERATIVE),
§ 19 sec. 1, point a of the accounting act states that the ordinary and extraordinary individual financial statements must have audited company that is required to create registered capital and cooperative. § 56 section. 1 of the Commercial Code states that is a trade company is a joint stock company, limited liability company, limited partnership company and general partnership company.
According to § 58 section 2 of the Commercial Code the trade companies are companies that are required to create registered capital such as limited liablity companies and joint-stock companies. Limited partnership company and general partnership company do not create registred capital and thus do not have statutory audit obligation under § 19 section 1 point a).
• if, until the date on which the financial statements are compiled and for the
• immediately preceding financial year
MEETS AT LEAST TWO OF THE FOLLOWING CONDITIONS:
1. total assets exceed 1 000 000 EUR
(in the amount of assets BRUTTO from the balance sheet).
2. 2. net sales of more than 2 000 000 EUR,
(from 1.1.2015 the definition of net sales has changed and moved to § 2 section 15 accounting act.) The revenues assigned to net sales belong to the accounting group 60 ( revenues from sales of goods and services minus discounts). In case, an entity book-keeps in the accounting group number 64 - other revenues and these revenues are part of its operations, they are also included into net sales after deduction of discounts. Net sales are thus only the revenues, that are part of operations of the entity. Among revenues that do not belong into net sales are revenues from asset sales and similar.
3. average calculated number of employees (ACNB) is greater than 30.
(PPPZ is a statistical indicator that emanates from the statistical methods and it is used in payroll).
2. A COMMERCIAL COMPANY OR A COOPERATIVE, WHOSE SECURITIES (SHARES) ARE ADMITTED AND TRADED ON THE REGULATED STOCK MARKET. COMMERCIAL COMPANY IS:
• joint stock company,
• limited liability company,
• limited partnership company,
• general partnership company.
3. ENTITIES THAT ARE SUBJECT TO AUDIT OBLIGATION UNDER A SPECIAL REGULATION
- various chambers,
- Slovak Radio,
- Slovak Television,
- non-profit organizations, when they exceed the specified conditions,
4. ENTITIES THAT PREPARE THEIRS FINANCIAL STATEMENTS IN ACCORDANCE WITH § 17A, I.E. UNDER IFRS.
- bank, branch of a foreign bank, the Export-Import Bank of the Slovak Republic,
- trust company, branch of a trust company,
- insurance except for health insurance company, branch of a foreign insurance company, Slovak Insurers' Bureau,
- reinsurance company, branch of a foreign reinsurance company,
- pension fund management company,
- supplementary pension insurance company,
- Stock Exchange,
- Railways of the Slovak Republic,
- tzv. large companies that meet the criteria specified in § 17a section 2 of the Slovak Accounting Act.
5. entity with the obligation to create consolidated financial statements
entity that is a mother company and has an obligation to create an consolidated financial statments and that meets the size criteria under § 22 section 10.
6. THE AUDIT OBLIGATION OF THE FINANCIAL STATEMENTS UNDER § 19 SECTION 4 OF THE SLOVAK ACCOUNTING ACT
The audit obligation of the financial statments under § 19 section 4 of the Accounting Act have legal persons whose annual share of the recieved tax under § 50 of the Slovak Income Tax Act was higher than 35 000 EUR and for the financial year in which these funds were used.
According to § 50 fo the Income Tax Act these entities are elgible for the tax:
non-profit organization providing community services,
special purose church vehicle and religious society,
organization with an international element,
Slovak Red Cross,
reserach and development entities,
vocational and preparation development fund.
The financial statements must be audited 1 year after the financial period.
ALWAYS TWO CONSECUTIVE YEARS.
If, for example an entity for the year 2011 as well as for 2012 meets two of the above size criteria, it becomes the subject to the audit obligation for 2012. The inconvenience of this regulation is that only at the end of the second year is the entity able to determine if it is indeed a subject to audit obligation. Thus, the entities are not able to adequately prepare for audit and could face subsequent problems to meet other regulatory obligations.
JOINT STOCK COMPANIES - CHANGES FROM 2010
Until 31.12.2009 all joint stock companies, regardless of their size, must have had their financial statements audited under the § 39 of the Commercial Code.
From 1.1.2010 joint stock companies are subject to the size criteria that are described above.
WHICH LEGAL ENTITIES DO NOT HAVE THE FINANCIAL STATEMENT AUDIT OBLIGATION EVEN IF THE MEET THE SIZE REQUIREMENT IMPOSED BY THE § 19 SECTION 1 OF THE SLOVAK ACCOUNTING ACT?
· Physical person
Because the physical person is neither a commercial company nor cooperative,
· general partnership company and limited partnership company
The above mentioned entities do not create share capital. Thus they are not the entities that must create share capital as set out in § 19 section 1 point a) (However, attention should be given to whether the audit obligation will not emerge under other points of §19 section 1) .