Any entity may commission an auditor to audit its financial statements. For some companies, this is a statutory obligation, and the selection of a statutory auditor should be made before the inventory period begins. This is particularly important in the case of entities that have high value assets in the form of fixed assets or stocks.
The following entities are subject to obligatory auditing of their annual financial statements by a certified auditor:
Mandatory audit of financial statements also applies to acquiring companies and newly established companies - statements should be prepared for the financial year in which the merger was made.
The appointment of an entity that will audit the financial statements and the signing of an appropriate audit contract with such entity, should take place within a period that will allow the statutory auditor to participate in the inventory of significant assets.
The selection of the statutory auditor is made by the body that approves the entity's financial statements - except when the articles of association, statute or other binding regulations provide otherwise. In the case of partnerships and limited partnerships, the statutory auditor is always chosen by the general meeting of shareholders.
After agreeing on all conditions related to the conducting of the audit, the authorized entity concludes a contract with the head of the entity to perform the audit of the financial statements. The contract should clearly state the duties of the audited entity as well as the authorized entity, including, in particular the need to:
The Accounting Act does not contain any provisions relating to the frequency of the change of the statutory auditor or the authorized entity. The Act on Statutory Auditors, in turn, provides for the rotation of statutory auditors in public interest entities but not of authorized entities. The key statutory auditor may not perform activities related to financial audits in the same unit for more than five years and must wait at a further two years before recommencing such activities following the end of that five year period.
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