Audit of the annual financial statements
Audit
What is an Audit?
Under Act C of 2000 on Accounting and Act LXXV of 2007 on the Hungarian Chamber of Auditors, the audit activity, and public oversight of auditors (2000. évi C. törvény; 2007. évi LXXV. törvény), the primary purpose of the statutory auditor and of carrying out audit procedures is to determine whether the financial statements prepared in accordance with accounting legislation present a true and fair view of the entity’s assets, financial position and results of operations. It can be stated that this—together with issuing the auditor’s report setting out the auditor’s opinion on the financial statements—constitutes the auditor’s principal task.
Drawing on our broad, multi-industry experience, in addition to audits of annual financial statements we undertake audit engagements in connection with company formations, transformations, and liquidations without legal succession, as well as assurance and attestation assignments (including valuations, reviews, opinions and opinions-with-attestation where prescribed by separate legislation).
Who is required to have an audit, and who is not?
Except for expressly named exemptions, the Accounting Act makes the audit of annual financial statements prepared under Hungarian accounting rules mandatory for all entities keeping double-entry books. Nothing, however, prevents entities that are exempt from audit from engaging an auditor to review their financial statements in the same way as entities subject to mandatory audit.
The audit thresholds have changed. Under the current rules, an audit is not mandatory if both of the following conditions are met together:
The entity’s net sales revenue (annualised, where applicable) did not exceed HUF 300 million on average over the two financial years preceding the reporting year, and
The entity’s average headcount did not exceed 50 employees on average over the two financial years preceding the reporting year.
Pursuant to the adopted legislative amendment, for financial years beginning in 2025, the HUF 300 million revenue threshold to be used in calculating the averages will be replaced by HUF 600 million.
There are, however, cases where the above exemptions do not apply—for example, where an audit is required by separate legislation; where the entity is included in consolidation; or, in the very rare case where, in order to present a true and fair view, the entity departs from the provisions of the Accounting Act. Likewise, the exemptions do not apply to savings cooperatives, to the Hungarian branch offices of foreign-registered companies, or to public-interest entities. For these entities, the financial statements must be audited and certified by a statutory auditor.
How to choose an auditor
Where an audit is mandatory, it is crucial to build a relationship of trust with your auditor. The auditor may review your accounting records, supplier and customer contracts, employment agreements, and gain insight into trade secrets, pricing policies, complaints received—in short, they can access virtually all information that matters to your business. Choosing an auditor is therefore a decision that rightly belongs at the highest level of corporate governance.
As with any service provider or adviser, it is sensible to examine several options before selecting an auditor so you can make a well-grounded decision. Of course, the proposed fee is one of the most important factors; auditors set their pricing based on their initial fact-finding and the recommendations of the Chamber of Auditors. However, do not overlook the other considerations.
Verify that the prospective auditor holds the qualifications and competencies needed to certify financial statements in your industry. This is especially relevant in sectors where bookkeeping and reporting are not governed solely by the Accounting Act, but are also subject to additional rules set out in specific government decrees.
Find out how much experience the auditor has in your business sector. You can save considerable time if you do not have to explain even the most basic relationships, and if the auditor already understands how your industry works—quite apart from the fact that they will be able to provide far more useful advice where they identify weaknesses in your operations.
Do not forget to consider the currency of the auditor’s technology. Audit efficiency can be significantly improved if both parties are comfortable with modern software solutions. The auditor’s data-analytics techniques can contribute to analyses and recommendations that create genuine value for the client.
Ask about the auditor’s quality-assurance procedures, which enable them to deliver services at the highest possible standard. Such procedures may include peer reviews performed by audit colleagues, regular continuing professional education, and the criteria used to select any specialists involved in the engagement.
Be wary of “experts” who seek to win your business with suspiciously low audit fees. In such cases you risk that the review of the financial statements or other audit services will not be performed to an appropriate standard; that the service you receive will not match what you paid for; or that, in the event of a prolonged audit, you may even miss statutory deadlines.
Why choose us?
At Central Audit, client satisfaction is our foremost objective. We shape our services to deliver the greatest possible added value for our clients.
Business focus
Audit & Assurance
Accounting Advisory
Financial Due Diligence
Company Valuation
Tax Advisory
Transfer Pricing
documentation
Special certifications
IFRS Certification
Investment Firm
Financial Institutions
Pension Fund
Sustainability
Public Interest Entities
Industry focus
Automotive Industry
Commerce
Production & Manufacturing
Real Estate Management
Not-for-profit Organizations
Services
Financial Enterprises