When Does My Company Need to Undergo an Audit in Estonia?
In Estonia, the requirement for a company to undergo a mandatory audit or an audit review is prescribed by law and is based on exceeding certain activity or financial indicators. This legal requirement aims to ensure transparency and accountability in financial reporting, applicable to various entities under different conditions.
An audit is mandatory for the following entities:
Joint-stock companies with more than two shareholders.
Local government units and public legal entities.
Political parties receiving allocations from the state budget.
Foundations, as specified by AudS § 91 (4) / § 92 (2).
Companies in which the state has decision-making rights.
Furthermore, an audit or audit review of the annual accounts is mandatory for an accounting entity whose annual report exceeds at least two of the following conditions:
Additionally, an audit or audit review is also mandatory for an accounting entity if its annual report exceeds at least one of the following conditions:
These thresholds are established to ensure entities of significant economic activities or financial sizes operate with the highest levels of financial integrity and transparency. It's crucial for entities to assess their financial and operational metrics regularly to determine the necessity of an audit or audit review, ensuring compliance with Estonian law. Engaging a certified auditor in a timely manner helps in adhering to these requirements, and failing to conduct a mandatory audit can lead to legal and financial consequences. Entities may also choose to undergo voluntary audits for strategic benefits such as enhancing credibility, preparing for growth, or attracting investment.
Mandatory Audit Requirements:
An audit is mandatory for the following entities:
Joint-stock companies with more than two shareholders.
Local government units and public legal entities.
Political parties receiving allocations from the state budget.
Foundations, as specified by AudS § 91 (4) / § 92 (2).
Companies in which the state has decision-making rights.
Furthermore, an audit or audit review of the annual accounts is mandatory for an accounting entity whose annual report exceeds at least two of the following conditions:
| Criteria | Audit Required | Audit Review Required |
|---|---|---|
| Sales revenue or income | > 4,000,000 euros | > 1,600,000 euros |
| Total assets as of balance sheet | > 2,000,000 euros | > 800,000 euros |
| Average number of employees | > 60 employees | > 24 employees |
Additionally, an audit or audit review is also mandatory for an accounting entity if its annual report exceeds at least one of the following conditions:
| Criteria | Mandatory Audit | Mandatory Audit Review |
|---|---|---|
| Sales revenue or income | > 12,000,000 euros | > 4,800,000 euros |
| Total assets as of the balance sheet date | > 6,000,000 euros | > 2,400,000 euros |
| Average number of employees | > 180 employees | > 72 employees |
These thresholds are established to ensure entities of significant economic activities or financial sizes operate with the highest levels of financial integrity and transparency. It's crucial for entities to assess their financial and operational metrics regularly to determine the necessity of an audit or audit review, ensuring compliance with Estonian law. Engaging a certified auditor in a timely manner helps in adhering to these requirements, and failing to conduct a mandatory audit can lead to legal and financial consequences. Entities may also choose to undergo voluntary audits for strategic benefits such as enhancing credibility, preparing for growth, or attracting investment.
Updated on: 12/03/2024
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