A long-awaited legislative amendment has finally arrived: the thresholds for audit and review obligation will rise by 25%. That means a number of companies and organisations will no longer have to contend with the obligation of undergoing an audit or review. The criteria for company sizes in the Accounting Act also changed, impacting annual report formats, including thresholds for consolidation.
The thresholds for revenue and balance sheet total are 25% higher for annual reports prepared for periods 1 January 2024 and later. The thresholds for number of employees will not change.
An audit is obligatory for accounting entities who meet two of the following three conditions:
An audit is also obligatory for accounting entities that meet one of the following three conditions:
A review of annual accounts is obligatory for accounting entities who meet two of the following three conditions (it is always an option to order the more rigorous audit instead of a review):
Accounting entities who meet at least one of the following three conditions are also required to order a review:
Changes were also made to the audit and review criteria for foundations, which include more stringent requirements for foundations in which the public sector has a holding. If the revenue and assets of a foundation with public sector participation are below 1 million euros, it must order a review, but if it crosses the 1-million-euros mark for either revenue or assets, it must order an audit.
Other foundations whose revenue and assets are under 1 million euros are not required to order a review or audit. If their assets or revenue are more than 1 million, however, they are required to order a review, and if the audit threshold for companies is reached (based on meeting one of three or two of three criteria) they must order an audit.
Test your company's audit obligation
Due to the amendment increasing the criteria for assets and revenue, the number of micro-enterprises will grow substantially. The change can be considered a positive one, since the smaller size category a company falls into, the lower its administrative burden in preparing reporting, and various simplified procedures apply.
The criteria for medium-sized and large companies were also raised, so a share of companies will now be categorized as small enterprises. For example, small undertakings are not required to prepare a full consolidated report.
Micro-enterprise – an accounting entity, two of whose indicators as at the reporting date do not exceed the following levels: total assets 450,000 euros, reporting year revenue 900,000 euros and an average 10 employees during the reporting year.
Small enterprise – an accounting entity, two of whose indicators as at the reporting date do not exceed the following indicators: total assets 7,500,000 euros, reporting year revenue 15,000,000 euros and an average 50 employees during the reporting year.
Medium-sized enterprise – an accounting entity, two of whose indicators as at the reporting date do not exceed the following indicators: total assets 25,000,000 euros, revenue 50,000,000 euros and an average of 250 employees during the reporting year.
Large enterprise – an accounting entity which is not a micro-enterprise, small enterprise or medium-sized enterprise.
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