A statutory audit is an independent review of financial statements, aimed at assessing whether the company’s or organization’s statements provide a reliable and accurate picture of its financial position. The audit is conducted in accordance with international auditing standards and includes, among other things, testing of data, evaluation of processes, and analysis of management explanations.
The audit obligation in Estonia stems from the Auditors Activities Act and may extend to commercial undertakings, foundations, and non-profit organizations if they exceed the audit thresholds stipulated by law. Our aim is to ensure that the audit is a value-adding, clear, and collaborative process for the client, not merely an obligation.
An audit is an independent and assurance engagement during which it is assessed whether the company’s annual report materially and fairly reflects its financial position, operating results, and cash flows.
The purpose of the audit is to provide reasonable assurance that the annual report does not contain material misstatements or misleading information and has been prepared in accordance with applicable accounting practices. The auditor’s opinion is appended to the annual report, thereby increasing the reliability of the report for investors, partners, funders, and other stakeholders.
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The obligation to audit is stipulated in the Auditors Activities Act and applies, for example, to:
● companies whose indicators exceed the thresholds specified in the law;
● foundations and public sector entities whose activities involve the use of public funds;
● associations whose articles of association, founding agreement, or funder’s terms require an audit;
● situations where an audit is ordered by a court or shareholders.
During the audit, the auditor assesses:
● whether the annual report complies with the applicable Accounting Act and adopted accounting principles;
● whether the accounting data is reliable and financial indicators reflect the company’s true situation;
● whether the treatment of tax accounting and significant accounting estimates presented in the report is clear and justified;
● whether a third party can gain an adequate financial overview of the company by reading the annual report. The work focuses on significant risks and areas that may affect the integrity of the report. The audit is conducted in accordance with International Standards on Auditing (ISA), and the content and scope of the work are determined according to the nature of the specific company’s operations.
It is important to understand that an audit is not a tax audit and does not replace internal control or management. The auditor:
● does not prepare the annual report on behalf of the client or take responsibility for its content;
● does not provide a comprehensive assessment of the company’s internal control system;
● does not make decisions or accounting estimates on behalf of management;
● does not check every detail of the accountant’s work or the completeness of all documentation;
● does not prepare cash flow statements or consolidation tables;
● does not guarantee 100% certainty – it provides reasonable, not absolute, assurance.
In our work, we are guided by thoroughness, clarity, and cooperation. Our goal is not merely to be a controller, but also a trusted partner who helps to increase the transparency of the company’s reporting and strengthen trust among funders, investors, and other key stakeholders. During the audit, we prioritize open communication and understanding of the company’s operations and risks to provide an independent and balanced assessment of the report’s reliability.
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