Audit challenges in Estonia.

Recently, tech companies in Estonia have been facing obligatory audit requirements. It must be taken into consideration that not all companies in Estonia are subject to audits.

If the company meets at least two of the three criteria below:

1. Sales revenue or income exceeds 4.0 million per year
2. Total assets in balance exceed 2.0 million per year
3. Average number of employees exceeds 60 persons

Then the company is required to undergo an audit review.

If the company meets at least two of the three criteria below:

1. Sales revenue or income exceeds 12.0 million per year
2. Total assets in balance exceed 6.0 million per year
3. Average number of employees exceeds 180 persons

Then the company is required to undergo an audit control.

In these cases, the audit requirements are the same, whether an auditor is conducting a control or review of the company’s records and documents.

What are the key requirements that an auditor sets for Estonian companies when conducting a control or review?

1. The auditor requires that accounting and recording of business transactions comply with the requirements of the Estonian RTJ standard (similar to IAS or GAAP).
2. Every financial and business transaction must be confirmed by a document.
3. The enterprise must carry out financial and economic activities in a transparent manner.
4. If a company has subsidiaries in other countries, the Estonian auditor requires the ability to audit these subsidiaries where they are located. Thus, the auditor will go to the country where the subsidiary is located.
5. If the company has counterparties (suppliers or customers), then at the end of the reporting period there must be confirmation of the balance with them.

As practice shows, it is quite difficult for most enterprises to fulfill such requirements.