Enacted Summary

On May 17, 2006, Directive 2006/43/EC of the European Parliament and the Council came into force requiring all statutory audits of annual and consolidated accounts to be carried out on the basis of International Standards on Auditing (ISAs) as adopted by the European Commission (EC). European Union member states were to adopt and publish the provisions necessary to comply with this directive before June 29, 2008. Member states may impose additional requirements relating to the statuary audits of annual and consolidated accounts for periods expiring on June 29, 2010. According to the information provided on the European Commission website, Slovakia has fully transposed the above-mentioned Directive into its national legislation. In a 2001 assessment of Slovak auditing and accounting practices, the World Bank pointed out the differences between Slovak requirements and ISAs and recommended wholesale adoption of the international standards. As indicated on the Ministry of Finance website, based on the World Bank recommendations, the Slovak authorities initiated a program for reform in the area of accounting and auditing with the support of a grant from the Institutional Development Fund. One of the purposes of the reform was to ensure that ISAs would be adopted, without modifications, as mandatory auditing standards. As stated in the Slovak Chamber of Auditors 2007 self-assessment and other publications on the issue, in line with the EC directive and the World Bank recommendations, effective December 31, 2004 Slovakia adopted ISAs as national standards for auditing.

General Overview

A 2005 self-assessment prepared by the Slovak Chamber of Auditors (SKAU) provides information on the regulatory and standard-setting framework for financial reporting in Slovakia. According to this assessment, the legal framework for the preparation of financial statements in Slovakia is based on the Commercial Code of 1991, as supplemented by the Auditing and Accounting Law. As explained in a 2008 KPMG report, all consolidated financial statements in Slovakia must be audited. In addition, all companies preparing individual financial statements in accordance with International Financial Reporting Standards (IFRSs), joint stock companies and other companies meeting two of the following three criteria: (1) total assets exceeding SKK 20 million; (2) net turnover exceeding SKK 40 million; and (3) average number of employees more than 20 during the accounting period are required to be audited.

In 2001, the World Bank conducted a review of accounting and auditing practices in Slovakia in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. The Report on the Observance of Standards and Codes (ROSC), published in November 2001, contained policy recommendations to improve the reporting framework in Slovakia. It recommended establishing an effective legal and regulatory framework, strengthening the enforcement mechanisms, and the adoption of ISAs in Slovakia. At the time of the assessment, the SKAU had developed 36 Slovak auditing standards or SSAs. The World Bank observed that "although the SKAU claims that all the SSAs conform to the requirements of the ISAs, there seem to be some gaps" (p. 6). As indicated on the Ministry of Finance website, based on the World Bank's recommendations, the government of Slovakia initiated a program of accounting and auditing reform supported by the Institutional Development Fund's Grant. One of the purposes of the reform was to ensure that ISAs would be adopted, without modification, as mandatory auditing standards, replacing existing SKAU-developed standards. The government of Slovakia, in collaboration with the SKAU, established the National Steering Committee (NSC) which was headed by the State Secretary of Finance and comprised representatives from the government, regulatory, supervisory, and industry bodies. Other than adoption of ISAs and IFRSs, technical support was provided for the establishment of the Financial Reporting Council (FRC), an independent oversight body, and for assisting the SKAU in the implementation of existing and future ISAs. In January 2004, the evaluation committee for the Institutional Development Fund's Grant project accepted technical proposals from Deloitte and Touche in consortium with Ernst and Young, KPMG, and PricewaterhouseCoopers. A Project Coordinator was authorized to negotiate the contract which was finalized and signed on March 1, 2004. According to the 2007 SKAU self-assessment and other publications, Slovakia adopted ISAs effective for financial statements prepared as of December 31, 2004. The 2007 SKAU self-assessment notes that "the law/regulation simply refers to IAASB pronouncements as the auditing standards" (p. 33), thus confirming the final adoption of ISAs in Slovakia. The 2007 International Monetary Fund Financial System Stability Assessment Update further confirmed that "the quality of auditing in the financial sector Slovakia is now covered by International Standards on Auditing (ISAs)" (p. 23). Slovakia thus complies with the Directive 2006/43/EC of the European Parliament and the Council which requires all statutory audits of annual and consolidated accounts to be carried out on the basis of ISAs as adopted by the European Commission. Per the directive, European Union member states shall adopt and publish the provisions necessary to comply with this Directive before June 29, 2008. According to the information provided on the European Commission website, Slovakia has fully transposed the above-mentioned Directive into its national legislation.

SKAU is the auditing standard-setting body in Slovakia. The 2001 World Bank assessment pointed out that the SKAU is authorized to enforce audit related rules, regulations, and standards. However, the 2005 SKAU self-assessment noted that ISAs had been adopted in 2004 and the standard-setting role of SKAU would change to "early translation of exposure drafts, make them available for public comments, prepare comments, translate final version and write commentary to implementation if necessary." A 2007 SKAU self-assessment noted that the SKAU had also adopted the International Federation of Accountants (IFAC) Code as issued without modifications. The SKAU is listed as a member on the IFAC website.

The Principles

ENISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (effective 2009)

According to the 2007 SKAU self-assessment and other publications on the subject, Slovakia adopted ISAs effective for financial statements prepared as of December 31, 2004.

ENISA 210 Agreeing the Terms of Audit Engagements (effective 2009)

See ISA 200.

ENISA 220 Quality Control for an Audit of Financial Statements (effective 2009)

See ISA 200.

ENISA 230 Audit Documentation (effective 2009)

See ISA 200.

ENISA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements (effective 2009)

See ISA 200.

ENISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2009)

See ISA 200.

ENISA 260 Communications of Audit Matters with Those Charged With Governance (effective 2009)

See ISA 200.

ENISA 300 Planning an Audit of Financial Statements (effective 2009)

See ISA 200.

ENISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2009)

See ISA 200.

ENISA 320 Materiality in Planning and Performing an Audit (effective 2009)

See ISA 200.

ENISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2009)

See ISA 200.

ENISA 402 Audit Considerations Relating to an Entity Using a Service Organization (effective 2009)

See ISA 200.

ENISA 500 Audit Evidence (effective 2009)

See ISA 200.

ENISA 501 Audit Evidence—Specific Considerations for Selected Items (effective 2009)

See ISA 200.

ENISA 505 External Confirmations (effective 2009)

See ISA 200.

ENISA 510 Initial Audit Engagements—Opening Balances (effective 2009)

See ISA 200.

ENISA 520 Analytical Procedures (effective 2009)

See ISA 200.

ENISA 530 Audit Sampling (effective 2009)

See ISA 200.

ENISA 540 Audit of Accounting Estimates (effective 2009)

See ISA 200.

ENISA 550 Related Parties (effective 2009)

See ISA 200.

ENISA 560 Subsequent Events (effective 2009)

See ISA 200.

ENISA 570 Going Concern (effective 2009)

See ISA 200.

ENISA 580 Written Representations (effective 2009)

See ISA 200.

ENISA 600 Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors) (effective 2009)

See ISA 200.

ENISA 610 Using the Work of Internal Auditors (effective 2009)

See ISA 200.

ENISA 620 Using the Work of an Auditor’s Expert (effective 2009)

See ISA 200.

ENISA 700 Forming an Opinion and Reporting on Financial Statements (effective 2009)

See ISA 200.

ENISA 705 Modifications to the Opinion in the Independent Auditor’s Report (effective 2009)

See ISA 200.

ENISA 710 Comparative Information—Corresponding Figures and Comparative Financial Statements (effective 2009)

See ISA 200.

ENISA 720 The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements (effective 2009)

See ISA 200.

ENISA 800 Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (effective 2009)

See ISA 200.