Auditing forms part of the business control system. It is therefore advantageous for companies to use the services of a professional auditor to ensure that the financial statements and possible annual report provide correct, sufficient and consistent information.
It is not compulsory for very small businesses to elect an auditor. Nevertheless, even companies not obliged to use an auditor often do so on a voluntary basis.
According to the Auditing Act, on certain preconditions a company can choose not to elect an auditor.
Private entrepreneurs (i.e. self-employed persons with a business name) need not elect an auditor. Small businesses, too (limited liability companies, general partnerships and limited partnerships, cooperatives) are under no obligation to conduct an audit. Only businesses in which not more than one of the following conditions are met in both the past completed financial year, and the financial year immediately preceding it, are considered small companies:
- the balance sheet total exceeds 100 000 euros
- net sales or comparable revenue exceeds 200 000 euros
- the average number of employees exceeds three.
If the articles of association, partnership agreement or rules of the organisation include a provision on electing an auditor, an auditor must be elected (or the relevant provision in the articles of association must be changed).
If the auditor is elected by law or on a voluntary basis, the auditor must be qualified and authorised, in other words
- An auditor approved by the Central Chamber of Commerce (KHT auditor) or
- An auditor approved by the local Chamber of Commerce (HTM auditor) or
- An audit firm approved by the Central Chamber of Commerce (KHT firm) or
- An audit firm approved by the Chamber of Commerce (HTM firm).
The auditor must be a KHT auditor or a KHT firm, if the corporation is subject to public trading or if at least two of the following conditions were met by the corporation or the foundation in the last completed financial year:
- The balance sheet total exceeds 25 000 000 euros according to the financial statements of the previous accounting period
- Net sales or comparable revenue exceeds 50 000 000 euros according to the financial statements of the previous accounting period
- The average number of employees exceeds 300 during the accounting period.
The trade register must be notified of the auditor.