External Audit of Financial Statements

An external audit is an independent examination of financial statements carried out by a licensed auditor from outside the company. Its purpose is for the auditor, based on evidence gathered, to express an opinion on whether the financial statements give a true and fair view of the company's financial position and performance, in accordance with the applicable financial reporting framework. An audit is not a guarantee that every error or fraud will be detected; it provides users of the statements with a high, reasonable — but not absolute — level of assurance.

The requirement primarily applies to public-interest entities, medium-sized legal entities, parent companies and groups that meet the prescribed thresholds, investment firms, investment funds, fund management companies and voluntary pension funds. Thresholds and categorisation change through regulation, so the obligation for a given year should be checked against the rules currently in force. During the initial consultation, we verify your category before the scope of engagement is agreed.

A statutory audit is performed because regulation requires it, while a voluntary audit is commissioned by management or the owner for business reasons — a bank, an investor, a tender, or internal quality control over reporting. Relevant professional auditing standards apply in both cases, while the precise scope, reporting requirements and intended users depend on the engagement and applicable requirements.

Duration depends on company size, transaction volume, the quality of documentation, and whether the statements are standalone or consolidated. For small and medium-sized companies with well-organised records, fieldwork typically takes a few days to two weeks, plus additional time for planning and reporting. If documentation is incomplete, the engagement takes longer, which is why we provide a PBC list of required documents at the outset.

Typically required are the financial statements and trial balance, general ledger and subledgers, an inventory of assets and liabilities, bank statements and confirmations, loan agreements and significant contracts, documentation on inventory and fixed assets, tax returns and payroll records, and decisions of the governing bodies. Before work begins, we provide a structured PBC list, so preparation does not depend on improvisation during fieldwork.

External audit is independent of the company and reports to users of the financial statements — owners, banks, regulators and business partners — on whether the statements are reliable. Internal audit is a function serving management and the governing bodies and continuously assesses internal controls, risk management and process efficiency. The two functions complement each other: a strong internal audit function reduces the risks that the external auditor tests.