Professional support and auditor’s control in case of different financial

reports in Hungary

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Chamber of Hungarian Auditors

dr. Ferenc Eperjesi dr. Tibor Pál

Vice President for International Affairs

Vice President for Education

1) Chamber in numbers2) Enterprises in Hungary3) Accounting rules4) Act on the Chamber, services of the Chamber5) Advisory services – opportunities and restrictions

Topics

Chamber in numbers

 Years 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Active 3684 3693 3693 3666 3600 3549 3473 3383 3335 3247 3096 2978Temporary inactive 1967 2102 2218 2278 2314 2332 2318 2306 2291 2282 2279 2280

Total 5651 5795 5911 5944 5914 5881 5791 5689 5626 5529 5375 5258

Firms 1830 1876 1909 1925 1916 1933 1928 1928 1940 3221 3119 3043

Chamber in numbers

 Regional Branches Active Temporarily Inactive Total

Budapest 1 101 841 1941Other regional branches

(19) 1 858 1 418 3 277

Total 2 959 2 259 5 218

  2008 2009 2010 2011 2012 2013 2014 2015Dues revenue (thousand HUF) 689 281 707 148 702 182 668 060 658 003 616 456 604 693 571 844

Dues revenue (thousand EUR) 2 298 2 357 2 341 2 227 2 193 2 055 2 016 1 906

Revenue

Number and distribution of audit reports

Number of reports  2009 2010 2011 2012

Big4  3 135 3 011 3 037 3 084

Top5-25 2 670 2 457 2 361 2 264

Other firms 27 612 25 845 25 235 21 186

Sole practitioners 13 327 12 376 10 493 8 411

Total 46 744 43 689 41 126 34 945

Enterprises in Hungary 1

Relatively large number of SEs –size categories are different from EU

Long-term submission deadline, accounting tasks concentrating at the end

EU environment – obligation to adapt to EU regulations

Need to manage tax problems

Enterprises in Hungary 2

Hungary is not a eurozone member, a lot of currency exchange problems

Enterprises not always employ prepared financial-accounting experts

A lot of (more and more) firms are not obliged to audit – lack of auditor’s support

Less tax control – no control

Accounting rules 1 Regulation by laws – continental accounting

practice Many are exempted from detailed reporting

obligation IFRS are needed only in case of consolidated

accounts of registered firms A lot of changes in regulation, a lot of

consequences in accounting – hard to manage

Accounting rules 2 Standard setting bodies have been established,

but no approved standard in effect yet Single interpretation of accounting issues is not

yet on track – interpretive body does not operate

Standard on micro entities is ready, but not independent, it has not been incorporated into the accounting act

Act on the Chamber, services by the Chamber

Capacity of many auditors is not used Regulation allows for book-keeping services

(preparation of report) Problem: rules for conflicts of interests, ethics

issues Difficult to control and prove

Advisory services – possibilities and restrictions1

Bigger firms: advisory service: separate business activity

Smaller audit entities – continuous presence, pre-investigations, consultations

Consequences – compliance with standards

– ethics, conflict of interests

– control by the Chamber, quality control

Advisory services – possibilities and restrictions 2

Consolidated reports – expected to remain the market of the big firms

Individual annual reports – big firms in case of IFRS implementation, open competition in other cases

Simplified, micro entities reports (without audit) – possibility for smaller entities, individual auditors

Expected (hoped) changes

Enlarge the group of experts preparing IFRS reports – growing demand for experts, auditors

Increase of the number of IFRS trainings, exams, qualifications – more prepared expert group

Support to prepare reports at a higher level

Thank you for your attention