Scope of responsibility of the statutory auditor
The term statutory auditor is used for companies that are subject to audit under Act No. 93/2009 Coll. on Auditors (hereinafter “the Act”). A statutory auditor in the sense of the Act is an individual who has been issued a decision by the Chamber of Auditors (hereinafter “the Chamber”) on the authorisation to carry out auditing activities. There is a certain responsibility associated with the performance of this function. Its scope must be based primarily on the Act, chiefly the section on disciplinary offences and misdemeanours. The basis of responsibility in the performance of this function is the need to comply with generally binding legal regulations, the obligation to comply with auditing standards, the need to observe the provisions of the Code of Ethics and other internal regulations of the Chamber.
Among the basic characteristics of the auditor is his independence defined in Section 14 of the Act, which states that the auditor may not perform an audit if there is a certain (direct or indirect) relationship between him and the audited accounting entity (e.g. it may be a long-term dependence on income provided by the entity). This also applies to the provision of non-audit services to the entity. If the auditor has concerns about his or her independence in the performance of the audit engagement, he or she must name them, demonstrate them and take certain actions.
Another fundamental duty of the auditor, for which he or she may be liable in the event of its breach, is confidentiality. He is obliged to comply with it under Section 15 of the Act. In this context, confidentiality applies to all non-public facts related to the performance of the audit. However, the auditor may be relieved of this obligation either by the Chamber or by the audited entity itself. Other exceptions to the obligation of confidentiality include the provision of information subject to confidentiality to the Czech National Bank (as the body supervising the financial market), to law enforcement authorities in the event of suspicion of a criminal offence (e.g. corruption) or to a court. In the event of a change of auditor, the original auditor is obliged to inform the current auditor of the information collected, which is subject to confidentiality.
A substantial part of the auditor’s liability is regulated by the Act in its part on offences, namely from Section 49a et seq. of the Act. The purpose of the legislators in defining individual offences in the Act is mainly to protect the public interest, the legally protected interests of the European Union and possibly the interests of the accounting entity. For committing individual offences in this area, the perpetrator of the offence faces a significant penalty, depending on the type of offence and the legal form of the auditor (the Act differentiates between an individual and a legal entity).
The scope of the auditor’s liability for the performance of his/her activities may also extend to the criminal law level in the event that he/she “issues to another a false audit’s report or a false confirmation of the financial situation or assets”, which results in the fulfilment of the criminal offence of issuing a false confirmation and report within the meaning of Section 259 of Act No.40/2009 Coll., the Criminal Code.
To sum it up, it can be said that the auditor must act with professional diligence in the performance of his/her duties. In order to perform this activity, the law requires, among other things, the successful passing of an audit examination. At the same time, as part of the performance of this function, the auditor is required to undergo various courses and training, not least to ensure that the auditor is made aware of his or her responsibilities.
In conclusion...same as the entity is responsible for the preparation of the financial statements, the auditor is responsible for his/her engagements, which are subject to oversight by the Chamber.
Our company provides audit and non-audit services, therefore please do not hesitate to contact us. We will be happy to assist you in this area and recommend the most suitable type of our service/contract.
Author: Terézia Švrčková