Czech audit rules: the two-of-three test that decides if you need one

Most small Czech companies never see an auditor, and most are glad of it. But the line is drawn by size, and a growing business can cross it without anyone noticing until the accountant raises the subject in the new year. At that point the audit is not optional, and it rearranges the whole year-end calendar.

Where the duty comes from

The obligation sits mainly in the Accounting Act (no. 563/1991 Coll.) and the Act on Auditors (no. 93/2009 Coll.), which also regulates the profession. The audit must be carried out by a licensed statutory auditor or audit firm registered with the Chamber of Auditors. Czech rules follow the EU framework, and the work is done to International Standards on Auditing.

The numerical criteria are updated in legislation, so this article explains the test and leaves the figures to the current text of the Act.

The size test

The main route to a compulsory audit is the size test. An s.r.o. must have its statements audited if it exceeds the limits for at least two of three criteria: total assets, annual net turnover and average number of employees. For a joint-stock company (a.s.) the test is stricter: exceeding one of the three is enough (Accounting Act, § 20). The test runs over consecutive periods, so one unusual year does not trap a company, and it can leave the obligation again by falling below the limits (as of 2026; check the official source). The figures come from the company's own statements, and group companies can face an additional test under the consolidation rules.

One warning on research. The limits have been revised upwards in recent years in line with EU adjustments, so an older article quoting a lower number overstates how many companies are caught. Take the thresholds from the Act itself or from your accountant, never from a forum post.

Audited whatever the size

The law lists entities that need an audit regardless of the size test. Public-interest entities such as listed companies, banks and insurers are the obvious ones, and some other regulated entities and legal forms fall in as well. If your company operates in a regulated sector, read the sector law alongside the Accounting Act, because the lists do not match.

Audits nobody in government asked for

Even where the law is silent, someone else may insist. A bank can make audited statements a condition of a loan. A foreign parent may want them for consolidation. A public tender or a subsidy programme may require them, and so may the articles of association or a minority owner where the articles allow it. In law that audit is voluntary. In practice it is not.

Some companies commission one purely as a signal of reliability. A voluntary audit done to the same standards is deposited in the register together with the statements.

What the auditor actually does

The auditor tests whether the statements give a true and fair view under the applicable framework. That means planning, risk assessment, testing of controls and transactions, third-party confirmation of balances, stock checks, review of estimates and a judgement on whether the company is a going concern. The result is a report with an opinion, which can be unmodified or, when problems turn up, qualified, adverse or a disclaimer.

An audit is not mainly a hunt for fraud, and it does not certify that a company is well run. It gives assurance about the statements, nothing more. For a small company the real burden is the volume of information requested, the timeline and the fee.

The calendar problem

The owners must approve audited statements, so the order is fixed: close the books, finish the audit, issue the report, approve, deposit the statements and report. A company that engages its auditor late struggles to meet the approval and filing limits described in our guide to annual accounts filing. Ask the auditor when the appointment must be made, since the timing can matter for work such as the stock count.

Why the line catches growing companies

A company grows into an audit. Revenue rises, hiring continues and a large asset purchase lifts the balance sheet. The test works across consecutive periods, so no single year decides, but the second year at the higher level is often the one that triggers the duty. The accountant notices in the new year, the owners are surprised, and the auditor is not available until spring. The hidden cost is not the fee but the compression of the calendar.

The reverse also holds. A company that shrinks can leave the obligation again, and a company that has been audited voluntarily can stop if the owners and lenders agree. Check with your bank before dropping a voluntary audit, since the facility letter may require it.

Choosing an auditor

Fees vary widely with size and complexity, so ask for a written proposal covering scope, timeline, fee and the team. Check that the firm is on the Chamber of Auditors' register, ask about experience with companies like yours and, if your owners are foreign, whether the work can run in English.

Independence is a hard rule. The firm that keeps your books cannot normally audit them, and there are limits on what other services an auditor may sell to an audited client.

If you skip it

A company that needs an audit and does not have one can be fined, and its deposited statements may be treated as incomplete. Banks and counterparties checking the register will notice either way. Responsibility lands on the director, as we explain in directors' duties.

Each year, soon after year-end, put your total assets, net turnover and average headcount next to the limits in the current Act and write down the result with last year's. If you are close on two of the three, speak to an auditor early. Hearing in January that an audit must be finished by June is a great deal cheaper than hearing it in May.

Before you sign an engagement letter, ask the auditor to describe the information they will need and the dates they need it. A firm that answers in specifics is usually one that will keep to the calendar.

Where to check

The Accounting Act and the Act on Auditors are the sources, and the Chamber of Auditors keeps the register of licensed auditors. Check the thresholds in the current text of the Act each year, and keep a dated note of your own figures. A short conversation with a prospective auditor, often free of charge, will tell you quickly whether you are close to the line.

Frequently asked questions

Who can perform a statutory audit?

A licensed statutory auditor or audit firm registered with the Chamber of Auditors, working to International Standards on Auditing.

Can my bookkeeper audit my accounts?

Not normally. Independence is a hard rule, and there are limits on what other services an auditor may sell to an audited client.

Is an audit a fraud hunt?

No. It gives assurance that the statements give a true and fair view, nothing more.

What if I need an audit and skip it?

The company can be fined, and the director bears the responsibility.

This is a general explainer, not legal or tax advice. Rules change; check the official source or a licensed adviser.