Who Is Subject to the Audit of Financial Statements
The coordination of an external audit begins with the question whether your organization is required by law to have one. Under Article 6 of the Law of Georgia on Accounting, Reporting and Audit, a public-interest entity, an enterprise of the first or second category and a group are obliged to ensure the audit of their financial statements or consolidated financial statements in the manner established by law. This requirement extends to a subject that is a subsidiary enterprise within a group — being inside a group structure does not neutralize the audit obligation.
On the other hand, enterprises of the third and fourth categories and non-entrepreneurial (non-commercial) legal persons are exempt from the audit obligation, unless otherwise provided by the legislation. For an enterprise subject to regulation or supervision by a regulatory or supervisory authority, the requirement for an audit of interim financial statements is established by the sectoral legislation. Determining the correct category and verifying sectoral requirements is the first step of coordination.
The Procedure and Standards of the Audit
Under Article 14, an audit in Georgia is conducted in accordance with the International Standards on Auditing — standards adopted by the International Auditing and Assurance Standards Board, put into effect by the Service: updated editions enter into force within 6 months of the update, and the auditor has the right to use the current English version of a standard. Other audit services — review, other assurance engagements and related services — are governed by the corresponding international standards.
The audit of a public-interest entity carries additional requirements: the authority to conduct such an audit belongs only to an audit firm that has passed monitoring of a quality management system of the corresponding level, and additional requirements for the audit process and procedures are established by order of the head of the Service. Audit activity connected with a contract where a party is a property manager likewise requires monitoring of a corresponding quality.