Compliance Audits Under Georgian Law: Which Statute Governs
The internal-control audit model familiar from United States securities legislation is not Georgian law and cannot carry a Georgian page. In Georgia the legal regime of audit is defined by the Georgian law on accounting, reporting and audit: it decides who must have financial statements audited, by which standards the audit is conducted, and what quality controls govern the auditor. The four articles behind this page refresh four distinct angles: coverage, standards, conduct and quality.
For a company this means audit plans and budgets must start from this law’s requirements rather than from foreign practice analogies.
Who Must Have Financial Statements Audited
Under Article 6, public-interest significant entities, first and second category enterprises and groups must ensure the audit of their financial statements or consolidated financial statements in the manner prescribed by the law, unless regulatory normative acts of the relevant field provide otherwise. The requirement extends to a subsidiary within a group.
Third and fourth category enterprises and non-commercial legal persons are exempt from the audit obligation unless Georgian legislation provides otherwise. For an enterprise subject to regulation or supervision, the requirement for an interim financial-statement audit or other assurance engagement is set by the sector’s legislation — sectoral regulation may thus amend the general rule.
By Which Standards, and Who May Conduct the Audit
Under Article 14, audit in Georgia is conducted in accordance with international standards on auditing — those adopted by the International Auditing and Assurance Standards Board or its successor body. For other audit services beyond an audit — review, other assurance engagements, related services — the corresponding standards of the same board apply. Updated standards enter into force within 6 months of their update, and the auditor may use the current English version.
Audits of public-interest significant entities carry additional requirements: only an audit firm that has passed the corresponding monitoring of its quality management system is entitled to conduct them. When choosing an auditor, a company therefore checks not only the price but the firm’s status.