In connection with the mandatory implementation of the new European Union audit regulation into the Slovak accounting and auditing laws in June 2016, some companies are obliged to establish a new body, an Audit Committee (“AC”) OR a Supervisory Board (“SB”) with AC functions.
Who is obliged to create Audit Committee
- Companies which are public interest entities or the large commercial companies (as specified in the legislation) are obliged to create AC except these situations:
- a) Company is a subsidiary and its parent company has established the AC which performs specific roles of the AC also for the daughter company;
- b) Company is registered in another member state of the European Union and established a body that carries out activities as an AC also for the Slovak entity;
- c) Its SB performs roles of the AC.
Formal establishment of AC or SB
- The company´s articles of incorporation need to be amended and approved by the General Assembly.
- The General Assembly formally establishes the AC or the SB with AC function and assigns its rights and responsibilities.
- For the SB the General Assembly also appoints individual members.
- Subsequently the SB with AC functions is registered into a Slovak Commercial Register.
Job Description of AC – Key areas
- Monitor the preparation of financial statements and compliance with specific legislation;
- Monitor the effectiveness of the reporting entity's internal control, internal audit and risk management systems if they affect the preparation of financial statements;
- Monitor the performance and results of the statutory audit of individual / consolidated financial statements;
- Select a statutory auditor or an audit firm and recommend the appointment of a statutory auditor or an audit firm to be approved to carry out a statutory audit for the reporting entity in accordance with specific legislation;
- Review and monitor the independence of the statutory auditor or the audit firm;
- Set a deadline for a statutory auditor or an audit firm to present a statutory declaration on their independence;
- Inform the management body or the supervisory body of the reporting entity of the outcome of the statutory audit and explain how the statutory audit of financial statements contributed to the integrity of the financial statements and what the role of the AC was in that process.
How we can help you
- We can assist you with formal establishment of AC or the SB with AC function including:
- a) Drafting the amendment of the articles of incorporation (including the establishment of processes set forth by the Act No. 423/2015 Coll. on Statutory Audit as amended, incl. elaboration on the member's obligations);
- b) Preparation of the Resolution of the General Meeting approving the amendment;
- c) Submission of the consolidated version of the articles of incorporation to the Collection of Deed.
- Assistance with company´s internal guidance preparation;
- Preparation of the template(s) of documentation:
- a) Timetable with responsibilities of AC / SB;
- b) General templates such as agenda, invitation and minutes/resolution templates;
- c) Specific templates such as: report on control activities of the AC/SB; the list of documents required by AC/SB for its meeting.
tel.: +421 2 5998 4111
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