Key regulatory requirements, practical implications and recommendations
An increasing number of Polish companies are expanding their business into the Czech market through subsidiaries or branch offices. As activities in the Czech Republic grow, many financial managers find themselves needing to assess whether the Czech entity is subject to a mandatory statutory audit and what implications this has for local accounting as well as group reporting.
In practice, Czech companies are often part of international capital groups, which means that local audit requirements directly affect not only the Czech financial statements but also consolidation, reporting and cooperation with the group auditor abroad.
Below we summarize the key regulatory aspects and practical recommendations that foreign companies operating in the Czech Republic should take into account.
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When is a financial statement subject to a mandatory audit in the Czech Republic?
Financial statements for 2025 and earlier
An audit was mandatory if the company met at least two of the following three conditions for two consecutive accounting periods:
- total assets exceeding 40 million CZK,
- annual revenues exceeding 80 million CZK,
- average number of employees exceeding 50.
From 1 January 2026
A legislative amendment significantly simplified the assessment – only medium sized and large accounting entities are subject to mandatory audits. In practice, this means that some smaller Czech subsidiaries may no longer require an audit, even if they were audited in the past.
For comparison: in Poland, the audit requirement is always assessed based on the figures from the previous accounting period, which is important when planning group processes.
Comparison table
| Criterion | Poland | Czechia until 31 Dec 2025 |
| Total assets | above 3.125 million EUR | above 1.64 million EUR (40 million CZK) |
| Net revenues | above 6.25 million EUR | above 3.3 million EUR (80 million CZK) |
| Average number of employees | above 50 | above 50 |
| Mandatory audit rule | audit required after meeting at least 2 of 3 criteria | audit required after meeting at least 2 of 3 criteria |
Entities subject to audit regardless of size
The statutory audit requirement also applies to selected types of entities, regardless of quantitative thresholds, in particular:
- banks and financial institutions,
- joint stock companies in cases defined by law,
- companies that are part of capital groups and prepare consolidated financial statements.
As a result, many Polish groups find that the audit of a Czech entity is required for regulatory or group purposes.
Key differences between audits in Poland and the Czech Republic
Although audits in both countries derive from EU legislation and International Standards on Auditing (ISA), there are important practical differences that affect the preparation of accounting data and the audit process.
1. Accounting standards
Czech companies prepare financial statements primarily under Czech Accounting Standards (CAS). For Polish owners this means the need to:
- maintain local accounting in line with Czech legislation,
- prepare additional reports for group purposes (PL GAAP / IFRS),
- perform consolidation adjustments and prepare reconciliation bridges.
2. Local auditor
The audit of a Czech company must be performed by an auditor licensed in the Czech Republic and registered with the Chamber of Auditors of the Czech Republic. Cooperation with a group auditor in Poland is common, but responsibility for the local audit remains with the Czech auditor.
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Differences in accounting
Czech companies prepare their financial statements under CAS, which differs in many areas from Polish accounting law and IFRS. Differences include, among others:
- recognition timing of revenues and expenses,
- creation of provisions and impairment allowances,
- depreciation principles,
- presentation of items in the financial statements,
- use of a detailed and strictly structured chart of accounts in the Czech Republic.
Comparison table
| Area | Poland | Czech Republic | What it means for Polish companies |
| Accounting standards | Accounting Act / IFRS | Accounting Act / IFRS under specific conditions | Need to maintain local accounting + group reporting |
| Publication of statements | KRS / RDF | Commercial Register (Collection of Deeds) | Different deadlines and formal requirements |
| Auditor | Auditor registered with PANA | Auditor registered with KAČR | Need to use a local auditor |
| Differences (Czech GAAP vs PL/IFRS) | Lower degree of formality | Significant differences | Need for consolidation adjustments |
Impact on group audit and reporting
In practice, Czech subsidiaries often prepare additional reporting packages for the head office, including:
- group audit documentation,
- reconciliation bridges between Czech GAAP and PL GAAP / IFRS,
- detailed analyses of significant differences,
- explanations of local accounting estimates and provisions.
A well designed process significantly:
- reduces the risk of adjustments during consolidation,
- increases transparency for the group auditor,
- streamlines the group audit process.
Benefits:
- improved communication between headquarters and the local finance team,
- consistency of group data,
- lower risk of adjustments at the consolidation stage.
How to prepare for the audit of a Czech company –practical recommendations
Polish companies operating in the Czech Republic should pay special attention to the following areas:
- Regular monitoring of audit thresholds
We recommend continuously evaluating:
- financial results and asset structure,
- revenue growth,
- headcount and forecasts.
- Setting accounting processes in line with CAS
Key factors include the quality and completeness of accounting documentation, correct provisioning, impairment and depreciation, and full compliance with Czech legislation. - Coordination with the group
Important elements include:- timelines for local audit and group reporting,
- format of consolidation packages,
- alignment with group accounting policies (e.g., IFRS).
- Choosing an auditor experienced in international group structures
An experienced auditor should:
- communicate effectively with the group auditor,
- identify differences between Czech GAAP and PL GAAP / IFRS,
- minimise risks and inefficiencies during the audit.
- Preparation of documentation and audit timetable
The standard preparation includes a PBC (Prepared by Client) list such as:
- trial balance and general ledger,
- accounts receivable/payable ledgers and analyses,
- fixed asset and inventory reports,
- business critical contracts,
- documentation for revenue, expenses and payroll testing.
Check whether your Czech company is ready for an audit
If you operate in the Czech Republic and want to ensure that your financial processes are audit ready, contact us.
Frequently Asked Questions (Q&A)
- Does every company in the Czech Republic need an audit?
No. Mandatory audits apply only to companies that meet statutory criteria or selected entities where the audit is required regardless of size. - What are the basic criteria for an audit requirement?
For financial statements for 2025 and earlier, the obligation arises if at least two of three criteria are met:
– assets exceeding 40 million CZK,
– revenues exceeding 80 million CZK,
– average number of employees above 50.
From 2026 onward, the obligation applies to medium sized or large accounting units. - Does a Polish company in the Czech Republic need an audit?
Yes, if its Czech subsidiary meets statutory criteria or if an audit is required for group consolidation or internal requirements.
- Is an audit necessary for consolidation?
In most international groups, yes. An audit of the local financial statements increases the reliability of data used for consolidation. - Which accounting standards are used in the Czech Republic?
Financial statements are primarily prepared under Czech GAAP. IFRS may be used only in specific cases. Reconciliation to PL GAAP or IFRS is usually required for group purposes. - Must the audit be performed by a local auditor?
Yes. Only an auditor licensed in the Czech Republic and registered with the Chamber of Auditors can perform a statutory Czech audit.
How can an adviser or auditor support Polish companies in the Czech Republic?
Polish companies operating in the Czech Republic often face the challenge of reconciling local regulatory requirements with the expectations of their headquarters. Support typically includes:
- statutory audits of Czech companies,
- audits for group consolidation purposes,
- analysis of differences between CAS, PL GAAP and IFRS,
- audit preparation and reporting process setup,
- CFO support in managing regulatory and accounting risks.
With extensive experience working with international capital groups, we help ensure consistent financial reporting, streamline audit processes and reduce regulatory risks.
If a Polish company owns a subsidiary or branch in the Czech Republic – or is planning to enter the Czech market – it is advisable to prepare early for the mandatory audit and financial reporting requirements.
Contact us – we will be happy to discuss how we can support your finance team
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