Audit or review?

A review engagement is a type of assurance service provided by an auditor that is more limited in scope than a full audit. Consequently, it offers a lower level of assurance that the financial information reviewed does not contain material misstatements in relation to applicable requirements. The purpose of a review is to provide users of financial information with moderate assurance that no such misstatements have been identified during the review process.

A review may also be conducted for financial information prepared for consolidation purposes. This applies when subsidiaries located abroad submit financial data to the group’s accounting department, and their local accounting standards differ from those of the parent company (i.e. from Estonian GAAP or IFRS). If the group auditor determines that a review is sufficient for a consolidation component, this approach may be applied.

Larger corporate groups and publicly listed companies may conduct interim financial statement reviews in accordance with applicable public or internal regulations.

Statutory Audit and Review Requirements in Estonia (Applicable for reporting periods starting from January 1, 2024):

Entities required to prepare consolidated financial statements under the Accounting Act must determine their audit or review obligation based on consolidated financial figures.

In addition, an audit is mandatory for:

• Public limited companies (AS) with more than two shareholders during the financial year,

• State accounting entities, local government units, legal persons governed by public law, political parties receiving state budget allocations, and companies where the state has at least decision-making authority under the State Assets Act,

• Foundations with revenue or assets of at least 1 000 000€ as of the reporting date, established by the state, a public law entity, a local government, a political party, or a company in which the state has decision-making authority under the State Assets Act.

A review is mandatory for:

• Foundations with revenue or assets below 1 000 000€ as of the reporting date.

Auditor’s Reports for Audits and Reviews

• Audit Outcome: The auditor issues a positive opinion, confirming that the financial statements comply with applicable requirements.
• Review Outcome: The auditor issues a negative assurance statement, confirming that no material inconsistencies with applicable requirements were found in the financial statements.