Slovakia

As a member of the European Union (EU), Slovakia is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations. Slovakia has fully aligned its legal framework with the EU acquis communitaire as it relates to accounting and auditing.

Accounting Framework

Act No. 431/2002 Coll. On Accounting (the Accounting Act) stipulates the requirements for the preparation of financial statements, including applicable accounting standards and financial reporting thresholds. In accordance with the law, the Ministry of Finance is responsible for enacting financial reporting standards in Slovakia.

In accordance with the EU statutory framework, Regulation EC 1606/2002, as transposed into national legislation, EU-endorsed IFRS Standards are required for the consolidated financial statements of European companies whose securities trade in a regulated securities market. In addition, all other companies are permitted to apply IFRS for their consolidated financial statements.

As documented by the IFRS Foundation, Slovakia also utilized an option under the framework to (i) require EU-endorsed IFRS in both consolidated and separate company financial statements of all public interest entities (PIEs); (ii) permit EU-endorsed IFRS in the separate company financial statements of all companies whose securities are traded in a regulated market that are non-PIEs; and (iii) require EU-endorsed IFRS as adopted by the EU in the consolidated statements of companies whose securities do not trade in a public market. IFRS for Small and Medium-sized Entities is not adopted in the jurisdiction, nor is it under consideration until the EU Accounting Directive changes.

PIEs include banks, financial institutions (e.g., asset management companies, pension funds), insurance companies, listed companies, health insurance companies, railways of the Slovak Republic, and companies that meet two of the following criteria in two consecutive years: (i) total assets exceeds EUR 170 million; (ii) net turnover exceeds EUR 170 million; and (iii) employees exceed 2,000.

Auditing Framework

European Union member states had until June 17, 2016 to transpose the European audit reform package, comprising the Directive 2014/56/EU on statutory audits of annual accounts and consolidated accounts and Regulation (EU) No 537/2014 on specific requirements regarding statutory audit of public interest entities, into their national legislation.

Act No. 423/2015 on Statutory Audit specifies the auditing standards that should be applied in the conduct of audits. Article 19 stipulates that all statutory audits must be conducted in accordance with ISA as issued by IAASB.

As of 2022, entities that are classified as PIEs, cooperatives, and companies created using share capital and that trade on a regulated market or meet two out of following three criteria—(i) total assets greater than EUR 4,000,000; (ii) net turnover of more than EUR 8,000,000; and (iii) average number of employees exceeding 50—are subject to statutory audit.

Only Certified Auditors are regulated at the state level under Act No. 423/2015 on Statutory Audit. The legislation regulates auditors and the conduct of audits, and outlines the activities, rights, and duties of auditors, audit firms, and assistant auditors. It also establishes both initial and continuing professional development requirements for auditors; entry requirements to the auditing profession; professional standards that should be adhered to; the requirement for the implementation of quality assurance review mechanisms; and a requirement for an investigation and disciplinary arrangement.

Act No. 423/2015 created the Úrad pre dohl’ad nad výkonom auditu (UDVA) as the independent audit oversight body, responsible for oversight over statutory auditors and audit firms; third-country auditors and third-country audit firms registered in Slovakia; the activities of the Slovenská Komora Audítorov (SKAU); public interest entities (PIEs); and large companies as defined in the Act.

Per the legislation, candidates for Certified Auditor must first join the SKAU as an ‘assistant auditor’ (student) by possessing a second-level university degree; passing SKAU’s entry-level examination; and be free of any disciplinary measures and have an untarnished reputation. Individuals must then complete at least five years of practical experience in accountancy and with three of those years (3,000 hours) being in auditing. After completing practical experience, individuals must pass the final examination offered by the UDVA and then register with the UDVA and the SKAU as a Certified Auditor. To remain a member of SKAU in good standing, auditors are required to complete CPD requirements.

UDVA is tasked with (i) organizing the auditors’ final examinations; (ii) issuing audit licenses and certificates; (iii) suspending and withdrawing audit licenses and supervising SKAU’s enforcement system; (iv) maintaining a registry for statutory auditors and audit firms as well as third-country auditors and firms; (v) overseeing compliance with international auditing standards, the Auditors’ Code of Ethics, and provisions of the act; (vi) conducting quality assurance (QA) reviews of PIEs and large companies; (vii) overseeing auditors’ fulfillment of continuing professional development (CPD); (viii) participating in the international standard-setting process through cooperation with EU authorities; and (ix) collaborating with the Ministry of Finance when preparing accounting and auditing legislation in Slovakia.

Meanwhile, the SKAU is authorized to: (i) issue the Auditor’s Code of Ethics in line with the IESBA Code of Ethics; (ii) conduct quality assurance reviews of auditors providing services to non-PIEs under the oversight of UDVA; (iii) provide CPD and enforce CPD requirements; (iv) maintain a registry for members; (v) operate an investigation & disciplinary system for members under the supervision of UDVA; and (vi) provide auditors with translations of standards.

Act No. 423/2015 on Statutory Audit establishes the Úrad pre dohl’ad nad výkonom auditu (UDVA) as the independent public audit oversight authority.

In accordance with the law, entities subject to UDVA oversight are statutory auditors and audit firms; third-country auditors and third-country audit firms registered in Slovakia; the activities of the Slovenská Komora Audítorov (SKAU); public interest entities (PIEs); and large companies as defined in the legislation.

UDVA is tasked with (i) organizing the auditors’ final examinations; (ii) issuing audit licenses and certificates; (iii) suspending and withdrawing audit licenses and supervising SKAU’s enforcement system; (iv) maintaining a registry for statutory auditors and audit firms as well as third-country auditors and firms; (v) overseeing compliance with international auditing standards, the Auditors’ Code of Ethics, and provisions of the act; (vi) conducting quality assurance (QA) reviews of PIEs and large companies; (vii) overseeing auditors’ fulfillment of continuing professional development (CPD); (viii) participating in the international standard-setting process through cooperation with EU authorities; and (ix) collaborating with the Ministry of Finance when preparing accounting and auditing legislation in Slovakia.

The UDVA is a member of International Forum of Independent Audit Regulators.

Slovenská Komora Audítorov (SKAU)

The SKAU is a professional accountancy organization established in 1992 that unites auditors and audit firms. It is subject to the regulations set out in the Act No. 423/2015 on Statutory Audit, which defines the organizational structure and duties of the organization. SKAU’s mandate is to: (i) issue the Auditor’s Code of Ethics; (ii) conduct quality assurance reviews of auditors providing services to non-public interest entities under the oversight of Úrad pre dohl’ad nad výkonom auditu (UDVA); (iii) conduct and enforce continuing professional development requirements; (iv) maintain a registry for members; and (v) operate an investigation & disciplinary system for members under the supervision of UDVA.

In addition to being a member of IFAC, SKAU is a member of Accountancy Europe.

• The Ministry of Finance is transposing the CSRD in the Accounting Act. Slovakia will follow the ESRS (European Sustainability Reporting Standards). SKAU also indicates that auditors must follow IAASB standards. If the EU refers to IAASB standards for sustainability assurance, these will automatically be adopted as well. SKAU, the UDVA, and Ministry of Finance are developing training materials in Slovak regarding sustainability as requirements for a new qualification around sustainability will be incorporated in the Act on Statutory Audit.

The Act No. 423/2015 on Statutory Audit stipulates that statutory auditors and audit firms are subject to quality assurance (QA) reviews carried out by Úrad pre dohl’ad nad výkonom auditu (UDVA) for public interest entities (PIEs) and large companies and by the Slovenská Komora Audítorov (SKAU) for non-PIEs under UDVA’s oversight.

Selection of entities is risk-based and is carried out (i) once every three years in the case of audits of an entity that is a PIE or large company as defined in Article 2(15)(f)); and (ii) every six years in the case of other statutory auditors and audit firms.

Inspectors are required to share outcomes of QA reviews with UDVA’s Committee for Statutory Audit Quality Assurance and SKAU’s Supervisory Board.

Relevant standards — ISQM 1, 2 and ISA 220 (revised) — were effective as of December 15, 2022.

SKAU reports that the QA review arrangements in Slovakia are in line with the requirements of SMO 1 and the European Union’s Directives.

Current Status: Adopted

The initial and continuing professional development (IPD and CPD respectively) requirements are established for auditors in the Act No. 423/2015 on Statutory Audit and are implemented by universities, Úrad pre dohl’ad nad vykonom auditu (UDVA), and the professional organization for statutory auditors, the Slovenská Komora Audítorov (SKAU).

Per the legislation, candidates for Certified Auditor must first join the SKAU as an ‘assistant auditor’ (student) by possessing a second-level university degree; passing SKAU’s entry-level examination; and be free of any disciplinary measures and have an untarnished reputation. Individuals must then complete at least five years of practical experience in accountancy and with three of those years (3,000 hours) being in auditing. After completing practical experience, individuals must pass the final examination offered by the UDVA and then register with the UDVA and the SKAU as a Certified Auditor. To remain a member of SKAU in good standing, auditors are required to complete CPD requirements that are stipulated in the Act. Members are required to complete at least 20 verifiable hours of CPD per year and 120 hours over a 3-year rolling period which aligns with the input-approach in IES 7.

SKAU reports that the national requirements have taken into consideration the latest IES requirements. The recent revisions reflect the need for competency-based approaches as well as the increasing demand for accountants skilled in information and communications technologies and place further emphasis on professional skepticism skills and behaviors. SKAU aligned its education in 2021 and 2022 to reflect these needs.

Current Status: Adopted

Act No. 423/2015 on Statutory Audit specifies the auditing standards that should be applied in the conduct of audits. Article 19 stipulates that all statutory audits must be conducted in accordance with ISA as issued by IAASB. The Slovenská Komora Audítorov (SKAU) reports that, accordingly, all ISA are transposed and effective in Slovakia immediately. As of 2023, the SKAU has translated and adopted the 2017 IAASB Handbook in its entirety and subsequently translated and adopted new and revised standards issued including ISA 250 (revised), ISA 540 (revised), ISA 315 (revised), ISQM 1, ISQM 2, ISA 220 (revised), and ISRS 4400. ISA 600 (effective December 2023) is being translated.

Current Status: Adopted

According to Act No. 423/2015 on Statutory Audit, the Slovenská Komora Audítorov (SKAU) is responsible for issuing the Auditor’s Code of Ethics for auditors under the oversight of the Úrad pre dohl’ad nad vykonom auditu (UDVA).

Article 2(18) stipulates that the Auditor’s Code of Ethics issued by SKAU, must be compliant with the International Code of Ethics for Professional Accountants as issued by IESBA. The translation of the Code of Ethics into Slovak must be approved by the SKAU General Assembly before it can be legally effective. SKAU has translated and approved the 2018 International Code of Ethics for Professional Accountants as issued by IESBA. SKAU is translating the 2022 International Code of Ethics for Professional Accountants which it expects to be adopted by end of 2023. SKAU also intends to translate and approve revisions related to PIEs by December 2024.

Current Status: Adopted

The Ministry of Finance is responsible for accounting standard-setting for public sector entities under the Act No. 431/2002 Coll. on Accounting (the Accounting Act). SKAU reports that the National Public Sector Standards (NPSSs), which are based on accrual basis IPSAS principles, constitute the current financial reporting framework.

Current Status: Partially Adopted

The Act No. 423/2015 on Statutory Audit requires the establishment of an investigation and disciplinary (I&D) system for auditors.

Slovenská Komora Audítorov (SKAU) operates an I&D system for its members under the supervision of Úrad pre dohl’ad nad vykonom auditu (UDVA). It is required under law to report all complaints received to UDVA on an annual basis (Article 40). The UDVA carries out I&D procedures for auditors of public interest entities.

SKAU’s Supervisory Board comprises five members that are approved by the General Assembly to serve four-year terms. It is responsible for investigating members and sending proposals for disciplinary action to the SKAU Disciplinary Commission. The Disciplinary Commission may impose sanctions outlined in Article 49 of the law not later than within three years after the date when the breach took place. Sanctions may be appealed by the individual subject to disciplinary action within 15 days after the delivery of the decision. Members in both the Supervisory Board and Disciplinary Commission may be re-elected for a maximum of two consecutive terms.

UDVA’s Enforcement Committee is mandated by law to examine SKAU’s I&D processes; initiate proceedings according to Article 64; decide on the imposition of a sanction according to Article 64; and decide on the release of the obligation to maintain confidentiality according to Article 32(3). UDVA’s Committee may impose sanctions outlined in Article 64 when it detects deficiencies during a QA review, or if it receives a proposal from SKAU.

SKAU reports that the existing I&D arrangements in the jurisdiction are aligned with SMO 6 requirements.

Current Status: Adopted

The Ministry of Finance (MoF) is responsible for the adoption of accounting standards in Slovakia in accordance with Act No. 431/2002 Coll. On Accounting (the Accounting Act).

In accordance with the EU statutory framework, Regulation EC 1606/2002, as transposed into national legislation, EU-endorsed IFRS Standards are required for the consolidated financial statements of European companies whose securities trade in a regulated securities market. In addition, all other companies are permitted to apply IFRS for their consolidated financial statements.

As documented by the IFRS Foundation, Slovakia also utilized an option under the framework to (i) require EU-endorsed IFRS in both consolidated and separate company financial statements of all public interest entities (PIEs); (ii) permit EU-endorsed IFRS in the separate company financial statements of all companies whose securities are traded in a regulated market that are non-PIEs; and (iii) require EU-endorsed IFRS as adopted by the EU in the consolidated statements of companies whose securities do not trade in a public market. IFRS for Small and Medium-sized Entities is not adopted in the jurisdiction, nor is it under consideration until the EU Accounting Directive changes.

PIEs include banks, financial institutions (e.g., asset management companies, pension funds), insurance companies, listed companies, health insurance companies, railways of the Slovak Republic, and companies that meet two of the following criteria in two consecutive years: (i) total assets exceeds EUR 170 million; (ii) net turnover exceeds EUR 170 million; and (iii) employees exceed 2,000.

EU-endorsed IFRS have slight modifications from IFRS (e.g., temporary 'carve-out' from IAS 39 Financial Instrument: Recognition and Measurement and a temporary extension of the scope of applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts) but according to the IFRS Foundation, the modifications affect a limited number of companies. The majority of companies that do not apply the modifications can state full compliance with the IFRS.

IFRS for Small and Medium-sized Entities is not adopted in the jurisdiction, nor is it under consideration until the EU Accounting Directive changes.

Current Status: Adopted

Relevant Organizations

• Slovenská Komora Auditorov (SKAU)
• Ministry of Finance of Slovakia
• Úrad Pre Dohlad Nad Výkonom Auditu (UDVA)

Relevant Legislation

• Act No. 513/1991 Coll. Commercial Code
• Act No. 431/2002 Coll. On Accounting
• Act No. 423/2015 on Statutory Audit
• Act No. 540/2007 Coll. On Auditors, Audit and Oversight of Audit
• Act No. 747/2004 Coll. On Supervision of the Financial Market

Relevant Publications

• Accountancy Europe, Structure and Organisation of the Accountancy Profession. Key feature: Slovakia, 2020.
• --, Member State Implementation of Directive 2014/95/EU, 2017.
• --, Organization of the Public Oversight of the Audit Profession in Europe, a Survey, March 2018.
• --, Definition of Public Interest Entities in Europe, March 2019.
• --, Defining a public interest entity: How to streamline the scope of EU audit rules across countries, 2022.
• --, Overview of the ISA adoption in the EU, 2015.
• European Commission, Audit Directive – Transposition Status, Nov 2021.
• IFIAR, Slovakia: Member Profile, 2023.
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Slovakia, June 2016.
• Sikora, M, Amendment to the Act on Accounting (Effective from 1 January 2016), August 2015.
• SKAU, SMO Action Plan, September 2023.