1. Professional support and auditor’s control in case of different financial reports in Hungary - Chamber of Hungarian Auditors dr. Ferenc Eperjesidr. Tibor Pál Vice President for International Affairs Vice President for Education

2. 1) Chamber in numbers 2) Enterprises in Hungary 3) Accounting rules 4) Act on the Chamber, services of the Chamber 5) Advisory services – opportunities and restrictions Topics

3. Chamber in numbers Years200220032004200520062007200820092010201120122013 Active36843693 366636003549347333833335324730962978 Temporary inactive196721022218227823142332231823062291228222792280 Total565157955911594459145881579156895626552953755258 Firms1830187619091925191619331928 1940322131193043

4. Chamber in numbers Regional BranchesActiveTemporarily InactiveTotal Budapest1 1018411941 Other regional branches (19)1 8581 4183 277 Total2 9592 2595 218

5. 20082009201020112012201320142015 Dues revenue (thousand HUF)689 281707 148702 182668 060658 003616 456604 693571 844 Dues revenue (thousand EUR)2 2982 3572 3412 2272 1932 0552 0161 906 Revenue

6. Number and distribution of audit reports Number of reports2009201020112012 Big43 1353 0113 0373 084 Top5-252 6702 4572 3612 264 Other firms27 61225 84525 23521 186 Sole practitioners13 32712 37610 4938 411 Total46 74443 68941 12634 945

7. Enterprises in Hungary 1  Relatively large number of SEs –size categories are different from EU  Long-term submission deadline, accounting tasks concentrating at the end  EU environment – obligation to adapt to EU regulations  Need to manage tax problems

8. Enterprises in Hungary 2  Hungary is not a eurozone member, a lot of currency exchange problems  Enterprises not always employ prepared financial-accounting experts  A lot of (more and more) firms are not obliged to audit – lack of auditor’s support  Less tax control – no control

9. Accounting rules 1  Regulation by laws – continental accounting practice  Many are exempted from detailed reporting obligation  IFRS are needed only in case of consolidated accounts of registered firms  A lot of changes in regulation, a lot of consequences in accounting – hard to manage

10. Accounting rules 2  Standard setting bodies have been established, but no approved standard in effect yet  Single interpretation of accounting issues is not yet on track – interpretive body does not operate  Standard on micro entities is ready, but not independent, it has not been incorporated into the accounting act

11. Act on the Chamber, services by the Chamber  Capacity of many auditors is not used  Regulation allows for book-keeping services (preparation of report)  Problem: rules for conflicts of interests, ethics issues  Difficult to control and prove

12. Advisory services – possibilities and restrictions1  Bigger firms: advisory service: separate business activity  Smaller audit entities – continuous presence, pre- investigations, consultations  Consequences – compliance with standards – ethics, conflict of interests – control by the Chamber, quality control

13. Advisory services – possibilities and restrictions 2  Consolidated reports – expected to remain the market of the big firms  Individual annual reports – big firms in case of IFRS implementation, open competition in other cases  Simplified, micro entities reports (without audit) – possibility for smaller entities, individual auditors

14. Expected (hoped) changes  Enlarge the group of experts preparing IFRS reports – growing demand for experts, auditors  Increase of the number of IFRS trainings, exams, qualifications – more prepared expert group  Support to prepare reports at a higher level

15. Thank you for your attention