1. SLOVAKIA - 8th EU Directive Implementation 1 8th EU Company Law Directive - Slovakia case Ivan Bošela National Steering Committee, Vice-Chairman Slovak Chamber of Auditors, Chairman

2. SLOVAKIA - 8th EU Directive Implementation 2 Agenda  Modernised 8th EU Directive as reaction to poor level of audit – or accounting?  Modernised 8th EU Directive – how Slovakia is prepared?  Modernised 8th EU Directive – possible problem areas

3. SLOVAKIA - 8th EU Directive Implementation 3 Accounting Systems in transition economies – past and present situation PAST ACCOUNTING: ▪ Regulation by: State ▪ Purposes/Function: - State ownership control - Central State Planning ▪ Standards: Local (Tax orientation) ▪ Comparability of FS: Locally PRESENT ACCOUNTING: ▪ Regulation by: State (public sect.) FRC (private sect.) ▪ Purposes/Function: - Ownership Control - Information for diversity of users ▪ Standards: International (Investors orientation) ▪ Comparability of FS: Internationally

4. SLOVAKIA - 8th EU Directive Implementation 4 Audit Profession in transition economies – past and present situation PAST AUDITING: ▪ Regulation by: - State – People`s Control Board (no Auditing Profession) ▪ Purposes: - State Ownership Protection ▪ Standards: Local ▪ Comparability of Reports: - Locally PRESENT AUDITING: ▪ Regulation by: - State (Supreme Audit Office) - Chamber of Auditors ▪ Purposes: - State and Private Ownership Protection ▪ Standards: International ▪ Comparability of Reports: - Internationally

5. SLOVAKIA - 8th EU Directive Implementation 5 Slovakia and the International Profession  1989: No relationship with international audit profession  2001: IFAC - full membership (support of EU profession)  2002: FEE - full membership (support of EU profession)

6. SLOVAKIA - 8th EU Directive Implementation 6 Market for Auditing Services in EU Auditing Units: EU: cca 2 000 000 SLOVAKIA: cca 20 000 %: 1,0 Auditors: cca 500 000cca 1 000 0,2

7. SLOVAKIA - 8th EU Directive Implementation 7 Market for Auditing Services in SLOVAKIA  Public Sector: - Local government institutions (towns, villiges) - Non-Profit Organisations - Political Parties  Private Sector: - Financial Institutions (banks, inssurance, capital market,...) - Plc - all - Ltd – over some criterias

8. SLOVAKIA - 8th EU Directive Implementation 8 Modernised 8th EU Directive – how Slovakia is prepared?  Accounting standards: ● PIE`s: Fully compatible with IAS/IFRS from 2006 (Slovakia probably first country in Europe, where the tax base is calculated from accounting profit under IAS/IFRS) ● SME`s: Local - In compliance with IAS/IFRS from 2003 (major measurement, presentation and disclosure principles)

9. SLOVAKIA - 8th EU Directive Implementation 9 Modernised 8th EU Directive – how Slovakia is prepared?  Auditing standards: ● for PIE`s: full ISA (IFAC) from 2004 ● for SME`s: full ISA (IFAC) from 2004

10. SLOVAKIA - 8th EU Directive Implementation 10 Modernised 8th EU Directive – how Slovakia is prepared?  Ethical standards: ● For All Auditors – IFAC`s Code of Ethics from 2004

11. SLOVAKIA - 8th EU Directive Implementation 11 Modernised 8th EU Directive – how Slovakia is prepared?  Educational standards: ● IFAC`s IES implemented into domestic standards

12. SLOVAKIA - 8th EU Directive Implementation 12 Approval and Mutual Recognition of Auditors  Ownership of Audit Firms and Management ● a majority of the voting rights must be held by audit firms which are approved in any Member State… ● a majority up to a maximum of 75% of the members of the administrative or management body of the firm must be audit firms which are approved in any Member State…

13. SLOVAKIA - 8th EU Directive Implementation 13 Quality Assurance Systems Public oversight, Investigations and sanctions  Institutional and procedural changes ● Financial Reporting Council - key role in future: - A&A regulation (standards) - Principles of Quality Assurance Systém - Public Oversight - Investigation and Sanctions ● Slovak Chamber of Auditors – reconstruction of competencies (Modernised 8th EU Directive)

14. SLOVAKIA - 8th EU Directive Implementation 14 Financial Reporting Council

15. SLOVAKIA - 8th EU Directive Implementation 15 Financial Reporting Council - responsibilities

16. SLOVAKIA - 8th EU Directive Implementation 16 Slovak Chamber of Auditors - responsibilities

17. SLOVAKIA - 8th EU Directive Implementation 17 Modernised 8th EU Directive – conclusion for SLOVAKIA  Radical Reform in Acocunting and Auditing – good starting point for 8th EU Directive implementation  Change of 3 major national Acts: 1. POB Act 2. Act on Accounting 3. Act on Auditing

18. SLOVAKIA - 8th EU Directive Implementation 18 More information...  www.finance.gov.sk  www.skau.sk