The transformation of the economy of the Czech Republic brought about the need for a well-functioning auditor profession able to perform the functions pertaining to it in the market economies. Though the requirement to have financial statements examined by auditors had already been introduced before the Velvet Revolution (November 1989), it was not until the new audit legislation came into effect (1992) that the profession of the auditor began to assume the standard features matching those in the advanced market economies. Within a short period of time auditors became an integral part of the Czech Republic's business environment.

During the several years of the profession's existence, the profession has shown remarkable advance in both its qualitative and quantitative aspects.

The first auditors only examined the financial statements of entities involving foreign capital, but the range of accounting entities needing audit spread significantly with the advancing privatisation. Currently, the obligation to have financial statements examined by the auditors is imposed on all joint-stock companies, other corporations which possess registered capital, and co-operative societies with a turnover exceeding Kc40 million or with net equity of more than Kc20 million. Audit is required for consolidated financial statements from a certain level of net consolidated turnover or net consolidated equity, for annual reports and consolidated annual reports, for the financial statements of municipalities, funds and trusts, state-owned enterprises, utilities and many other entities. The range of Czech accounting entities which must have their financial statements examined by an auditor is, in essence, the same as in the traditional market economies.

The re-focusing of auditing under the conditions of the market economy in the Czech Republic has been associated with extensive education projects and with the regulation of the performance of audit work. Over the period of its existence, the Chamber has issued a whole range of internal standards, more than 20 audit guidelines, several audit handbooks, and a Code of Ethics.

The audit guidelines are based on international audit standards and comply with the laws of the Czech Republic.

Evidence of the development and advance of the auditor's profession is also provided by the quantitative indicators. When the Chamber of Auditors of the Czech Republic arose, its register included about 600 auditors. Currently, there are about 1,200 auditors, about 500 assistant auditors, and more than 200 firms of auditors on the chamber's register. This indicates that many of the individual auditors have joined to establish firms of auditors; this process still continues and is expected to speed up, responding to the requirements of the audited accounting entities and to the developments in the world.

The auditor profession in the Czech Republic is represented by Czech auditors and firms of auditors as well as a number of firms with significant participation of the well-known international firms, including the Big Six.

The process of concentration in the auditor profession is associated with the extension of the range of services provided by auditors. In addition to the statutory audit, auditors are asked also to perform other types of audit, including in particular the audit of accounting entities for which audit is not required by law, as well as special-purpose audits focused on the assessment of investment objectives, economic assessment of changes in the legal form of businesses, selection of strategic partners, issue of securities etc, ie tasks normally performed by firms of auditors in all market economies. Considering this, the concentration of the firms of auditors as well as further development of both audit and non-audit services are expected to continue.

All auditors, assistant auditors and firms of auditors are on the register maintained by the Chamber of Auditors of the Czech Republic, which is a public corporation entitled to take decisions relating to the issue of authorisation s for auditing, the maintenance of the register of auditors, supervision of audit activities, and enhancement of the skills, education and professionalism of assistants and auditors.

The supreme organisation of Czech auditors has a number of permanent tasks, including the monitoring of the development of auditing, the maximisation of potential within the profession, the enhancement of the function of auditing under the conditions of the market economy, and the establishment of a high professional level for Czech auditors with particular respect to the ethics of the profession and the reliability of auditors' opinions and reports.

The auditor's profession has international dimensions. This means that auditors must continue their efforts to minimise the difference between the national and international approaches to the consideration of facts and events being audited. For this and other purposes, the profession must be actively involved in the work of the European and world institutions. Since 1993, the Chamber of Auditors of the Czech Republic has been a member of the International Federation of Accountants with its centre in New York, whose experts work on international accounting and audit standards. Correspondingly, in 1996 the Chamber became a member of the Féderation des Experts Comptables Européens, which represents the profession within the European Union in Brussels. The Chamber also develops useful bilateral co-operation with a number of auditors' organisations in European countries; within the framework of this co-operation, the Chamber organises workshops, supports the exchange of experience, and arranges study stays at firms abroad.

The Chamber of Auditors supports audit-related legislation and regulations which guarantee auditors' independence as an essential condition and basis for the objectivity and reliability of the auditors' opinions and other statements pronounced by auditors.

The Chamber of Auditors supports appropriate forms of supervision of auditors' work and the evaluation of auditors' responsibility.

The efforts to achieve and maintain a standard level of organisation and control of the auditor's profession should also enhance and extend the Chamber's influence on the national and international development of both accounting and auditing.

Komora auditoru Ceske republiky
PO Box 772, Opletalova 55/57
11121 Praha 1
Tel: ++420 2/242 126 70
Fax: ++420 2/242 119 05
email: kacr@ms.anet.cz
http://www.finance.cz/ost/auditor/auditor.htm