An audit is a recurring annual process for many businesses. Behind the scenes, it is a comprehensive engagement that often spans several months and is designed to determine whether a company’s financial statements present a true and fair view of its financial position.

An audit is not merely a regulatory requirement. When performed properly, it helps shareholders, investors, lenders, and other stakeholders make informed decisions based on reliable financial information.

What is the purpose of an audit?

The primary objective of an audit is to determine whether a company’s financial statements comply with the applicable accounting standards and present a true and fair view of its financial position, financial performance, and cash flows.

A common misconception is that the auditor represents the interests of management or the owners. In reality, the auditor’s report is intended for all users of the financial statements, including shareholders, banks, lenders, grant providers, and regulatory authorities.

The auditor’s role is not to evaluate how well a business is managed, but to assess whether the financial information provides a reliable basis for economic decision-making.

How does the audit process begin?

At PKF Hungary, every engagement begins with a comprehensive risk assessment. During this stage, we evaluate whether the engagement can be accepted, confirm compliance with independence requirements, and identify any circumstances that may affect audit quality.

The risk assessment covers the risk of material misstatement in the financial statements, the possibility of fraud, and, where relevant, legal or reputational risks.

Once the preliminary information has been reviewed, we assign the audit team and determine the expertise, resources, and time required for the engagement.

What happens during the planning phase?

During this phase, we develop an understanding of the company’s operations, business environment, accounting processes, and internal control system. The objective is not simply to review the figures in the financial statements, but to understand the business processes behind them.

The implementation of a new ERP system, an acquisition, a significant investment, or a complex financing structure are all examples of circumstances that may require increased audit attention.

As part of the audit planning process, we identify the risks of material misstatement, gain an understanding of the company’s operations, accounting processes, and internal control environment, and prepare the audit strategy and detailed audit programme based on those risks.

How long does an audit take?

The duration of an audit depends on several factors, including the size of the business, the complexity of its operations, the volume of transactions, and any specific issues that arise during the engagement.

In practice, the process often begins before the financial year-end with the planning and risk assessment phases. The substantive audit work is then carried out alongside the preparation of the financial statements.

The earlier the company and the auditor begin coordinating the engagement, the more efficiently the audit process can be organised.

What does the auditor’s report include?

The auditor’s report contains the auditor’s opinion on whether the financial statements comply with the applicable accounting framework and present a true and fair view of the company’s financial position.

Before issuing the report, the auditor evaluates any identified misstatements, reviews subsequent events, obtains management representations, and assesses whether sufficient appropriate audit evidence has been obtained.

The audit opinion can only be issued once the auditor has gathered enough evidence to support the conclusions reached.

What happens after the audit is completed?

The formal engagement concludes with the issuance of the auditor’s report. However, the professional process does not end there.

At PKF Hungary, we perform a post-engagement quality review, reassess our initial risk evaluations, and analyse the lessons learned throughout the project. This enables us to carry out future audits even more efficiently while maintaining the highest professional standards.

When might an audit be required beyond statutory requirements?

There are several situations where an audit may be required or beneficial beyond statutory audit obligations.

Examples include corporate transformations, mergers, or demergers, where an auditor may be required to certify balance sheets prepared for the transaction. Audit services may also be required in connection with a change of functional currency, as well as in certain voluntary liquidation or insolvency proceedings.

Companies may also choose to engage an auditor voluntarily before attracting investors, obtaining financing, changing ownership, or making significant strategic decisions, where independent assurance over financial information provides additional confidence.

Why choose our team?

Selecting an auditor is a long-term decision. Auditors gain detailed insight into a company’s operations, financial processes, and business information, making both technical expertise and trust essential considerations.

It is important to work with an auditor who has relevant industry experience, sufficient resources, and a proven methodology supported by modern technology to ensure an efficient audit process.

Drawing on the expertise of the international PKF network, extensive industry experience, and digital solutions, we support clients throughout the entire audit lifecycle.

The entire engagement is managed through a dedicated online platform that supports the process from engagement acceptance through completion. The platform facilitates the management of anti-money laundering documentation, document requests, management representation letters, and information relating to subsequent events.

Both the client and the audit team can monitor outstanding tasks, completed document requests, and the current status of the engagement on the same platform. This provides greater transparency while reducing the risk of duplicate communication and inconsistencies caused by multiple document versions.

If you have any questions regarding your statutory audit obligations or the preparation of the audit process, please do not hesitate to contact our experts.