Independent financial audit
On 15.11.2016, the National Assembly adopted on second reading the Law on Independent Financial Audit, which was promulgated on 29.11.2016. The law entered into force on 03.12.2016.
Subject
This law regulates:
1. the purpose, scope and principles of the independent financial audit, performed by registered auditors;
2. the professional standards of organization, documentation and implementation as well as certification of the results of financial audits (the applicable auditing standards);
3. the acquisition of capacity of a certificated expert accountant;
4. the acquisition of capacity and the exercise of the auditing profession by the registered auditors;
5. the rights and obligations of the registered auditors;
6. the status and functions of the Commission for Public Oversight on Statutory Auditors;
7. the status and functions of the Institute of Chartered Accountants;
8. the activities of the audit committees in the public interest entities.
Purpose of the financial audit
The purpose of the financial audit is to increase the confidence of the consumers of financial statements by expressing an audit opinion on whether these statements have been prepared in all significant aspects in accordance with the applicable financial reporting framework.
Financial audit
The financial audit is the fulfillment of a set of necessary and interrelated procedures defined by the applicable auditing standards on the basis of which the auditor's opinion is formed. The type of the applicable financial reporting framework is taken into account in the expression of an audit opinion.
Subject of the financial audit
Financial audit is carried out on:
1. annual or interim, individual and consolidated financial statements prepared in accordance with the applicable financial reporting framework;
2. other financial statements or financial information.
Applicable reporting frameworks
The applicable financial reporting frameworks are:
1. the common financial reporting framework regulating financial statements with a general purpose for a wide range of consumers;
2. the specific financial reporting framework regulating statements for specific consumers.
Statutory audits and voluntary audits
The financial audit is mandatory and voluntary. A statutory audit is an audit of the annual financial statements as far as it is required by law or by the European Union Law. A voluntary audit is any other audit different from the mandatory one.
Registered auditors
Financial audit is performed by registered auditors:
1. natural persons;
2. audit firms.
An audit firm is a commercial company registered as a limited liability company, a general partnership or a limited partnership under the Bulgarian legislation or under the legislation of another Member State of the European Union, with a main scope of activity – the performance of financial audit of financial statements of companies, in which three-quarters of the members of its management body are registered auditors under this law or registered auditors from other Member States of the European Union, has a good reputation and is:
1. a general partnership in which more than half of the partners are registered auditors under this law or under the legislation of other Member States of the European Union;
2. a limited partnership in which more than half of the fully liable partners are registered auditors under this law or under the legislation of other Member States of the European Union;
3. a limited liability company in which more than half of the votes in the general meeting of the partners and of the capital belong to registered auditors, auditors and/or audit firms from other Member States of the European Union.
