2004年-世界发展银行全球_Hungary___Accounting_and_Auditing_19页_559kb

ROSC Report on Hungary: Accounting and Auditing (June 20, 2004)

Executive Summary

This report evaluates the accounting, financial reporting, and auditing practices in Hungary, benchmarked against International Financial Reporting Standards (IFRS), International Standards on Auditing (ISA), and the EU acquis communautaire. It outlines the strengths and weaknesses of the current regulatory framework and provides policy recommendations to enhance the quality and transparency of financial reporting.

Hungary has implemented the Fourth, Seventh, and Eighth EU Company Law Directives and ISA, aligning its accounting and auditing laws with EU standards. However, the country has not extended IFRS requirements to all public interest entities, which may lead to inadequate financial reporting for foreign users. The Hungarian Accounting Standards Board is expected to achieve full convergence with IFRS within six to eight years.

The Hungarian Financial Supervisory Authority (HFSA) reviews financial statements of listed companies, banks, and insurance entities but does not fully comply with CESR Standard No. 1, which mandates a more rigorous review of financial statements for compliance with IFRS. The report recommends enhancing the enforcement of accounting and auditing standards.

Core Content

I. Institutional Framework

A. Statutory Framework

• Act C of 2000 on Accounting sets the legal basis for accounting and auditing in Hungary and complies with EU directives.
• All companies must prepare financial statements in accordance with Hungarian Accounting Standards (HAS).
• IFRS can be used for consolidated financial statements, provided they are reconciled with HAS.
• Tax implications of adopting IFRS prevent public interest entities from using IFRS instead of HAS.
• Budapest Stock Exchange requires Category A companies to publish IFRS financial statements starting from 2005.
• Category B companies may use IFRS or US GAAP, but must reconcile with HAS.

B. The Profession

• The Hungarian Chamber of Auditors is a self-regulatory body responsible for auditing standards, ethics, and quality control.
• It has 5,780 members, with 3,695 actively engaged in audit work.
• 1,800 audit firms are registered with the Chamber.
• Professional ethics are based on the IFAC Code of Ethics (1996 version), modified to a rules-based approach.
• Non-audit services are prohibited for auditors or audit firms under the Act on the Chamber of Auditors and Auditing Activities.

C. Professional Education and Training

• A nine-year program is required for auditors, including higher education, practical experience, and examinations.
• The Chamber mandates 24 hours of continuing professional education (CPE) per year, currently provided exclusively by the Chamber.
• Plans are in place to allow external training providers to offer CPE in line with IFAC guidance.
• In-company training by audit firms is not recognized by the Chamber for CPE purposes.

D. Setting Accounting and Auditing Standards

• Hungarian Accounting Standards are set by the Ministry of Finance and are detailed, reflecting EU directives and IFRS.
• The Hungarian Accounting Standards Board was established in 2003 to take over the standard-setting process.
• The Board aims for full convergence with IFRS within six to eight years.
• Hungarian Standards on Auditing are based on ISA and include explanatory material tailored to the Hungarian environment.
• The Chamber has adopted virtually all ISA and plans to adopt the remaining ones.

E. Enforcing Accounting and Auditing Standards

• The HFSA reviews financial statements of listed companies and financial institutions but does not conduct compliance checks with IFRS or other standards.
• It assumes that audited financial statements comply with the appropriate standards.
• The Budapest Stock Exchange receives but does not review financial statements.
• The Chamber of Auditors conducts annual quality control inspections of its members, focusing on compliance with national auditing standards.
• The inspections are carried out by selected members with six years of experience, 30 audits, and satisfactory evaluations.
• The quality control program aligns with EU recommendations but lacks public oversight and non-auditor involvement.

Main Issues and Recommendations

• Compliance with IFRS: While IFRS is required for listed companies, it is not extended to all public interest entities, leading to potential transparency issues.
• Audit Enforcement: The HFSA does not fully comply with CESR Standard No. 1, which requires more rigorous review and enforcement of financial reporting standards.
• Auditor Independence: There is no mechanism for terminating auditors, which may compromise independence.
• Audit Quality: The Chamber of Auditors has a quality control program, but it lacks external oversight and non-auditor participation.
• Professional Education: The CPE program is currently limited to internal training, and there is a need for broader recognition of external training.

Key Recommendations

• Adopt IFRS for public interest entities to improve transparency and meet international expectations.
• Enhance the enforcement of accounting and auditing standards, particularly by aligning with CESR Standard No. 1.
• Introduce mechanisms to ensure auditor independence, such as termination procedures.
• Strengthen the quality control program by involving non-auditors and introducing public oversight.
• Allow external providers to offer continuing professional education to support auditor development.