To find an answer to this question, it’s necessary to refer to the specific country’s legislation.
In Latvia, this question is regulated by the Law on Annual Statements and Consolidated Annual Statements, which specifies when and which companies need to undergo an audit. There are two types of audit procedures: financial statement audits and reviews.
Financial Statement Review
A financial statement review is a more limited examination compared to an audit. It provides less assurance and is typically required for companies that do not meet the full audit criteria but still need some level of external validation of their financial statements.
A financial statement review is required when a company exceeds two of the following three criteria for two consecutive years:
- Balance Sheet Total: Exceeds EUR 400,000
- Net Turnover: Exceeds EUR 800,000
- Number of Employees: Exceeds 25
Financial Statement Audit
A financial statement audit is required:
- when a company exceeds two of the following three criteria for two consecutive years
- Balance Sheet Total: Exceeds EUR 800,000
- Net Turnover: Exceeds EUR 1,600,000
- Number of Employees: Exceeds 50
- if a company is a capital company of a public entity, subsidiary thereof or a public-private capital company within the meaning of the Law on Governance of Capital Shares of Public Entity and Capital Companies
- Companies in the financial sector, such as banks and insurance companies
- Publicly traded companies
- Parent companies with controlled subsidiaries (50% investment or more)
- Companies preparing financial statements according to International Financial Reporting Standards
A company may also conduct an audit even if it is not legally required.
