Audit of Financial Statements

The audit of financial statements is an independent examination of financial statements or consolidated accounts of an enterprise, institution or organisation and provision of an opinion, which indicates whether the financial statements or the consolidated financial statements in all material respects give a true and fair view of the financial position of the enterprise, the results of its activities, and cash flows.

The goals of the audit are to establish whether:

• the financial statements of the enterprise give, in all material respects, a true and fair view of the financial position of the enterprise, the results of its operations, and cash flows;
• the data given in the annual report (consolidated annual report) or activity report of the enterprise (in case they are developed following the requirements of legal acts) correspond to the data presented in the annual financial statements (consolidated annual financial statements).

Regulation and application

The Republic of Lithuania Law on the Audit of Financial Statements regulates the audit of financial statements. In carrying out the audit of financial statements for the reporting periods starting on 1 January 2009 upwards, auditors must follow the International Standards on Auditing and the Code of Ethics for Professional Accountants.

Pursuant to the Law on Financial Statements of Entities, the audit is compulsory for:

• state and municipal enterprises;
• public enterprises;
• public limited companies;
• private limited companies, where the shareholder is the State and (or) municipality;
• private limited companies, cooperative companies (cooperatives), general partnerships and limited partnerships, where all full members are public limited companies or private limited companies, in case on the last day of the financial year at least two their indicators exceed the following rates: 
  • sales net income during the reporting financial year is EUR 3 500 000;
  • assets value indicated in the balance sheet amounts to EUR 1 800 000;
  • average listed number of staff during the financial reporting year is 50.
•  The audit of consolidated financial statements must be carried out in enterprises drawing up consolidated financial statements.

The Authority of Audit, Accounting, Property Valuation and Insolvency Management under the Ministry of Finance of the Republic of Lithuania carries out the function of public oversight of auditors and audit entities.