Estonia’s business-friendly environment includes a clear framework for financial audits and reviews. Understanding what an audit involves, when it’s required, and how it differs from a review is crucial for entrepreneurs and investors.
In this guide, we’ll explain audit vs review in Estonia, outline the Estonian audit criteria for mandatory audits and reviews, and discuss the value of voluntary audits. We’ll also touch on how companies like Eesti Firma can assist with audit and review services in a helpful.
What is a Financial Audit (and Who Performs It)?
A financial audit is an independent examination of a company’s financial statements by a certified auditor. The auditor (a licensed professional or audit firm) reviews the company’s accounts, transactions, and internal controls to ensure the financial statements are accurate and comply with accounting standards and laws. In practice, audits involve checking financial records and processes in detail. They play a crucial role in providing assurance and transparency – giving owners, investors, and regulators confidence that the company’s financial reports are trustworthy. By catching errors or inconsistencies, audits help maintain integrity in business finances and can even improve internal processes.
Independent Auditors Ensure Trust and Transparency
In Estonia, audits must be performed by independent certified auditors. The law requires that an auditor be formally appointed (usually by the shareholders) and that the auditor is completely independent of the company’s management. This ensures the audit’s objectivity. Estonian auditors are typically members of the Auditors’ Association and must follow professional standards. In short, an audit gives a high level of assurance (“reasonable assurance”) that the financial statements present a true and fair view.
Audit vs. Review: What’s the Difference?
Aside from full audits, Estonian law also recognizes financial reviews (sometimes called audit reviews or limited audits). A review is a lighter form of audit – an assurance engagement where the auditor performs fewer procedures (mostly inquiries and analytical checks) instead of an in-depth inspection. Because a review is more limited in scope, it provides only limited assurance, which is a lower level of confidence in the financial statements than a full audit provides. In practical terms, an auditor’s review report will state that nothing has come to the auditor’s attention that indicates material mistakes, whereas a full audit report provides a positive opinion on the financial statements.
Comprehensive or Light-Touch: Audit and Review Explained
Key differences between an audit and a review in Estonia include the depth of work and the assurance level. An audit is more comprehensive (and usually more costly and time-consuming), involving detailed testing of transactions and balances. A review is quicker and cheaper, involving primarily high-level financial analysis and discussions with management. Because of this, an audit offers stronger confidence to stakeholders that the books are accurate, whereas a review offers moderate confidence that no major issues were found. Companies that are not required by law to undergo a full audit might opt for a review as a middle-ground – it’s less rigorous but still adds credibility.
When Are Audits or Reviews Required in Estonia?
Estonian law (specifically the Accounting Act) sets clear criteria for when a company must have its accounts audited or reviewed. These criteria are based on the size and financial results of the company. In general, larger companies must undergo a full audit, while mid-sized companies may only need a review, and small companies have no mandatory requirement. The thresholds are defined in terms of annual sales revenue, total assets, and number of employees. If a company exceeds certain thresholds, an independent audit or review becomes mandatory.
Mandatory Audit Criteria
A full audit is required if a company exceeds at least two of the following three thresholds at the end of the financial year:
- Revenue (turnover): €5 million and above
- Total assets: €2.5 million and above
- Average number of employees: 50 and above
If your company’s annual report shows two of those figures above the limits, a statutory audit by a certified auditor is required. Additionally, an audit is required if any one of those indicators is extremely high – specifically, if one of the following is exceeded:
- Revenue: over €15 million (regardless of other figures)
- Total assets: over €7.5 million
- Employees: 180 or more
These “one criterion” rules ensure that even if a company is only exceptionally large in one dimension (say, very high revenue), it will still be audited for the sake of financial transparency.
Mandatory Review Criteria
A limited review (instead of a full audit) is required for mid-sized companies that pass lower thresholds. A company must undergo an audit review if it exceeds at least two of the following three thresholds:
- Revenue: €2 million and above
- Total assets: €1 million and above
- Average number of employees: 24 and above
Similarly, if just one of these is far above normal size, a review is mandatory when any one of the following is exceeded:
- Revenue: over €6 million
- Total assets: over €3 million
- Employees: 72 or more
In summary, exceeding the smaller set of thresholds triggers a mandatory review, whereas exceeding the higher set triggers a mandatory audit. These thresholds were updated in 2024 to ease the burden on companies – they were raised by about 25% to reduce how many businesses need audits or reviews. As a result, many medium-sized firms now qualify for a review instead of a full audit, and some smaller ones have no obligation at all.
These criteria generally must be exceeded for two consecutive years before the obligation kicks in. If your company crosses the line just in one year (e.g., a one-time spike in revenue), you typically won’t be forced to audit immediately; however, if it happens two years in a row, then an audit or review becomes mandatory. This rule prevents companies from falling in and out of audit requirement due to temporary fluctuations. Also note that certain companies must always be audited regardless of size – for example, all public limited companies (AS) with more than 2 shareholders, public interest entities, certain foundations, and government-owned companies are subject to statutory audits by law.
The Value of Voluntary Audits (Even When Not Required)
Many Estonian OÜs (private limited companies) are small enough that they don’t legally need an audit or review. However, some choose to do a voluntary audit or review for the benefits it can bring. Even if not required, an audit can be a “badge of credibility” for your business. Here are a few ways a voluntary audit or review can help:
- Building Trust: Audited financial statements give investors, banks, and partners greater confidence in your company’s financial health. It shows you have nothing to hide and operate to high standards of transparency. This can be helpful if you’re seeking loans or investors – the audit report adds credibility.
- Improving Financial Discipline: The audit process often uncovers areas to strengthen bookkeeping or internal controls. Even a review can highlight inconsistencies. By voluntarily undergoing this process, you might identify efficiencies or correct small issues before they become big problems. It’s a useful “check-up” for the business.
- Preparing for Growth: If you plan to scale up, go public, or attract major investors, you’ll eventually need audited accounts. Doing voluntary audits ahead of time helps you prepare for larger compliance requirements down the road. It can also make due diligence easier if you decide to sell the company or raise significant funding.
- Enhancing Reputation: In certain industries or international deals, having audited financials can set you apart. It signals professionalism and can be a marketing point when dealing with foreign partners or government tenders.
In short, voluntary audits or reviews can be strategic. As one source notes, companies may choose to undergo audits for benefits like enhancing credibility, preparing for growth, or attracting investment. While there is a cost to an audit, the return in trust and insight can outweigh the expense, especially for companies with big ambitions.
Getting Help: How Eesti Firma Supports Audits and Reviews
Navigating the audit process in Estonia can feel overwhelming — from gathering the right documents to finding a licensed auditor, especially given how high the demand is. That’s exactly where we come in. At Eesti Firma, we help businesses manage audits and reviews as part of our broader support services.
We also provide a wide range of accounting services, from daily bookkeeping to tax reporting. One of our core areas of expertise is preparing annual reports in full compliance with Estonian legal standards — something every company registered in Estonia must do. This gives us a strong foundation to support our clients before, during, and after the audit process.
Audits Don’t Have to Be Stressful — Let’s Simplify It
Over the years, we’ve worked with companies from various industries, helping them organize and go through audit reviews smoothly. We assist with preparing financial statements, making sure your accounting is in order before the auditor arrives, and coordinating directly with certified auditors on your behalf.
Financial audits and compliance reviews are part of what we do every day. Whether your audit is required by law or you’re doing it voluntarily, we make sure the process is clear, efficient, and fully compliant with Estonian regulations. In our experience, an audit doesn’t have to be a burden — with the right support, it becomes a valuable opportunity to boost your company’s credibility and financial transparency.
