In the Czech Republic, the audit of financial statements has been a statutory obligation since 1 January 2026, primarily for medium-sized and large accounting entities and public-interest entities. The purpose of the audit is to provide independent assurance that the financial statements present a true and fair view of the company’s financial position and comply with applicable legislation.
Audits are governed mainly by Act No. 563/1991 Coll., the Accounting Act, and Act No. 93/2009 Coll., on Auditors.
When is an audit mandatory
Pursuant to Section 20 of the Accounting Act, an accounting entity is required to have its ordinary or extraordinary financial statements audited if it qualifies as a medium-sized or large entity or meets other statutory conditions.
Until 31 December 2025, the audit obligation was assessed based on the former thresholds (e.g. assets exceeding CZK 40 million, turnover exceeding CZK 80 million, more than 50 employees). From 1 January 2026, these rules change – small accounting entities are generally not subject to a mandatory audit, except for public-interest entities.
The auditor is appointed in accordance with Section 17 of the Auditors Act, and the audit engagement must be concluded with an auditor registered in the Chamber of Auditors of the Czech Republic.
Obligation to complete the audit on time
The audit is performed after the end of the accounting period and must be completed and published in the Commercial Register no later than one year after the balance sheet date, including the auditor’s opinion, which forms part of the annual report.
Administrative sanctions for failure to conduct or timely complete the audit
If an accounting entity is required to conduct an audit and either fails to do so or completes it after the statutory deadline, it may face several types of sanctions:
1) Fine under the Accounting Act
A failure to have the financial statements audited constitutes an administrative offence under the Accounting Act. This is typically sanctioned by a fine imposed by the tax authority pursuant to Sections 37 et seq. of the Accounting Act.
The maximum fine may reach up to 3% of the entity’s total assets; in practice, fines often range from tens of thousands to hundreds of thousands of CZK, depending on the seriousness and recurrence of the breach.
2) Fine imposed by the Commercial Register Court
In addition to sanctions under the Accounting Act, the accounting entity may also face penalties from the Commercial Register Court. Under Section 104 of Act No. 304/2013 Coll., on Public Registers, the court may impose a procedural fine of up to CZK 100,000 if the entity fails to file its financial statements in the Collection of Deeds or files them without the required auditor’s opinion.
In cases of repeated non-compliance, the court may even initiate proceedings to dissolve the company with liquidation.
3) Other administrative proceedings
The tax authorities and other supervisory bodies (e.g. the Czech National Bank in the case of regulated entities) may initiate additional administrative proceedings for breaches of statutory obligations, potentially resulting in further fines or sanctions.
Practical consequences of underestimating the audit
Beyond formal penalties, failure to comply with audit obligations can have serious practical consequences:
- Failure to publish an annual report with an auditor’s opinion may lead to the rejection of financial statements in credit approval processes or negotiations with business partners (loss of credibility).
- Banks and investors often require audited financial statements as a condition for financing.
- The reputation of the company and its management may suffer — the absence of an audit is perceived as a risk indicator and may disadvantage the company in the market.
- For regulated entities (e.g. entities supervised by the Czech National Bank), the absence of an audit may increase the risk of further sanctions, restrictions on activities, or revocation of licenses.
