The EKTK has reached out to the Ministry of Finance, Ministry of Economic Affairs and Communications as well as the Ministry of Justice regarding its dissatisfaction with the obligation thresholds for mandatory audits and reviews of annual accounts.

The Ministry of Finance submitted a bill to the government this July proposing a 25 percent increase in these thresholds. The chamber, however, is not satisfied with this hike. They believe the threshold hike should be significantly higher – at least 50 percent.

The EKTK pointed out that while the Finance Ministry justified the 25 percent increase by citing the 27.7 percent rise in the EU's consumer price index (CPI) over the past decade, Estonia's own actual figures should be considered instead. Since 2016, when the thresholds in question were last raised, the CPI in Estonia has risen by 57.5 percent through the end of this August.

"Therefore it is entirely reasonable to raise the thresholds for mandatory audits and reviews in terms of revenue or income and assets by at least the change in the CPI," said EKTK director general Mait Palts and Association of Estonian Accountants (ERK) board chair Margus Tammeraja.

They noted that new thresholds are unlikely to be changed for at least the next five years, given that the most recent increase was more than eight years ago, and economic forecasts suggest that the CPI will continue to rise in the years ahead as well. They also suggested agreeing to these thresholds being revised again in five years' time.

According to the Chamber of Commerce and Industry, the availability of audit services has worsened. Many business owners have a hard time finding a certified public accountant (CPA), and there have even been instances of companies failing to submit their annual accounts on time as a result.

"The problem is likely due on one hand to the fact that the audit and review thresholds haven't been changed for years, resulting in an increase in the number of businesses subject to audit obligations," Palts and Tammeraja pointed out.

Furthermore, CPAs have been and are about to be assigned additional duties, such as auditing sustainability reports, which will further reduce the availability of their services. The number of CPAs has decreased as well.

"Increasing audit and review thresholds to a greater extent than planned would help alleviate, if not eliminate, the availability issue for audit services," the EKTK found.

They highlighted that higher thresholds would reduce business owners' workloads and costs as well as make it easier for businesses to find a CPA. This would, in turn, also reduce the number of businesses submitting their annual reports to the commercial register late.

ERR reported at the beginning of the year that many businesses were required to audit their financial results for the first time, as by law, audit obligations extend to those who meet two of the three following conditions: revenue of €4 million, assets of €2 million and 50 employees. Audits are always required for companies with revenue exceeding €12 million. With prices rising and reporting obligation thresholds unchanged in years, the number of businesses meeting these criteria has grown rapidly in recent years.

Last June, the Estonian Auditors' Association had likewise proposed to the finance minister to rapidly raise these thresholds. The state, however, did not find the opportunity to do so.

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