Audit and review of financial statements

An independent opinion that builds trust

An independent audit gives your financial statements the credibility that banks, investors, donors and public institutions expect. Fryti Audit performs audits and reviews in accordance with the International Standards on Auditing (ISA), with every engagement led by a licensed statutory auditor.

The firm is licensed by the KCFR (Kosovo Council for Financial Reporting) and is a member of SCAAK. Audit engagements are led by Diedon Berisha, statutory auditor. This means the opinion you receive is issued by a firm registered in Kosovo and recognised by the institutions — a condition the law itself imposes for audited financial statements.

Our reporting is clear and objective: alongside the opinion you also receive a management letter setting out our findings and practical recommendations for strengthening your internal controls. We work with clients across Kosovo — from Peja to Pristina, Prizren and Ferizaj — mainly online through a shared document folder.

What the service covers

• Statutory audit of annual financial statements under ISA
• Review engagements on financial statements under the ISRE standards
• Special-purpose audits and donor-funded project audits
• Audit of consolidated financial statements for groups of companies
• Assessment of internal controls and risks
• Management letter with findings and recommendations
• Reporting under ISA and the IFRS and IFRS for SMEs frameworks

When is an audit of financial statements mandatory

The legal basis is Law No. 06/L-032 on Accounting, Financial Reporting and Audit, in force since 1 January 2019. It divides commercial companies into four categories — micro, small, medium-sized and large — based on three criteria measured on the last day of the preceding financial year: the balance sheet total, net turnover and the average number of employees.

For small and medium-sized companies, the threshold that decides everything is net annual turnover of 4.000.000 €: above that figure the statements must be accompanied by an audit opinion and a compliance statement; up to that figure a review report from an independent auditor is sufficient. Large companies are always audited, as are public interest entities (PIEs) — financial institutions licensed by the CBK, publicly and socially owned enterprises, and entities with securities traded on a regulated market.

Newly established companies are classified on the basis of first-year data extrapolated to an annual basis, while groups are classified on a consolidated basis. If you want to check for yourself where your business falls, use the company classification calculator under the KCFR rules — it shows you the category and the reporting requirement within seconds.

Audit or review — which one do you need

Both are engagements performed by an independent auditor, but the level of assurance they provide is different. That difference determines how much work is required, what report you receive at the end and whether the institution asking for it will accept it.

Audit — reasonable assurance

An audit is carried out in accordance with the International Standards on Auditing (ISA) and provides reasonable assurance — the highest level of assurance that is practically attainable. The auditor tests transactions and balances, requests confirmations from banks, customers and suppliers, observes the stock count, examines contracts and evaluates internal controls. The outcome is an audit opinion expressed in positive form: a statement that the financial statements present fairly, in all material respects, the financial position and performance.

Review — limited assurance

A review is carried out in accordance with the International Standards on Review Engagements (ISRE) and provides limited assurance. The procedures consist mainly of analytical procedures and inquiries of the responsible personnel, without extensive testing of evidence. The conclusion is expressed in negative form: the auditor states that nothing has come to their attention that would cause them to believe the financial statements were not prepared in accordance with the applicable framework. The engagement is shorter and less expensive, but the assurance is lower.

When the bank, the donor or a tender requires it

Beyond the legal obligation, many businesses are audited because someone else requires it. Banks ask for audited financial statements for larger loans, because the auditor's opinion reduces their assessment risk. Donors frequently require a project audit, with separate reporting on the funded expenditure. In tenders, the qualification documents may call for audited financial statements for recent years. The first step is to read the requirement precisely: where it says audited financial statements, a review is not enough. If you are not sure, send us the requirement and we will tell you which engagement satisfies it.

The financial reporting framework and the role of the KCFR

The KCFR — the Kosovo Council for Financial Reporting — is the institution that oversees financial reporting and auditing in Kosovo. It licenses statutory auditors and audit firms, maintains the public registers of certified accountants, adopts the reporting standards applied in the country, issues guidance for categories such as micro-enterprises, and receives and publishes annual financial statements. An audit opinion is accepted only if it comes from a firm certified by the KCFR and registered in Kosovo.

Which standards apply

• Large companies and PIEs — full IAS/IFRS, with a management report and a compliance statement.
• Small and medium-sized companies — IFRS for SMEs.
• Micro-enterprises — KCFR guidance, with three classes based on net annual turnover: below 50.000 € an income statement only, 50.000–300.000 € also a statement of financial position on the accrual basis, above 300.000 € full financial statements under IFRS for SMEs.

All classes of micro-enterprises must disclose the average number of employees, the total assets and liabilities at the closing date of the period, and the basis of preparation. If you need help with preparing the statements themselves ahead of the audit, that is covered by our accounting service.

Who signs the financial statements

In large companies the statements are signed by the chief executive officer and the chief financial officer; if the latter is not a certified accountant, a certified accountant from the public register signs as well. In medium-sized companies and groups they are signed by the chief executive officer, the finance director and/or the certified accountant. For first-class micro-enterprises the signature of the chief executive officer or of the owner is sufficient.

Deadlines and the consequences of not filing

Audited financial statements are submitted to and published by the KCFR no later than 30 April of the following year, with a copy also going to the ministry responsible for trade and industry. For audited consolidated financial statements the deadline is 30 June. Fines for failure to file or for late filing range from 1.000 € to 20.000 €, with the higher amounts imposed on large enterprises.

In practice, the 30 April deadline means the engagement has to start much earlier: third-party confirmations and the clearing up of findings take weeks. We recommend making first contact immediately after the financial year closes, or even before it where the business holds inventory that needs to be observed. You will find the other deadlines throughout the year in the tax deadline calendar.

How we carry out the audit

1. Planning and understanding the business — we get to know the business model, the sector and the key transactions; we set materiality and the document request list.
2. Risk and internal control assessment — we identify the areas with the highest risk of material misstatement and test the controls where we intend to rely on them.
3. Fieldwork procedures and confirmations — we test transactions and balances, send confirmations to banks, customers and suppliers, observe the stock count and examine contracts.
4. Going concern assessment — we analyse the company's ability to continue operating, taking into account liquidity, liabilities and events after the reporting date.
5. Reporting and the management letter — we discuss the findings, issue the audit opinion and deliver the management letter with recommendations for the year ahead.

The same process, with more limited procedures, applies to review engagements as well. For clients who also want to see the position from a management perspective, we combine the audit with financial analysis of the key indicators.