According to the Accounting Law (Section 155), it is necessary to perform an audit for every enterprise that has a double-entry bookkeeping, but some businesses may be exempted from this requirement.

Audit is not necessary if the average of the company’s net sales revenue in the past two financial years did not exceed HUF 300 million, and the number of employees did not exceed 50 people.

This exemption, however, cannot be applied to organizations specified in the law, so the following businesses do have an audit obligation:

• businesses with a double-entry bookkeeping where audit is required by law
• special savings financial institution (‘takarékszövetkezet’)
• businesses included in consolidation
• Hungarian branches of corporations with a registered office outside of Hungary, except for the Hungarian branches of corporations whose registered office is in the European Union. Hungarian branches are also exempted if the registered office of the corporation is not in a European Union member country, but the country’s legal requirements for preparing, auditing, depositing and publishing annual financial statement are in line with the European Union’s applicable regulations. (These countries are listed on the Unified Government Portal.)
• businesses which, for some exceptional reasons, deviate from the provisions of the Act on Accounting in order to present a true and fair view
• economic entities with public interests
• entrepreneurs who have public debt exceeding HUF 10 million and is overdue for more than 60 days on the balance sheet date of financial year

When an entity is established with no legal predecessor and exemption based on thresholds is applied, the expected data for the current financial year and, if available, the previous (first) financial year’s data (calculated for the whole year) are to be taken into account if data are missing or are only partially available for either or both of previous two financial years.

Audit can be ordered in other cases as well by the law e.g. audit for the balance sheet of a transformation, tender grants/supports, etc.

Law earlier said that the last financial statement or the interim balance sheet, prepared as per paragraph (6), may have been taken into consideration for six months after the balance sheet date to confirm the shareholders’ equity, unless otherwise specified in a legislative provision. As a result, for financial years in line with the calendar year, the annual financial statement could have been used until 30 June for decisions on interim dividend.

This, however, was overwritten by the Civil Code which no longer contains the provisions of the 6-month-deadline for considering the financial statement or the interim balance sheet.

Section 3:186, and 3:263 of the Civil Code, as well as Section 21 (1), and Section 39 (4) state that

Based on the authorization of the members’ meeting, general assembly or the charter, the board of directors may decide on the payment of interim dividends between the approval of two consecutive financial statements if

• the interim balance sheet confirms that the company has sufficient funds to pay interim dividends;
• the amount to be disbursed does not exceed the sum of the retained earnings and taxed profit presented in the interim balance sheet; and
• the disbursement of interim dividends does not lead to the decrease of the adjusted equity below the registered capital of the company.

The proposal for the disbursement of interim dividends shall be submitted by the managing director or the board of directors. If a supervisory board operates in the company, the proposal of the managing director shall require the consent of the supervisory board.

If the data of the annual financial statement prepared after the distribution of interim dividends shows that disbursement of dividends is not possible, the members must repay the interim dividends to the company.

According to Section 14(3) of Act C of 2000 on Accounting: “The accounting policy of an economic entity shall be defined in writing on the basis of the basic principles and valuation rules laid down in this Act, consistent with the characteristics and circumstances of the economic entity and laying down the methods and means necessary for the implementation of this Act.”

Section 14(5) of the Accounting Law requires the preparation of the following four policies:

• the policy of taking and keeping inventory of assets and liabilities;
• the policy of the valuation of assets and liabilities;
• the internal regulations for product cost calculation;
• the cash handling policy.

Companies preparing simplified financial statement and entities not reaching the threshold defined by law are exempt from the obligation to prepare the internal regulations for product cost calculation.

Newly founded entities are required to prepare accounting policy and other regulations within 90 days from the date of foundation. In case of legal amendments, changes must be incorporated into the accounting policy within 90 days after the amendment takes effect.

The preparation and the amendment of the accounting policy is the responsibility of the authorized representatives of entities.