Gap analysis on national legislation (Audit)

21-25 January 2019



A team of Greek specialists with expert knowledge in auditing met with representatives of SARAS and the National Bank of Georgia to discuss Georgia’s legal framework for auditing and its compliance with the EU legislation, specifically with Directive 2006/43/EC as amended by 2014/56/EU and Regulation 537/2014.

After getting acquainted with the legal regulations governing the work performed by SARAS, the experts together with colleagues from SARAS engaged in analyzing the EU legislation article by article to identify any gaps between national legislation and the EU acquis.  



The gap analysis showed that the EU directives were incorporated into national legislation, but the incorporation of the Regulation applied only to the statutory audit of commercial banks and not to the audit of other PIEs resulting in a lack of consistency of national legal framework.

Other important gaps are summarized below.


Gaps related to the Directives

  • Definitions, especially definitions of the competent authority, audit firm, key audit partner, third countries, etc.
  • Delegation issues concerning the delegation to professional bodies on professional certification exemptions and continuous education
  • EU provision for the statutory audit of consolidated financial statements
  • Systems of penalties (factors to consider when sanctioning, measures, reporting mechanism)
  • International cooperation
  • Other gaps on issues such as Public Register, approval and withdrawal of statutory auditors (good repute), outsourcing of audit functions, quality assurance review, professional secrecy, dismissal of statutory auditor, and information for competent authorities


Gaps related to the Regulation

  • Audit fees
  • Engagement Quality Control Review
  • Prohibition of non-audit services
  • Additional report
  • Transparency report
  • Audit committees (composition, independence of members, appointment of statutory auditors or audit firms, monitoring and communication with competent authorities)
  • Rotation issues (cooling off period of auditor)