An amendment has been made to the Order of the Head of SARAS on the Rule for Monitoring Quality Management System

An amendment has been made to the Order No. ნ-9 of 12 July 2017 of the Head of the Service for Accounting, Reporting and Auditing Supervision on the Rule for Monitoring the Quality Management System.

Since it is important for Georgia to come closer to the best practices of the world (including that of the European Union) in order to promote the improvement of audit quality and to simplify the authorization system, according to the decision of the Head of SARAS of 16 May 2024, as of 1 June 2024, a change will be made in the quality categories assigned to auditors/audit firms. In particular, auditors/audit firms registered in the State Registry of Auditors (www.saras.gov.ge) will be divided into two groups - statutory auditors/audit firms and non-statutory auditors/audit firms. Within the group of statutory auditors/audit firms, there will be two sub-groups - statutory auditors/audit firms that do not have PIE audit authority and statutory auditors/audit firms that also have PIE audit authority.

I and II category audit firms (taking into account their current authority) are defined as statutory audit firms providing audit services to PIEs; III and IV category audit firms are defined as statutory auditors/audit firms (without the authority to provide audit services to PIEs); and V category audit firms are defined as non-statutory auditors/audit firms (also taking into account their current authority). Until 1 January 2028, SARAS will ensure the re-monitoring of auditors/audit firms which have the final assessment of the fourth category as of 31 May 2024, so that the groups of statutory audits (except for those of PIEs) does not include audit firms/auditors with different authorities for a long time (IV category auditors/audit firms are not authorized to perform audits for enterprises/groups of the first category).
It should be noted that the transition to the new classification will take place at the same time for all audit firms/auditors in order to avoid overloading the Registry with the authorities of audit firms/auditors and thus confusing users with the information in the Registry.

The changes will also apply to auditors/audit firms with the "without category" status. In particular, auditors/audit firms with the "without category" status, as of 31 May 2024, will be defined as statutory auditors/audit firms, and those that submit to SARAS, no later than 1 January 2025, information on at least 2 completed (finally set documentation) audit engagements of financial statements after the entry into force of the law will retain the status of statutory auditors/audit firms until the monitoring is carried out by SARAS and the relevant results are published. Auditors/audit firms that have not completed (finalized) at least 2 audit engagements of financial statements and/or have not provided SARAS with information on at least 2 completed (finalized) audit engagements of financial statements in the post-enactment period will be defined as non-statutory auditors/audit firms (subject to relevant authority/restrictions) from 1 January 2025.

In addition to the changes related to the cancellation of the above-mentioned categories and the division of auditors/audit firms into statutory (including that of the PIEs) and non-statutory auditors/audit firms, the amendment provides for other important issues (including the consideration of other audit engagements in addition to the financial statements audit engagements in the monitoring plan) about which you can read more in the Decision of the Head of SARAS of 16 May 2024 on the Amendment to the Order No. ნ-9 of 12 July 2017 of the Head of SARAS on the Rule for Monitoring the Quality Management System.