Chamber of Hungarian Auditors

Member | Established: 1997 | Member since 1992

The MKVK was established in 2008 by the Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors. The act prescribes that membership of the MKVK is mandatory for all auditors in the jurisdiction along with the institute’s responsibilities. The MKVK is responsible for (i) providing high-quality services and developing auditors’ professional knowledge and competence on a continuous basis; (ii) applying and observing national auditing standards and principles; (iii) adopting professional and ethical standards of behavior; (iv) issue certificates and register statutory auditors; (v) make arrangements for operating the system of quality assurance in connection with statutory audits; (vi) monitor the activities of auditors and audit firms and take the measures necessary upon learning of a registered statutory auditor or audit firm being engaged in any unlawful activity or conduct, or of any infringement of the Chamber’s statutes or the Chamber’s rules of self-governance; and (vii) promote public recognition of the profession, allowing auditors to help achieve Hungary’s economic objectives. 

In addition to being an IFAC Member, the MKVK is also a member of Accountancy Europe. 

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Statements of Membership Obligation (SMO)

The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.

Methodology
Last updated: 11/2018
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SMO Action Plan

Status of Fulfillment by SMO

• SMO 1: Quality Assurance

  The Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors establishes the creation of a quality assurance (QA) review system for all mandatory audits in the jurisdiction. As of 2013, the Auditors’ Public Oversight Authority (the Authority) carries out reviews for auditors of public interest entities every three years while inspections of non-PIEs are done every six years by the MKVK.

  The MKVK has operated its QA review system since 2003 and reports that it has adopted all relevant standards such as ISQC 1 and in an effort to align with international best practices, it has reviewed, assessed, and updated its QA review system to align with SMO 1 requirements. Additionally, with the passage of the EU Audit Reform in 2016, the MKVK states that the QA review system has been further strengthened and linked to a larger range of possible sanctions.

  The institute has established a Quality Control Committee that is responsible for the operations of the QA review system. The QCC prepares an annual QA plan that is then made publicly available on the MKVK’s website. After each cycle, the QCC will write and publish an annual report on the results and findings of the QA reviews. Based on these findings, the QCC will recommend training topics to the institute’s Education Committee for inclusion in educational materials and courses. The QCC will also prepare guidance to support the pre-inspection process, such as questionnaires, toolkits, a QA manual, as well as the post-inspection process with materials on common challenges and significant changes to standards.

  In addition, the QCC trains QA reviewers by organizing a mandatory, annual conference for quality controllers. Reviewers receive training during this time from the QCC, legal, and information technology experts of the MKVK.

  Lastly, the institute has recently transitioned to an electronic sample selection system and enhanced the data collection and analysis between its annual reporting system and the sample selection system. The new software supports the QA review process by storing electronic questionnaires and on-site inspection forms and can provide statistics and analytics to improve and target training and educational initiatives.

  Current Status: Sustain

• SMO 2: International Education Standards

  The Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors establishes the initial and continuing professional development (IPD and CPD) requirements for auditors in Hungary. In order to earn the statutory auditor designation in Hungary and offer auditing services, individuals must first have acquired appropriate higher education and obtained initial practical experience (three years) and passed initial competence examinations (three years’ part-time study). Subsequently, individuals must serve as apprentice auditors under the supervision of an active member of the Hungarian Chamber of Auditors (MKVK) for three years. After this time, candidates may take a final professional and competence examination. The MKVK’s Committee for the Qualification of Chartered Certified Statutory Auditors (OKKT) and the Education Committee are authorized by law to determine the requirements of and implement all aspects of educational programming that leads to the designation.

  As part of maintaining an auditor’s qualification, in 2018, the MKVK increased CPD obligations for its members to 120 hours over three years in order to align with the 2010 IES. The annual CPD programming of the MKVK is approved by the Auditors’ Public Oversight Authority. The institute has implemented several mechanisms in order to ensure that members have a wide range of educational and training opportunities to fulfill their CPD requirements. First, it has established its own, separate training company, the Chamber’s Centre for Education Ltd. Two, the institute maintains a list of approved education providers from whom members can earn CPD credit. Lastly, over the course of 2016—2018, the MKVK has introduced e-learning options as well to support long-distance learning.

  The MKVK reports that its Education Committee reviews programming, preparation of materials, and tendering procedures in order to ensure quality training. The committee will also review feedback on lecturers and host train-the-trainer sessions. Finally, the committee is also apparently monitoring the application of and compliance with IES requirements, which includes a review of the 2015 revised IES, which emphasizes learning-outcomes and competencies in educational programming. For instance, the MKVK is considering whether a practical exam could reflect applicants’ knowledge and skills more realistically than a thesis which is currently presented to the Education Committee after completing an auditor’s apprenticeship under the supervision of an active MKVK member. MKVK is also considering other innovations such as a mock business case with a mock client in order to implement approaches that meet the revised IES requirements.

  Presently, one of the key elements of education programming for auditors is that they must present on the new and/or modified regulations and standards in order to get the mandatory credits. In preparing the educational materials, the MKVK sets learning outcomes and expectations, and focuses on the competencies’ improvement, mainly:

  importance of risk assessment in audit;IT skills’ development in audit software and other supporting tools and methods; andcapability to understand and apply the new regulations in the audit work and comply with all the requirements.

  Current Status: Review & Improve

• SMO 3: International Standards on Auditing

  Auditing standards outlined in Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors are applicable in Hungary. Audits must be conducted in accordance with auditing standards that have generally been accepted internationally—further defined as ISA issued by the IAASB—that are prepared and issued by the Hungarian Chamber of Auditors (MKVK) with approval by the Auditors’ Public Oversight Authority. The MKVK has issued the Hungarian National Audit Standards (MNKS), which are Hungarian translations of ISA, and it has most recently completed translations of the new auditor’s report.

  In addition to the timely translation of ISA, the MKVK maintains and implements annual activities to support its members with the application and implementation of the standards. Through its website, the MKVK provides members with access to a multitude of resources, templates, and other guidance on application of the standards. The institute also issues a monthly Auditor’s Journal to further supplement website announcements. Finally, the MKVK regularly organizes trainings on the standards and hosts discussions between members and the Quality Control Committee to share experiences with the aim of improving members’ quality of audit work.

  Current Status: Sustain

• SMO 4: Code of Ethics for Professional Accountants

  The Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors stipulates that the Hungarian Chamber of Auditors (MKVK) may adopt the rules of professional ethics, taking into consideration the Code of Ethics of the IESBA. These rules are subject to the review and approval of the Auditors’ Public Oversight Authority. The MKVK has developed a Hungarian Code of Ethics which is harmonized with the IESBA Code of Ethics. The IESBA Code of Ethics is to apply to any issues not covered by the MKVK’s Code of Ethics. The MKVK has translated and disseminated the 2016 IESBA Code into Hungarian.

  In addition to the timely translation and publication of amendments to the IESBA Code of Ethics, which permits adjustments to be made to the MKVK’s Code of Ethics, the MKVK maintains and implements annual activities to support its members with the application and implementation of ethical requirements. It will incorporate any changes to the ethical requirements into its training materials and review its CPD programming with the goal of providing practical assistance to members.

  The MKVK has submitted a permission request to translate the Revised and Restructured Code of Ethics for 2018. The Hungarian version of the Restructured Code is expected to be available in June 2019.

  Current Status: Sustain

• SMO 5: International Public Sector Accounting Standards

  In 2013, the Hungarian Ministry of National Economy (MNE) issued Government Order No. 74/2013 to begin reforming public sector accounting. The legislation introduced new amendments and regulations to accompany the standards outlined in within Act C of 2000 on Accounting (the Accounting Act) for public sector entities. The reforms intended to transition public sector entities to an accrual-based accounting system that, according to the European Commission, align closely with the IPSAS. However, the Hungarian Chamber of Auditors (MKVK) states that the Hungarian government has no plans to directly adopt IPSAS.

  With no legal authority to adopt standards in this area, the MKVK reports that it promotes the benefits of IPSAS adoption to the MNE and includes the topic within its annual conference and online courses. The institute also indicates that it will inform the MNE about work undertaken by the IPSASB and stands ready to offer support should the MNE decided to adopt and implement IPSAS.

  In response to members’ requests and needs, the MKVK has begun offering intensive (30 hour) training courses on applicable public sector accounting standards that were introduced in 2014. The course offers an overview of the accounting system, primary accounting tasks, and the reporting requirements based on the new rules in addition to providing practical examples.

  Current Status: Sustain

• SMO 6: Investigation and Discipline

  The Act LXXV of 2007 on the Chamber of Hungarian Auditors, the Activities of Auditors, and on the Public Oversight of Auditors outlines the roles of the audit oversight entity—the Auditors’ Public Oversight Authority (the Authority) which operates under the Ministry of National Economy—and the professional accountancy organization—the Hungarian Chamber of Auditors (MKVK) in regards to investigative and disciplinary (I&D) procedures of auditors. The MKVK may monitor the activities of its members, hear disciplinary cases, and take necessary measures upon discovery of any unlawful activity or conduct. The MKVK’s I&D procedures are applicable for all auditors (both public interest entities and non-PIEs) and are subject to the oversight of the Authority.

  The MKVK has established a Disciplinary Committee that receives complaints of any violations or misconduct. In disciplinary proceedings, the MKVK is represented by the disciplinary commissioner. The disciplinary commissioner is vested with responsibilities to enforce the provisions of the relevant legal regulations, and the provisions of the Chamber’s statutes and rules of self-governance. The disciplinary commissioner conducts—possibly involving experts if necessary—the investigation. Upon completion of the investigation process, the disciplinary commissioner reviews the evidence and decides whether to initiate the disciplinary proceedings. Acting on the disciplinary commissioner’s initiative, the President of the Chamber orders the opening of the disciplinary proceedings in writing. The Disciplinary Committee will conduct the disciplinary proceeding and also impose sanctions as necessary. The disciplinary commissioner has no voting right in the decision-making process of the Disciplinary Committee. Individuals may appeal any decisions to the Presidium of the Chamber. In the event that an appeal at this level is unsuccessful, individuals may bring the decision to an ordinary court within 30 days.

  The MKVK’s Disciplinary Committee will regularly publish decisions, observations, and resolutions throughout the year on its website in order to raise awareness of members’ responsibilities and consequences of non-compliance as well as strengthen public trust in the regulation of the profession.

  Current Status: Sustain

• SMO 7: International Financial Reporting Standards

  Accounting and bookkeeping regulations are contained within Act C of 2000 on Accounting (the Accounting Act) and its statutes as issued by the Ministry for National Economy (MNE). The Accounting Act is in effect Hungarian GAAP. The MNE has harmonized accounting regulations with the EU regulations that require the application of IFRS as endorsed by the European Commission (EU-endorsed IFRS) for financial statements of companies whose securities trade in a regulated securities market and permitted optional application of EU-endorsed IFRS for consolidated accounts of all companies within the scope of the Accounting Act that do not trade in the regulated market. In 2015, the MNE issued a resolution that expanded the application of EU-endorsed IFRS to individual accounts of Hungarian companies, such as financial institutions, companies whose securities trade in the European Economic Area, and companies subject to mandatory audits.

  With no legal authority to adopt accounting standards in this area, the MKVK indicates that it cooperates with the MNE in regards to IFRS adoption and implementation issues. For example, the MKVK had representatives participate in working groups that led to the 2015 resolution expanding IFRS application in the jurisdiction.

  The institute also reports that it raises awareness of the standards and supports implementation by including IFRS within its continuing professional development programs, its annual conference, and online course materials. The MKVK will also include IFRS-related technical issues and news within its Auditor’s Journal. Lastly, the MKVK has included a selection of “IFRS Experts” within its Committee of Technical Experts that can help address IFRS technical inquiries as they are raised by MKVK members.

  Current Status: Sustain

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