Higher thresholds and changes in audit: What does the amendment mean for your company?

In this article, we focus on the amendments to the Accounting Act and the Auditors Act, published on 2 September 2025. The most significant change affecting many entities is the increase in thresholds for the classification of accounting entities and the revision of statutory audit requirements. While the amendment generally becomes effective on 1 January 2026, selected rules, including those related to the classification of entities have been effective since 3 September 2025.

Changes to the classification criteria for accounting entities

The new thresholds will already be applied when assessing whether the relevant criteria are met as at the balance sheet date for accounting periods starting on or after 1 January 2024 and ending on or after 31 December 2024. When determining the category of an entity, the criteria must be assessed over two consecutive accounting periods. The changes relate to total assets and annual net turnover, while the average number of employees remains unchanged.

The new thresholds are as follows:

Micro entity

An entity qualifies as a micro entity if it does not exceed at least two of the following three thresholds:

• total assets of CZK 11 million,
• annual net turnover of CZK 22 million,
• average number of employees: 10

Small entity

A small entity is one that is not a micro entity and does not exceed at least two of the following thresholds:

• total assets of CZK 120 million,
• annual net turnover of CZK 240 million,
• average number of employees: 50

Medium-sized entity

A medium-sized entity is one that is neither a micro nor a small entity and does not exceed at least two of the following thresholds:

• total assets of CZK 600 million,
• annual net turnover of CZK 1,200 million,
• average number of employees: 250

Large entity

A large entity is one that exceeds at least two of the thresholds set for medium-sized entities, i.e.:

• total assets exceeding CZK 600 million,
• annual net turnover exceeding CZK 1,200 million,
• average number of employees exceeding 250

Changes in statutory audit thresholds

Changes in the classification of accounting entities have a direct impact on the requirement for statutory audits. Under the new rules effective from 1 January 2026, small entities will no longer be subject to a statutory audit. The audit requirement will primarily apply to medium-sized and large entities. The classification is assessed based on meeting at least two out of the three criteria over two consecutive accounting periods.

In simple terms, small entities will no longer be required to have their financial statements audited for accounting periods starting on or after 1 January 2026, unless the obligation arises for other reasons. This change does not apply to public-interest entities, for which an audit remains mandatory regardless of these criteria.

We recommend verifying which category your entity currently falls into and for which accounting period the audit requirement is being assessed.

In this context, we can assist you with:

• assessing the correct classification of your entity under the new thresholds,
• analysing the impact of the amendment on your company,
• evaluating whether a statutory audit requirement arises or ceases to apply,
• adjusting internal processes in response to legislative changes,
• audit preparation or arranging the audit itself

If you are unsure how these changes apply to your specific situation, please do not hesitate to contact us. We will be happy to walk you through the implications and propose a suitable solution.