With the start of a new fiscal year, many Mongolian companies will be concerned with finalizing annual audited financial statements.
In Mongolia, a legal entity is entitled to conduct auditing activities only after obtaining a license to engage in auditing activities. At the moment, there are approximately 130 auditing entities which have a valid license to perform auditing services.
Licensed auditing legal entities shall carry out the auditing of financial statements, review of financial statements, and relevant financial services. Furthermore, these licensed companies may engage in specialized tax consulting service, asset valuation, financial and accounting consulting service and training after acquiring relevant licenses.
All of you may aware that legal entity’s financial statement is required to be audited in compliance with the legislation of Mongolia. The following business entities or organizations is required to have mandatory auditing of financial statements:
- business entities or organizations to follow the International financial standard;
- business entities or organizations develop consolidated financial statements;
- business entities or organizations going under reorganization or liquidation or selling all their properties through auction;
- foreign invested business entities or organizations;
- fund; and
- other business entities or organizations required to have mandatory auditing of their financial statements under the international treaties which Mongolia is a party.
Most business entities or organizations, except joint venture company and banks, are obliged to have their annual financial statements within April 30 of the following financial year. As for business entities or organizations going under reorganization and liquidation or selling all their properties through auction, their financial statement is required to be audited one month prior to implementation of such activities.
The legal entity that is responsible for mandatory auditing shall be liable to impose a fine in the amount of MNT 1, 000,000 and to compensate a damages for failure to performing audit on its annual financial statement or not fulfilling its obligation to perform audits in its annual financial statements within timeframe set by the legislation.