The 2015 Auditing Law that was put in effect from 1 January 2016 has the following six categories of entities which require annual statutory audits:
- All entities required under the Accounting Law to apply full IFRS to their financial statements (see above)
- Entities presenting consolidated financial statements
- Entities that are being restructured, liquidated or planning to sell all their assets at auction
- Entities with foreign investment
- Not-for-profit foundations operating for the public benefit, as defined under Article 36.2 of the Civil Code
- Any other entities or organizations required to be audited under an international treaty to which Mongolia is a party
By the Auditing Law, there’s a mandatory rotation of auditors every five years, where the previous auditors are not allowed in the same field for three years. It is an increase from previous iteration of three years rotation requirement. Audit and non-audit services cannot be obtained from the same provider at the same time, and in order for a statutory audit opinion to be recognized in Mongolia, the auditing firm must hold a local audit license.
In private sector, banks, insurance companies and non-bank financial institutions (NBFIs) are subject to the strictest audit deadlines, which must have their annual financial statements audited and published by 31 March. The Auditing Law stipulates a deadline of 30 April for other private entities; however, interpretation advice from the Ministry of Finance to audit firms was that, in order to be consistent with the timeframe allowed for changes to tax filings, entities may instead submit unaudited financial statements by 30 April in conjunction with an auditor’s ‘progress letter’ stating that the auditor is in possession of an audit. Then, audited financial statements are expected to be accepted until December 31. In addition to the periodic legislative audit, audited financial statements may also be required to satisfy funding levy or restructuring criteria. For instance, before an initial public offering ( IPO) or the company is disposed of.
