New quality control rules for auditors: a more unified and modern framework

On 4 September 2025, a new NGM Decree on audit quality control entered into force, renewing the framework for quality inspections conducted by the public oversight authority (“Könyvvizsgálói közfelügyelet” in Hungarian), aligning Hungarian regulation with EU standards. While the sanction regime remains unchanged, the new decree streamlines procedures and ensures consistency across all types of audits.

The scope of quality control has been broadened: the rules now apply to every chamber member, auditor and audit firm, irrespective of whether they are audit public-interest entities. The authority may also order more frequent inspections based on risk or past performance. The decree defines three inspection types (individual audit engagements, firms’ internal quality management systems and sustainability assurance engagements), reflecting the growing regulatory focus on ESG reporting.

The evaluation methodology is now standardized and more transparent. Results depend on the proportion of “yes” responses in structured questionnaires: 90–100% is “compliant,” 70–89.99% “compliant with remarks,” and below 70% “non-compliant.” A “no” to a key (veto) question automatically leads to a “non-compliant” result. Unlike the former system, which allowed discretionary adjustments, the new approach ensures uniform, objective assessments across all engagements. The questionnaires have been decoupled from the legal text and will be published annually on the government portal by 31 March. This allows for timely updates as auditing standards evolve, without requiring legislative amendments.

Finally, the decree explicitly recognizes the connection between sustainability assurance and financial audit reports. Under the Accounting Act, auditors may include their assurance opinion on sustainability reports within the financial audit report. If a quality review later finds material deficiencies, corrective measures will apply to the entire audit report, ensuring that sustainability assurance errors are not concealed and that investors receive full transparency.

In summary, the new quality control decree comprehensively modernizes the regulatory framework for auditors in Hungary. The new regime covers a broader range of entities, integrates a new area of oversight (sustainability audits), and simplifies as well as objectifies the evaluation methodology through clear percentage thresholds, veto questions, and uniform grading principles. It also introduces a more flexible, annually updated questionnaire system and ensures full alignment with EU requirements, including the most recent directives. At the same time, it retains the proven elements of the previous framework, such as the three-tier rating system and consideration of auditors’ comments, but places them within a more transparent and consistent structure.