Why BDO Czech Republic won't issue an IFRS audit without dnl
BDO Czech Republic at a glance
- 30+years in the Czech market
- 11years Jana Zentrich has spent at the firm
- IFRSthe framework its public interest entity clients report under
- AllIFRS clients now in dnl
Its IFRS team wanted AI that could answer a reviewer’s first question: why?
Audit partner Jana Zentrich had a specific complaint about the disclosure process BDO Czech Republic used before dnl, and it wasn’t about speed.
“As a reviewer, I didn’t know why the answer was ‘yes’ or ‘no,’ or what the supporting documentation for it was.”
The process produced answers. Zentrich, BDO, and any third-party review needed the reasoning. They needed evidence: links to supporting documents, financial statements, and notes. Instead, they had a completed checklist that was more like a black box. If anyone had probed a detail in the final report, Zentrich might not have been able to defend it.
“From the point of view of audit documentation, the tool was not satisfactory for us internally, and also for the regulators,” Zentrich said. “So, we were looking for another solution.”
BDO Czech Republic has operated for more than 30 years, and Zentrich has been with the firm for 11. She focuses on public interest entities, which in the Czech Republic report under IFRS. Martin Vodička, an IFRS specialist on the methodology team who joined from Deloitte a year ago, works alongside her. Between them, they cover both ends of the same file: Vodička prepares it, and Zentrich reviews it.
What Zentrich wanted is what any reviewer looks for in an audit file. Each answer should trace back to the evidence it rests on. The work should be documented well enough that someone else can re-perform it. And the record should show that a named auditor reviewed the conclusion and stands behind it.
This case study looks at how BDO Czech Republic rebuilt its disclosure review around those three principles, and what changed for the people who prepare and sign the file.
Where the old process failed
Before BDO used any checklist tool, the review was done entirely by hand. “We got the IFRS standards and compared them one by one, paragraph to the financial statements and notes,” Zentrich said. She said the repetition itself created risk. “The checking was quite repetitive, and it’s boring. So, there is a lot of space for misstatements that are made by people.”
The checklist tool that came next still required staff to work through each question by hand, and it added a second problem to the documentation gap. “Honestly, the quality of the audit documentation was one of the kick-off points. But the second was the time spent on the preparation of the checklist,” Zentrich said. For one of her clients, the checklist took “at least five or seven” days.
BDO considered building its own replacement. “We were also thinking about developing something internally, because we are very good at preparing audit documentation ourselves,” Zentrich said. The deciding factor was upkeep, because an internal tool would need updating every time the standards changed. “Once we compared the time spent on internal development, plus updates for the new standards, against dnl, it was quite straightforward.”
Four levels of review
BDO Czech Republic answers to four levels of review: two statutory regulators, an internal quality review, and a group review. “There’s a lot of checking of whether the engagements are prepared properly,” Zentrich said.
Every reviewer at those levels asks the same questions of a disclosure file: what each answer rests on, whether the work can be re-performed, and who signed off. Those questions matter more as AI enters the audit.
In the UK, the Financial Reporting Council’s guidance says responsibility for AI output stays with the human auditor. The IAASB has proposed revisions to its evidence standards that address auditors’ use of technology, and Germany’s Chamber of Public Accountants maintains guidance on AI in audit practice. dnl CEO Andreas Schindler set out the case for these principles in The Case Against AI Replacing Human Auditors.
How BDO Czech Republic and dnl addressed the review challenge
BDO needed a disclosure file that could answer a reviewer’s three questions. dnl provides the links to evidence and the documentation behind each answer. BDO provides the review and the sign-off.
Traceability
A good research paper lets a reader check any claim by following its footnote to the source. BDO’s old checklist had answers but no footnotes. In dnl, each answer links to the passage in the financial statements or notes that supports it, so a reviewer can follow any “yes” or “no” back to the evidence. “The quality of the exports is very good for the audit documentation,” Zentrich said.
Reproducibility
Roll-forward works like starting this year’s tax return from last year’s: it saves effort only if the receipts come along too. In dnl, each prior-year answer carries its supporting documentation into the new year, so the work narrows to what changed. Vodička tested it on BDO’s 2024 statements. “There are about 700 questions if you start from scratch, but if you roll it, it can be reduced to about 200,” he said.
Year 1: answered from scratch
~700 questions answered
Year 2: rolled forward
~500 carried forward with their evidence
~200 left to answer
Source: Martin Vodička, testing roll-forward on BDO's 2024 statements
A reviewer could fairly ask whether a carried answer is just last year’s work with a new date. Because each carried answer still points to its source, a reviewer can check it again.
Numbers follow the same rule. Vodička uploads the spreadsheet behind a set of statements, and dnl checks each published figure against it before he reviews the results.
Human accountability
An architect may not draw every line on a plan, but the stamp on it shows who answers for it. BDO’s file works the same way. Vodička prepares the checklist, flags the questions that matter, and writes a summary for the engagement team. “This is the output of my work,” he said. Zentrich then reviews it. The firm has made that sequence mandatory.
“We have an internal rule that none of the IFRS clients is supposed to be finished, or the audit issued, without the dnl exports and the dnl checks,” Zentrich said.
BDO Czech Republic
How a disclosure check moves through the file
Each step, who owns it, and the principle it supports.
Client and audit team
Handover
The client delivers the financial statements and notes. The audit team has finished its own verification.
dnl
Checklist run
- Auto-answerdnl can verify the result. It answers and links the source.
- Proposaldnl can’t verify it. It drafts an answer with the evidence and routes it to a person.
Methodologist
Preparation
Resolves the proposals, flags the questions that matter, and writes a summary for the engagement team.
Audit partner
Review
Reviews the export. Every answer links to the passage in the statements or notes that supports it.
BDO
File and roll forward
The export is filed. Next year, each answer carries forward with its supporting documentation.
Quality review
The inspection test
Internal quality review since adoption: no documentation findings known. Statutory review is still ahead.
AI that knows when to stop
Many AI tools answer every question with the same confidence. That shifts the risk onto the reviewer, and research on automation bias shows that people tend to accept what an automated system tells them, especially under time pressure. dnl is built to answer only what it can support and to send the rest to a person. Across 1.69 million disclosure-checklist questions on the dnl platform in early 2026, reviewers accepted 98.17 percent of the answers dnl gave on its own without correction, compared with 92.68 percent for human-prepared answers. dnl answered only the questions it judged it could handle, and the harder ones went to people.
That routing changes how a methodologist spends his time. Vodička said the hours saved leave room for judgment. “It’s really good to take some time, think about it, and maybe say, ‘Hey, look, there’s IFRS 15, so you can add this information.’”
Zentrich sees the same change from the review side. “It’s not the mechanical ticking of a check box,” she said. “It really takes us some time to think over the financial statements and notes, and to highlight some very weak spots.” For the client whose checklist once took five to seven days, the work now takes one or two.
Before dnl
5–7 days
With dnl
1–2 days
Lighter days mark the top of each range.
Source: Jana Zentrich, BDO Czech Republic
The first test
BDO adopted dnl after its last two statutory quality reviews, so no regulator has examined the new files yet. The firm’s internal quality review has, and Zentrich sits on that group. “I don’t know of any findings related to the documentation that is used for the accuracy and completeness of the financial statements,” she said.
BDO did not wait for a regulator’s verdict before committing. Waiting would be like a restaurant that cleans its kitchen only when the health inspector is due. Instead, every IFRS client is now in dnl, and no IFRS audit is issued without its exports. The kitchen is always clean. For Zentrich, that settles the complaint she started with: a reviewer can now see why an answer is yes or no.