A market economy implies the independence of entrepreneurs from state power. However, business entities cannot be left without any control. Otherwise, the country's economic space will become too shaky and disorganized. To maintain the business sector, there are special audit procedures. How they work will be described in detail in our material.
Audit procedure: what is it?
Entrepreneurs are required to fulfill only one important condition: comply with the law. If this requirement is taken into account, then government intervention in the operation of the enterprise will be minimal. So, entrepreneurs are allowed to independently dispose of their products and profits. The goals enshrined in the organization’s charter can be achieved without any state supervision.
Any company pays special attention to financial and statistical reporting. A special accounting work is being carried out, the results of which are the publication of data on the status of organizational property. Every business transaction, tax or payment made is taken into account. Accountants closely monitor all the financial steps of the enterprise. But is such control enough? Most likely no. That is why many legal entities and individual entrepreneurs decide to conduct an audit procedure. This is an independent non-departmental audit of the financial condition of the organization.
An audit is a mandatory procedure. It must be carried out in a timely manner, but it is also possible in an unplanned time frame. So, in a sudden audit control should be primarily interested in the head of the enterprise. Frequent financial checks will help to improve the organization, to make its work more planned and of high quality.
Concept and subject
The concept of audit is included in the scope of audit activities. In fact, verification is only one form of control, of which quite a lot can exist. The subject of the audit is precisely the financial audit.
There are several types of audits, all of which are listed in FZ-307 dated 12/30/2008. Each type of audit is implemented in accordance with special standards - documented financial accounting conditions. Standards reflect the effectiveness of certain financial decisions made by the company for the reporting period. It is important to note that the standard is a kind of charter, because the audit itself is an entrepreneurial activity. The procedure is implemented by representatives of certain legal entities, whose tasks include the following points:
- conducting marketing events;
- tax advice;
- accounting;
- analysis of economic and financial activities;
- valuation of liabilities and assets of economic entities;
- development and analysis of investment projects;
- drawing up business plans;
- housekeeping training;
- preparation of declarations and much more.
The implementation of all the tasks presented is necessary to achieve one important goal. This is an expression of opinion on the reliability of the financial activities of the audited entities.Reliability refers to the level of accuracy of financial reporting data.
Organization Creation
The auditor can be either an individual entrepreneur - an individual, or a full-fledged organization. When creating the instance, neither the form of ownership, nor the citizenship of the person is considered. So, a foreign organization may well conduct audit activities in the Russian Federation. It is only important to get a license from the tax authority, which allows you to do business.
The created audit organization may take any legal form. The exception is only OJSC. The property of the created person is subject to selective verification, and not continuous - as during the audit.
The free and legal provision of audit services is only possible upon receipt of a license and subsequent inclusion in the state registry. By the way, the registry itself includes all Russian auditors. Its management is organized by the Financial Control Commission.
Auditing organizations implement their activities in relation to economic entities. These are the persons subject to financial control. The object of the audit is the economic activity of the organization, which needs to be checked. The subject in this case is a collection of information about the state of activity of the audited enterprise.
The main forms of audit
Audit procedures take various forms. Lawyers have developed a special classification that allows you to consider the main types of financial audit.
The first form of audit is called external. Such verification is carried out on the basis of an agreement between independent parties: the organization and the audit firm. At the same time, the reporting and accounting system of the enterprise is subject to audit. The task of the controlling organization is to confirm compliance with applicable law and evaluate the reliability of financial statements. During the audit, the audit firm is guided by generally accepted standards.
A little more important is the internal audit. During its implementation, it is necessary to conduct an operational audit of the enterprise, taking into account all the requirements of the law. Particular attention should be paid to the accuracy and completeness of accounting documentation. It is necessary to ensure the safety of organizational property. Thus, internal audit involves not only detailed control over financial assets, but also a thorough review of management and organizational policies.
The main difference between external and internal audit is the depth and completeness of the verification implemented. So, an enterprise that decided to conduct an internal audit pursues such goals as protection against loss of resources, optimization of activities, return of legal capacity, etc. The external process of audit evaluation is necessary as a preventive action.
Types of audit
Depending on many factors, audit procedures are divided into several types. In relation to the terms of the law, an audit is mandatory and proactive. Mandatory verification is regulated by FZ-307 "On Auditing." It affects the accounting and financial condition of the organization. A mandatory audit is carried out annually and usually has an internal form. There is also a proactive form of verification. It is voluntary. The audit customer himself determines the scope of the procedure, as well as its timing, form and type.
The audit procedure is mandatory for economic entities that have the following characteristics:
- OJSC status (open joint-stock companies) - regardless of the number of shareholders and the size of the authorized capital;
- the presence in the authorized capital of a share owned by foreign investors;
- attitude to credit, insurance, commodity, stock or investment activity.
Thus, all economic entities are subject to mandatory verification by the audit organization. The exception is only state and municipal enterprises.
The second type of classification involves dividing the audit by objects. So, a financial audit can be banking, budgetary and extrabudgetary, investment, exchange, as well as general and state. To carry out any of the presented procedures, you must have a license issued by the Ministry of Finance of the Russian Federation or the Central Bank.
Formally, any financial audit is of a private nature, although the Audit Chamber of the Russian Federation has a position of auditor. Nevertheless, the term "state audit" has not yet been widely used in Russia.
Audit report
Based on the results of the audit, an audit report is prepared. This is a special act, which sets forth the deficiencies identified during the audit. They may have a financial, economic or industrial character. So, violations can be considered embezzlement, abuse, illegal spending of finances, mismanagement and much more.
The conclusion is the final step in the process of providing audit services. This document contains all the necessary advice and recommendations that can be given to the enterprise. The conclusion itself consists of three parts: introduction, analysis and summary. The introductory part provides information about the audit firm. The name, location and type of services provided are indicated.
The analytical part provides a full report on the results of the audit. First, information is given about the organization in respect of which the audit was conducted, and only then the main shortcomings in its activities are listed. The final part of the conclusion provides evidence of the reliability or inaccuracy of the financial statements. Here, recommendations can be made to the founders of the audited entity.
Each page of the audit document must be signed by a certified specialist who directly conducted the audit. The document is certified with a company seal.
There are five forms of audit report. The first two forms are quite simple: a positive or negative assessment. Moreover, a positive assessment is divided into unconditional and conditional. The following two forms are a bit more complicated. Thus, the auditor may declare no confidence in the company. This means that the control was carried out, however, the audit authority retained some questions for the organization being audited. The final form is a conclusion with a refusal to express an opinion. In this case, the auditor recognizes his own incompetence on a particular issue.
The conclusion itself must be drawn up in triplicate. The first paper will go to the organization that initiated the audit. The second will be presented to the director of the audited enterprise, and the third will remain with the auditor. The issued opinion should be carefully studied by the enterprise. As a result, an action plan should be drawn up aimed at eliminating errors.
State regulation of audit
The activities of audit companies are entrepreneurial in nature. In this regard, any company that exercises financial control is under state control. The main controlling authority is the Russian Ministry of Finance. Its competence includes the following functions:
- development and approval of federal auditing standards;
- publication within its competence of regulatory acts governing the audit procedure;
- control over audit organizations;
- organization of a training and certification system;
- control over state audit registers.
Under the Ministry of Finance, a council was established to organize audit activities. It includes specialists implementing state policy in the field of financial control.They analyze the market for audit services, and on the basis of the conclusions made, pave the way for further modernization.
The Audit Council consists of two representatives from the Ministry of Finance, 10 accountants, one representative from the Government and two independent auditors. The Chairperson of the Council is elected by voting. The main task of the authority is to make proposals to improve the audit procedure.
Auditor Responsibility
Relations between the economic entity and the auditor are drawn up under a special agreement. He has the character of a contract. It is in this document that all the services provided are recorded, as well as their cost and duration. An essential condition of the contract is information on the liability of the audited and audited entity. What is included in the concept of responsibility? At the very beginning, possible risks that may be caused by a financial audit are indicated. For each risk, reimbursement is due. This is the area of responsibility.
The form and content of the contract may vary depending on the type of services provided. So, when conducting an external audit, only one contract is required. It must indicate the necessary minimum of information: general requirements for work and types of responsibility. The auditor undertakes to reimburse all expenses in case of inaccurate accounting and business analysis.
Everything will be a little more complicated with the implementation of the internal audit procedure. In addition to the essential conditions, the document should indicate several optional requirements. Moreover, the contractor is obliged to provide the customer with the auditor qualification certificate and a license to implement financial control.
The separate norm from the Federal Law "On Auditing" has important legal significance. Thus, auditors are prohibited from conducting a financial audit if they have previously been associated with an economic entity acting as a customer. Prolonged negotiations of the customer with the auditor are also prohibited. All these rules are necessary for the prevention of corruption.
Audited Person
Having dealt with the rights and obligations of auditors, it is necessary to provide a description of directly economic entities - audited entities. Such entities can be individuals (individual entrepreneurs) or legal entities - commercial or non-commercial. All that matters is that the person being audited is legitimate. The relevant legal document confirms the legitimacy - a license on the legal form of the person (LLC, OJSC, ZAO, Fund or others) or the status of individual entrepreneurs.
A person becomes audited from the moment of concluding a contract with an auditor. At the same time, it acquires a number of additional duties and powers. First, you should deal with the rights. So, the audited entity has two important powers:
- to receive from the auditor full information about the requirements of the law regarding the conduct of the audit;
- for familiarization with audit reports.
The responsibilities of the inspected person are much greater. So, here it should be highlighted:
- creation of all necessary conditions for the optimal work of the auditor;
- prompt elimination of violations identified during the audit of accounting or finance;
- providing the auditor with clarifications or confirmations on certain issues;
- issue to the auditor of all necessary documentation.
If a financial audit is mandatory, then an individual or legal entity does not have the right to refuse to comply with audit rules.
Audit Related Services
Not all IPs or organizations wish to conduct an audit. The most common reason is a reluctance to spend finances. Some authorities, however, completely hide something thoroughly, and therefore each mandatory audit is a real problem for them.Nevertheless, an annual financial audit is mandatory for everyone, and hiding from it is akin to ruining your own enterprise. There can only be one way out: to carefully understand the types of audit services. And choose only the most necessary.
According to federal law, 10 optional services are included in the audit program. Here they are:
- tax advice;
- accounting advice and accounting. accounting;
- legal advice;
- management consulting;
- business analysis, financial advice;
- conducting market research;
- valuation of property;
- development and analysis of investment projects;
- accounting automation;
- training and qualifications.
All audit services are divided into effective and controlling. Services of action - this is the formation of documentation, the composition of which was previously agreed with the economic entity. Control services are a check of documents for their compliance with the requirements of the law. There are also additional information services. So, if the auditee is not satisfied with the requirements indicated in the conclusion, then there is always the opportunity to request a consultation.
Thus, along with the "classical" audit, a number of additional services can be provided. Entrepreneurs or company representatives should not be afraid of financial audits. Auditing is a great way to "improve" your company, make it more clean and independent.