Audit financial control is nothing but extra-departmental control of an independent nature, which is carried out as entrepreneurial activity. It must be added that the latter is called the audit. What is the significance of the presented category today? What is the place of audit control in the financial control system? Why? This article details these and other equally interesting questions.
Audit control, its place in financial control
Today, under audit financial control it is necessary to understand independent control of an extra-departmental orientation, which is carried out as an audit of entrepreneurial activity. This type of control is endowed with considerable importance in the conditions of distribution and development of a market type of economy. The concept of audit financial control suggests that today it is possible to combine the interests of economic entities and the state. In addition, this combination implies the exclusion of costs in terms of cash from the budget for the implementation of control activities. In the process of formation and development of the Russian audit control in the field of finance, the experience of the most developed foreign countries was reflected very clearly. It is there that all types of audit financial control are widespread.
It is important to note that the regulation of the organization and implementation of audit control in the field of finance is carried out through the Federal legislative act "On Auditing". In accordance with article one of this law, an audit or audit should be understood as an entrepreneurial activity related to the independent verification of accounting (in other words, financial) statements and bookkeeping, both of large-scale structures and individual entrepreneurs. The concept of audit financial control assumes that under the audited entities in this case it is necessary to consider individual entrepreneurs and enterprises of various levels.
Goal and result
What is the purpose of the study procedure? Having examined the audit financial control briefly, we can conclude that the main goal of strategic audit is to express an opinion on the reliability of the accounting (in other words, financial) statements of the audited structure as a large category. In addition, through an audit, the compliance of the accounting procedure with Russian legislation is determined.
The result of the audit should be considered the audit report. So, independent financial control, audit, audit report (RB, for example) are categories that are closely related. It should be noted that by the latter it is necessary to understand a document of an official nature, formed according to federal rules called standards, and including the opinion of an individual entrepreneur in this field or an audit organization, expressed in the form established by the legislation of the relevant country, regarding the reliability of accounting (in other words, financial) statements of the audited company or individual entrepreneur, as well as the conformity of the procedure for conducting its (his) accounting certain legislative acts.
The Law presented above mentions that the audit cannot serve as a substitute for state control in terms of the reliability of the accounting (in other words, financial) statements, which is carried out strictly according to Russian legislation through the efforts of authorized authorities (paragraph four of article one of the Law “On Auditing” activities ").
Mandatory nature of the audit
Today, audit financial control is used by the state, provided that it is mandatory in certain cases specified in the legislation (article seven of the Law discussed above). This provision applies primarily to insurance and credit organizations, municipal and state unitary enterprises, extrabudgetary funds, and so on. It should be noted that the legal basis of audit financial control is largely endowed with a public character. So, through legal norms, state-power rules (in other words, standards) of auditing activities are prescribed in general, and the organization, the procedure for its implementation and control are revealed. At the same time, financial law that characterizes audit control presupposes the independence of the relevant organizations and individual auditors, as well as the independence of the signing by the audited entities of contracts for the provision of audit services.
It is important to note that individual entrepreneurs in this area and audit organizations, in accordance with the law, are not entitled to promote any other entrepreneurial activity, in addition to organizing and conducting audits, as well as related services. In order to guarantee the quality of audit activity, today the practice of installing certification of the mandatory nature of persons who wish to carry out the activities considered in the article is practiced. In addition, in particular, audit financial control includes the obligatory presence by the individual auditor or audit structure of a license permit (license) for its implementation. By the way, today, the federal authority authorized to do this has the right to implement audits in relation to the quality of activity of audit structures or individual auditors.
Responsibility and additional nuances
It is important to note that for violation of the law regarding audit activities in the course of activities that are accompanied by audit financial control, the Law establishes liability with respect to audit structures, their management, individual entrepreneurs (such as it turned out, are called individual auditors), audited entities, and persons who, one way or another, are subject to mandatory audit. In situations defined by law, the listed entities may bear civil, criminal, administrative responsibility.
The following are the key functions of the authorized federal authority (Ministry of Finance of Russia) for the state regulation of audit activity:
- Formation of regulatory acts of a legal nature that regulate audit activities.
- Submission for approval by the Government of Russia of federal standards (rules) that affect audit financial control.
- Organization of the system, as well as certification.
- Licensing (licensing) of audit activities.
- Organization of a supervisory system with respect to compliance with licensing standards governing independent audit financial control.
- Control in terms of compliance by individual auditors and audit organizations with federal standards (rules) regarding audit activities.
- Maintaining state registries, which include certified audit organizations and individual auditors.
- Accreditation of audit associations conducting professional activities promoting independent audit financial control.
Classification of audit financial control
Today, the classification in relation to audit in the field of finance has a very extensive network. That is why all types of audit financial control are classified in accordance with the following features:
- Stage of development.
- The nature of the order.
- Frequency.
- The scope of the business entity.
- Performers.
So, according to the stage of development, it is customary to distinguish the following types of financial audit:
- Confirming audit control consists mainly in the verification and subsequent confirmation of the accuracy of the documentation and financial statements.
- System-oriented financial control is intended primarily to familiarize yourself with the structure’s internal control system. So, this type is an element of the audit of internal financial control.
- Risk Based Audit. This situation occurs when all the audit forces are directed to areas with a possible high degree of risk. It must be added that such an interesting option greatly simplifies the performance of the audit in other areas.
Frequency and nature of the order
In accordance with the frequency of the conduct, it is customary to distinguish the following types of audit control:
- The initial financial audit is always carried out in a particular organization for the first time.
- The agreed financial audit is carried out in the organization in a repeated manner. It is important to add that it is endowed with a number of advantages over the first variety. These include a significant reduction in the risks of the structure, continuous improvement of labor activity at the enterprise, and so on.
Varieties of financial audit in accordance with the nature of the order:
- Mandatory audit control in the field of finance is nothing more than an annual verification of a mandatory nature conducted by the efforts of an individual auditor or audit organization regarding the conduct of financial (accounting) statements and accounting records of an organization or an individual entrepreneur. It is necessary to add that the performance of a mandatory audit is carried out in accordance with the requirements of current Russian legislation.
- Initiative audit control in the field of finance is a check carried out at the initiative of the enterprise management.
- Tax audit control is nothing more than an audit of the structure, aimed at determining the degree of correctness of accounting of the enterprise in the field of taxes. In addition, the process of this audit takes into account the minimization of risks associated with taxation.
Field of activity
In accordance with the scope of activities, it is customary to distinguish the following types of financial audit:
- A general audit involves approval of the financial statements for the year in respect of trading, manufacturing and service structures.
- Insurance audit involves checking the accuracy of the reflection of the activities of the insurance structure, which is of a financial and economic nature.
- Investment audit - verification of the reliability of financial statements, as well as the expenditure of funds for specific purposes; checking the feasibility of decisions regarding investments.
- Bank audit - an audit in terms of the activities of banks and other credit institutions, which is of a financial and economic nature.
Classification by Artist
The types of audit verifications of the financial plan, depending on the executors, are classified as follows:
- An external audit in the financial sector should be understood as an independent audit and confirmation of the accounting (financial) statements of a certain organization by the audit structure or by an individual auditor in order to determine its reliability, completeness, and also compliance with current Russian legislation. In addition, the responsibilities of performing an external audit include consulting in accordance with various issues. The latter, as a rule, are financial, tax or organizational in nature.
- Under the internal audit of the financial plan it is necessary to understand the audit of the financial (accounting) statements of the structure of its specially appointed employee to determine the accuracy and completeness of the documentation, as well as to identify errors in it.
All of the above varieties and areas of audit are designed to find errors in the accounting (financial) statements of the structure. So, their timely correction allows you to both avoid fines and improve the work of the company as a whole. That is why the definition of an audit organization or individual auditor should be treated with a high degree of responsibility.
Forms of audit financial control
The form of financial control should be understood as the method of a specific organization and the expression of control operations. In addition, in the literature forms of financial control are often considered as separate aspects of the manifestation of its essence. This mainly depends on the timing of the implementation of the control plan.
The theory and practice of a financial and legal nature distinguish in the traditional aspect the following forms related to financial control: preliminary, current, subsequent. Nevertheless, several domestic scientists prefer not to distinguish the second of the presented forms as an independent category. They argue for such an illogical position by the fact that preliminary and subsequent control, one way or another, is carried out in the process of the current activity of the objects of control and fully expresses the content of operational work in relation to the relevant bodies of a current nature. So, under the current control, it is necessary to consider the follow-up or preliminary control in the financial sphere carried out in a daily manner.
More details
The preliminary financial control is appropriate before the implementation of the financial plan operations, that is, in the process of discussion and subsequent approval of “legislative” decisions related to financial matters; assessing sections of business plans that are financial in nature; forecasting tax revenues to state budgets and so on. It should be noted that preliminary control is given special importance in the process of assessing the legal, political and economic consequences related to bills of the financial plan; the introduction of fundamentally new rules of a financial and legal nature, which, one way or another, regulate the economic activity of business entities. It is important to add that the preliminary implementation by municipalities or the state of their own control functions is vested with great importance in terms of preventing offenses. In addition, it contributes to a significant strengthening of the discipline of finance.
Conducting current financial control is appropriate during the implementation of certain operations of the financial plan. Among them are such categories as payment of taxes, financing of state expenditures, intergovernmental lending, budget execution, and so on.The implementation of subsequent financial control takes place only after the completion of operations of a financial nature through audit and analysis of financial and accounting documents, conducting an external audit in relation to reports on the execution of budgets, industry programs, state funds of extra-budgetary orientation, as well as estimates of municipal (state) unitary structures . By the way, the key objective of subsequent financial control is to evaluate the effectiveness of financial activities, as well as the effectiveness of operations.