Audit (translated from Latin means “listen”) is a form of financial control over the activities of various enterprises and organizations. The law provides for an annual mandatory audit.
The audit procedure must go through all organizations, regardless of the field of activity and legal form. Based on the results of the audit, the auditor makes a conclusion. This article will tell you what types of audit reports exist at the moment.
Presentation of the audit report
Before presenting its opinion, the auditor must provide information in writing based on the results of the audit. This information contains information about the identified deficiencies that may lead to significant deficiencies in the financial statements. This document is required for mandatory verification. During the audit, which was initiated by the person undergoing verification, the document is drawn up if this clause is prescribed by the contract.
Written audit information is a confidential document. If, as a result of the audit, significant deficiencies in the financial statements are found, then these financial statements should be finalized. The reporting entity is attached to the audit report itself.
In the event that the audit report is drawn up after the submission of the financial report by the person undergoing the audit, the final part of the report must have a list of corrections that should be made in these reports so that it is recognized as having reliability.
The audit organization may use any other way of providing revised financial statements of the enterprise, which provides a comprehensive and reliable representation to users of the changes that need to be made to these statements.
What does an audit report include?
Regardless of the type, the content of the audit reports must necessarily include:
- the study on the basis of tests of evidence that confirms the data in the financial statements of the economic activity of the audited entity;
- assessment of compliance with the rules and methods of accounting, as well as the rules for the preparation of financial statements;
- identification of the main assessment information that has been received by the governing bodies of the entity being tested during the preparation of the accounting report;
- assessment of the basic understanding of financial statements.
The audit report should include the statement of the auditor that the audit provides sufficient data to express an opinion on the reliability of the financial statements in accordance with the rules of accounting with the laws of the Russian Federation.
The audit report should indicate that the audit was conducted on a sample basis. In conclusion, it is necessary to clearly indicate the main principles and methods of maintaining financial statements and preparing a financial report. The main principles and methods of accounting and preparation of this type of reporting are determined by Russian legislation.
Conclusion structure
Any type of audit report on the structure according to the legislation should consist of 3 parts: introductory, analytical and final. The auditor's report must be accompanied by the accounting report of the enterprise in respect of which the audit was conducted.
The introductory part reflects all the necessary data about the company, which conducts an audit or an auditor working independently.
The analytical part is, in fact, the main part that reflects the results of the audit, and includes information on the general results of the study of the state of accounting at the enterprise, the reliability of the financial control system, compliance with the legislation of the enterprise during economic transactions.
The final part is the opinion of the competent person regarding the accuracy of the accounting documentation provided by the entity undergoing the audit. The audit report of the enterprise in respect of which the audit was conducted should be attached to the audit report. If during the audit process violations are identified, they should be indicated in the audit report.
The opinion of the inspector must necessarily include: the official name, details of the organization being audited, reliable information about the organization that conducted the audit (name, details, license numbers). It is also necessary to indicate the date and signature.
Classification of Conclusions
The international audit standard identifies several types of audit reports:
- Unconditional, positive audit opinion (unmodified). This type of opinion is drawn up when the audited institution or organization reliably reflects financial activity and position. In cases where there are disagreements with the management of the legal entity on the admissibility, as well as on the adequacy of the chosen accounting policy, the auditor has the right to refuse to express an unconditionally positive opinion.
- Modified conclusion. This conclusion is issued when there are any inaccuracies in the financial statements of the enterprise.
Modified Conclusion
This conclusion is issued in cases where the inspector concludes that the detected distortions in the reporting entity must be mandatory corrected.
The following types of modified audit report are available:
- Conditionally positive conclusion with a reservation.
- Negative conclusion.
- Refusal to express an opinion.
These types of audit reports are the main ones in the category of unconditionally positive.
Reservation Conclusion
A qualified audit opinion is a type of modified type of opinion of the auditor. This category of conclusions is drawn up if during the inspection cases of misstatement of documents were revealed, but they were recognized as not essential for the overall picture of financial statements. This type of audit report describes the basis for expressing an opinion with a reservation, including the available distortions.
And also, if it is not possible to obtain reliable evidence on which to base the audit report, however, the idea appears that the influence of not found distortions may be significant.
Negative conclusion
The issuance of this type of audit report will mean that the person conducting the audit of the organization does not confirm the legal reliability of the information provided on the status of financial affairs. This occurs in exceptional cases when the inaccuracy and distortion of the financial statements of the enterprise for all important indicators are obvious to the auditor conducting the audit. This type of audit report is not so common.
Disclaimer
In special cases, the auditor is authorized to refuse to express an opinion. In what cases is the auditor issued a refusal to express an opinion? In case of obstruction to the inspector or failure to provide sufficient information and documents for the audit, the auditor may refuse to provide an opinion. This type of opinion in the audit report is also compiled when there are many facts of uncertainty that do not allow to assess the reliability of the presented financial statements.
Regulations
Types of audits and audit reports are governed by the following legal acts:
- The Law of December 1, 2007, "On Self-Regulatory Organizations."
- Federal Auditing Standard of 2010.
- The Law on Auditing Activities of 2001, which is the main legal document in this field of activity. There are also other regulations regarding auditing.
Samples of various types of audit reports
If the verifier does not reveal any violations, this fact will be reflected in an unconditionally positive conclusion in approximately the following wording: “According to the opinion, the reporting provided fully reflects the reliability of the accounting activities of this organization for a certain period of time.”
The auditor’s opinion with a reservation is formulated as follows: “For the period under review, the financial statements of the legal entity reliably reflect the financial situation. However, you should pay attention to the information set out in the explanatory report, that the court’s case between the auditee and the physical a person about the payment of material damage for the harm caused to health in connection with professional activities Provisions for the payment of compensation in case the organization loses in court Mr. process is not provided. "
Significant circumstances that prompt the inspector to refuse to express an opinion can be summarized in approximately the following form: “In connection with the refusal of admission to the organization’s warehouse, it is not possible to be present at the inventory”. Or: "Due to the refusal to provide evidence of depreciation of inventories, there is no way to verify and draw conclusions about the reliability of accounting reports."
In case of significant contradictions with the manager or if it is suspected that the auditor is misled about the reliability of the information, the following wording may be present in the negative conclusion: “As a result of the inaccuracy of the submitted financial and accounting reports, it is not possible to evaluate the data for the period provided.”
Conclusion
In international practice, audit is widely used in all areas of economic activity. The purpose of the audit firms is to conduct independent audits of the economic situation of the enterprise.
In Russia, such activity is a relatively new industry. We should not forget that the law provides for an article on knowingly false conclusions. The fact of giving a deliberately false conclusion is the basis for holding the auditor accountable. The audit report, in its essence, is an independent evidence of the objectivity and reliability of the organization’s reporting.