What is an audit and why is it needed? Why is an audit needed? When to conduct a mandatory audit
Commercial organizations are constantly under the influence of a large number of risks, both external and internal. And responsibility for their viability lies not with the state, but with their owners. Every day more and more enterprises are coming to the conclusion that it is necessary to carry out internal audit, which not only represents a system for monitoring compliance with accounting, but also allows you to identify opportunities to improve business efficiency. Let's take a closer look at what it is internal audit and does the organization really need it?
A system of control organized at an economic entity in the interests of its owners and regulated by its internal documents over compliance with the established accounting procedures and the reliability of the functioning of the internal control system.
Russian model internal audit consists of two directions:
1) an audit, the main focus of which is on checking the safety and efficient use of assets, as well as identifying and eliminating debts and shortages.
2), the purpose of which is to ensure the reliability of accounting and financial statements, minimize taxation and preserve the company’s assets.
If the owners of the organization are its managers and independently control all aspects of the business, you can do without internal audit. But as the size of the company increases, managers can no longer fully control the entire situation. Then there is a need for internal audit. It is also necessary for company managers who do not have enough time and specific skills to collect and structure the information required to make the right management decisions. has information on all aspects of the organization's activities, minimizes the likelihood of errors and abuses, identifies “risk areas” and opportunities to eliminate deficiencies or deficiencies in the future, and also helps to identify and eliminate weaknesses in management systems.
Also internal audit evaluates systems effectiveness internal control. Unlike The control and audit department (KRU) is focused not on finding mistakes that have already been made, but on analyzing future events and how they will affect the company’s activities.
They should not be confused with the external one; they perform completely different functions. The main task of an external audit is to confirm the reliability of the organization’s financial statements, while the internal audit is to evaluate the company’s existing control and risk management systems. Unlike internal audit, external audit does not assess the economic validity of management decisions and the efficiency of the company’s divisions, and is also aimed at protecting the interests of external parties - potential investors, creditors, while internal audit serves the interests of the owners and managers of the organization.
Let's highlight the main tasks and functions internal audit:
System evaluation internal control;
Analysis and assessment of the effectiveness of the risk management system;
Assessing the compliance of the company's corporate governance system with the principles of corporate governance.
In Russia, unlike economically developed countries, internal audit not yet given due attention. And if we can say that the formation of external audit took place in our country, then talk about internal audit Unfortunately, it's still early. No a sufficient number of scientific and practical developments devoted to it are not developed in professional and legislative aspects. But interest in it is growing, and perhaps soon the owners of Russian companies will boldly use it as a tool for increasing business efficiency.
The word “audit” is used to denote control over the activities of an enterprise in the economic, financial and economic spheres. This check is carried out by independent specialists (auditors) with state certificates. Basically, there are two types of such examination: independent and mandatory. The period and requirements for mandatory audit are enshrined in legislation. For example, it needs to be carried out by such enterprises as: banks, joint stock companies, insurance companies, pension funds. Other organizations do not have to carry out a mandatory audit, but they can contact an audit company to carry out an initiative audit.
Types of proactive audit
Initiative audit can be selective or continuous.
A selective audit is carried out according to a program approved by specialist auditors together with the customer. In this case, for example, you can consider a separate part of accounting, a specific financial transaction, accounting and financial documentation for a specific period of time. All control takes place at the discretion of the customer.
Unlike a selective audit, a comprehensive audit is carried out across all company documentation. With this type of audit, the verification is much stricter than during an audit by the tax inspectorate or government agencies. After the audit, the customer receives an extended report indicating all the company’s problems.
Why do you need to conduct a proactive audit?
In order to understand why you need to perform a proactive audit, it is worth giving a simple example: Whatever highly qualified specialist holds the position of chief accountant of a company, as a rule, he fails to do even this: even the most competent accountant will not be able to avoid errors in reports. The thing is that his responsibilities as an accountant include a lot of tasks: preparing accounting records with an understanding of the requirements of the law and its analysis, organizing financial document flow, paying tax contributions and labor of company employees, conducting an inventory. The main goal of auditors is to be able to find and correct these errors.
Basic required documents for conducting a proactive audit
Establishment agreement
Licenses and patents
Reports on the receipt and use of budget funds
Employee remuneration regulations
Business and commercial contracts
Production, personnel orders
Planned and actual calculations. Estimates, projects
Annual reporting
How does the proactive audit procedure work?
The proactive audit procedure takes place only as a result of an independent decision of management, shareholders or investors. It does not have fixed start and end dates for the examination; the time allocated for verification is determined by the customer. A proactive audit should be carried out with the help of external specialists, as this will allow you to get an impartial look at the situation in the company. At the appointed time, employees of the audit company come to the office and prepare technical specifications, taking into account the wishes and requirements of the customer. Such a document is drawn up to determine the necessary audit procedures, their content, nature and scope. In addition, the engagement determines the form of the audit report. As part of audit control, documents such as accounting reports, debit and credit debts of the company, inventory of property, obligations of the organization, reporting on the effectiveness of policy management, calculations of fees, taxes and duties are checked.
Most often, proactive audit helps to identify errors such as:
Documentation of the operation. For example, purchased inventories are not included in material accounting accounts
Incorrect determination of the moment of transfer of ownership. For example, goods in transit may already belong to the organization, and then they should be taken into account on the balance sheet, including VAT, since the invoice for them has not yet been received
Distortion of the original cost of the goods. At the same time, the most common mistake is to take into account transport costs in the costs of the enterprise, but do not calculate transport and procurement costs for the remainder of the goods for income tax.
Misuse of company funds. This includes the use of budget funds to pay for expenses not included in the budget estimate.
Violation of the procedure for calculating and paying wages. For example, changes in class rank and length of service are not taken into account
Violations by the company's management. For example, if a hired CEO cashed out funds through shell companies
A proactive audit helps to identify:
Accuracy of entering tax and accounting reports
Liquidity
Degree of financial independence of the company
Stability to market changes
Accuracy of concluded contracts
Are corporate governance requirements met?
Correct pricing pricing
Inventory order compliance
After completing the audit procedures, a conclusion is drawn up, which is then transferred to the head of the company. It indicates the deficiencies identified during the audit and calculates the degree of reliability of the submitted reports.
When is it necessary to conduct a proactive audit?
The proactive audit procedure is quite expensive; for example, for large companies, its cost can reach up to three hundred and fifty thousand.
Therefore, such an examination may be required in exceptional cases, such as:
Before the control of the tax service
Attracting new investments
Need for credit
Making financial and economic decisions
Calculating the value of the company and its liquidity
Suspicious activities by management personnel
The emergence of intentions to change persons holding high positions
Results of the proactive audit
The result of the examination gives owners and managers a detailed picture of the organization for the current period, the opportunity to control the work of the staff, and assess the quality of the company’s work. Auditors will be able to recommend how to correct errors, inaccuracies and tell you how to avoid this in the future. During the audit, specialists can also give advice regarding decisions regarding the transactions of the enterprise and the possible intention of the owners to sell, merge or acquire it.
CJSC "AK HOLD-INVEST-AUDIT"
CJSC "AK HOLD-INVEST-AUDIT" begins its history in September one thousand nine hundred and ninety-three. Based on data conducted by rating agencies such as Kommersant and Expert RA, we are annually included in the list of the hundred largest audit companies in Russia.
During our twenty-four years of work in the market, we have conducted more than fifteen successful proactive audits. We were contacted by such companies as: Continental Airlines JSC, Eastern Fish Resources CJSC, Generations Fund of YUGRA, CATUAR-CERAMIC JSC, World of Books JSC. Letters of recommendation from these organizations can be found on our website.
The number of employees of the company “HOLD-INVEST-AUDIT” is fifty people. We employ only certified auditors, 1C specialists and certified appraisers. The certificates of our specialists can also be viewed on the official website.
To get acquainted with our company, we invite you to undergo an initial free online consultation. In addition, a service for preliminary calculation of the cost of an initiative audit is available on our website.
Audit today is an integral part of the internal control system of most companies. They also have a direct interest in quality auditing. owner of the company, And its leader, and of course, Chief Accountant! Today's reality demonstrates the vital need to create a tax protection system in every company. Such a system must take into account possible risks in all directions. In order for the system to function effectively, the joint efforts of all financial services of the company and auditors are required - representing an element of external independent control.
Why does an accountant need an audit?
No specialist, even the most highly qualified, is immune from mistakes. Errors occur not only from a lack of knowledge, but also of a technical nature. Almost every chief accountant is constantly under conditions of overload and lack of time, and in such a situation it is quite difficult to control everything.
Unfortunately, for some accountants, auditing is associated with personal verification. However, it should be understood that the audit in no way aims to evaluate the professionalism of the accountant; on the contrary, its goal is to help the accountant professionally. The result of joint work will be correct accounting and reliable accounting and tax reporting, accordingly, the level of personal responsibility of the chief accountant will be reduced, and there will be confidence that the organization’s management has been promptly warned about the presence of significant risks.
There are also cases when the cause of an enterprise’s tax risks is precisely the policy of the company’s management; often the manager simply does not listen to his accountant. The likelihood that a manager will listen to external auditors and think about it is much higher.
Why audit the director?
- To obtain an audit report and its subsequent submission to the tax office. This is necessary if the organization is subject to mandatory audit.
- Personal responsibility. It is no secret that the director bears responsibility for the activities of the organization, and not only administrative and financial, but also criminal. Without deliberately violating tax laws, the head of the company may still be subject to persecution by regulatory authorities. There are many reasons for this, but the most common of them is an accountant’s mistake.
- Business security.
- Oddly enough, in practice there are quite often cases when organizations overpay taxes. This happens due to technical errors or ignorance of the company’s accounting department of certain features of tax legislation.
- To assess the qualifications of accounting personnel. As stated above, an accounting error can be very costly for both the company and its manager. Therefore, it is very important to have a worthy specialist nearby.
- To assess the effectiveness of the organization. An obligatory element of the audit is to perform an analysis of financial and economic activities. According to the analysis data, it is possible to track over time how important economic indicators characterizing the activities of the enterprise have changed.
Why audit owners?
- Obtaining real data about the company's activities. The audit will reveal any distortions in the company’s reporting, after correction of which the owner will receive reliable financial statements. Accordingly, the owner will be provided with information about the company’s income and expenses, the source of payment of dividends - net profit, assets and liabilities.
- Obtaining data on the company's performance. An obligatory element of the audit is to perform an analysis of financial and economic activities. According to the analysis, you can dynamically track how important financial and economic indicators that characterize the company’s activities have changed and obtain information about the factors that caused certain changes. The well-being of any owner depends on the level of integrity and professionalism of the company’s management.
- The well-being of any owner depends on the level of integrity and professionalism of the company’s management. As a rule, the director is not a specialist in economic and financial management. Therefore, the management of financial and economic activities, including the organization of the accounting system, and tax risk management are actually carried out by other specialists. The director is extremely dependent on their level of professional competence and business integrity. These are qualities that the director will not be able to test in practice. This requires a tool for external independent control, which is audit.
- Reducing the risk of financial losses. Today's reality shows many cases where a tax audit ends with the identification of arrears and the imposition of millions in fines. And not every enterprise is able to recover from such financial losses.
- To increase the company's level of protection from hostile takeovers. It is a well-known fact that any economically valuable enterprise today can become an object of capture. A fairly common scenario for a hostile takeover is the following: the organization is subject to tax audits or audits by other regulatory authorities. Signs of tax and economic crimes committed in the course of the company’s business activities are identified. As a result, each audit removes significant funds from the company’s turnover (in the form of arrears in taxes and fines), and attempts appear to bring the director to justice. And, as a result, a weakened company and its assets become easy prey. Of course, the audit, in this case, will not protect the company completely, but it acts here as one of the elements of preventive protection. During the audit, problem areas of the enterprise are identified, the elimination of which will significantly reduce the likely capabilities of aggressors.
- Probability of minimizing tax payments. Less taxes - more profit! Oddly enough, in practice there are quite often cases when organizations overpay taxes. This happens due to technical errors or ignorance of the company’s accounting department of certain features of tax legislation.
- To increase trust in the company. As you know, audit is a form of independent financial control. Consequently, the auditor's report is a document indicating the reliability of the company's financial statements, issued by a third-party independent auditor. It should be remembered that by confirming the statements, the auditor confirms the fact that the company actually owns the specified assets and bears the specified liabilities. Therefore, the presence of such confirmation is important for persons interested in the company’s activities (banks, investors, company owners, etc.).
In order for the work of the enterprise to always have positive dynamics, it is necessary to periodically check how effectively it is managed and whether internal resources and funds are distributed correctly. One of the most popular ways to collect information and analyze disparate data about the work of an organization is to conduct an audit.
With the help of regular audits, you can realistically assess the economic activity of a company and properly control it.
Audit control in an organization allows you to check the compliance of the accounting department with current legislative acts and monitor compliance with the rules, which are reflected in a variety of economic and legal documentation.
What is an audit?
As a rule, audits are carried out by independent firms or private external auditors and contain a number of mandatory steps, including the collection, evaluation and analysis of the information obtained. Analysis of the collected data helps improve the company's performance and stabilize its financial position.
The purpose of the audit is to obtain conclusions about whether the organization maintains its accounting records correctly and how well the financial statements correspond to the real state of affairs.
An audit of an individual entrepreneur, a joint stock company or any other company by external auditors also involves collecting information about how well the company complies with tax laws, whether there are any violations of the law in the course of business activities, and what the financial position of the organization is.
Why is a company audit needed, what are its main goals?
- Checking the accuracy of the information specified in the accounting documentation of the enterprise;
- Checking the rest of the company’s documentation, on the basis of which conclusions can be drawn about how well the organization functions;
- Identification of violations of economic activity and their immediate elimination (or issuance of recommendations for elimination).
Important! Based on the results of the audit of the organization, an official document is issued - a conclusion (if the audit was mandatory) or a report on the inspections carried out with the conclusions and recommendations of specialists regarding the improvement of the organization’s activities (in case of a voluntary audit).
Types of audits
There are several ways to classify an audit, for different reasons. If we talk about general categories, we distinguish between independent audit (conducted by an independent organization under a contract), government audit (customer - official government services) and internal audit, which is done by the company itself. There is a division of audits according to the profile of activity - general, banking, tax, insurance, audit of extra-budgetary funds, and so on.
However, the main division is made according to the nature of the order. In this context, a distinction is made between mandatory and voluntary audits, as well as audits based on an agreed assignment.
Mandatory checks
An audit is mandatory for those organizations that meet the criteria set out in detail in Article 5 of Federal Law No. 307-FZ “On Auditing Activities” dated December 30, 2008. If a company meets these criteria, it must arrange an independent audit every year to review its financial and accounting records.
As a result of such an audit, the company receives a conclusion and detailed written information about the violations identified. Sometimes a mandatory audit is carried out not according to the requirements of Russian legislation, but by decision of the company’s owners.
Important! If a company is required to conduct annual audits, then it does not have the right to use a simplified method of maintaining accounting (financial) reporting.
Voluntary audit
A voluntary audit is practically no different from a mandatory audit, but is carried out solely by the good will of the organization’s management or its owners. This allows you to ensure that your accounting and tax documentation is maintained correctly.
At the end of such an audit, management is provided with an audit report and additional written information to which close attention should be paid. Following the recommendations received will help you avoid significant tax penalties and large fines in the future.
Audit according to the agreed assignment
This type of audit is necessary when the management of the enterprise knows exactly what kind of audit needs to be emphasized. As a result, the auditor will provide a specific answer to the question posed to him. The task for a coordinated audit must be set very clearly; the number of procedures that the auditor will be required to carry out depends on this. The result of the inspection will be a report describing the work performed and a list of specific recommendations in accordance with the task.
How is an audit carried out?
An audit of any company, regardless of its organizational and legal form, involves passing through 4 mandatory stages of verification, including:
- Preparatory stage. General acquaintance with the organization, study of its constituent documents, assessment of risks associated with the company’s industry profile, its financial situation, staff turnover, the level of qualifications of the accounting department employees and the growth rate of production capacity. The audit itself begins only if the auditor is satisfied with all the working conditions he has studied. Initiates the verification by a letter of consent, which is sent to the management of the enterprise;
- Planning stage. Planning begins with the conclusion of an agreement between the auditor and the organization, which stipulates in detail the timing of the future audit, its cost, and the composition of the audit team. An overall plan is then agreed upon, including audit strategies and methods, level of materiality and other important parameters. The planning stage ends with the preparation of an audit program, which determines how deeply various sections of the reporting will be worked out;
- Main stage. At the main stage of the audit according to the stated standards, a number of mandatory procedures are carried out - collecting and reviewing the organization’s primary documentation and information on financial activities, assessing the sample and studying the reporting data, as well as assessing the level of materiality and audit risks, determining the compliance of the accounting (financial) documentation with legal requirements, collection of evidence;
- Analysis of evidence and drawing up a conclusion. Based on the results of the activities carried out, a final analysis of the data is made, all collected information is summarized, a report is generated on the status of the accounting documentation, and a written conclusion or report on the inspections carried out is issued to the company management.
Audit Methods
Each audit firm independently chooses the procedure for conducting an audit and the methods it will use when auditing a particular organization. Quite often, auditors focus on selective methods and testing, but there are other work strategies and special approaches. All of them are subsequently reflected in the working documents of the audit company:
- Full check implies a detailed, detailed study of all primary accounting documentation, accounting (financial) reports and registers of analytical and synthetic accounting. Due to its high labor intensity, such a check is used relatively rarely. For example, when auditing banks, it is very difficult to check and compare thousands of customer accounts and identify the correctness of transactions on them in financial documents;
- Custom scan allows you to draw a conclusion about the state of affairs of the enterprise based on studying a relatively small part of it. Document verification is not carried out in a continuous stream, but selectively. This can be random selection based on a special criterion (using a table of random numbers), or systematic selection (checking documents at a given interval), or combined selection (a combination of the two previous methods).
In practice, during an audit, a combination of continuous and random inspection methods is used. There is also a distinction between a desk (documentary) inspection, which does not require visiting the site and interviewing the organization’s personnel, and an actual inspection, which involves visiting the audited site.
According to the law, audit activity- this is a business activity for independent verification of accounting and reporting of organizations in order to express an opinion on the reliability of accounting statements and the compliance of financial and business transactions with the law. However, in our practice, we constantly encounter the fact that today there is no unambiguous understanding of the principles, goals and objectives of audit among its customers, and this situation applies equally to accountants and to the owners and management of companies.
Audit (audit)- independent audit to express an opinion on the reliability of financial statements. The word "Audit" translated from Latin means "listening" and is used in world practice to mean inspection.
The purpose of an audit of financial statements is to enable the auditor to express an opinion on whether the audit reports are prepared, in all material respects, in accordance with the financial reporting framework.
An audit of financial statements is an assurance engagement.
Someone orders an audit to confirm economic solvency to foreign partners (that is, to really confirm the reliability of accounting and financial statements), someone wants to get rid of alleged tax risks. Someone does not trust their accountant or does not find a common language with him, someone simply wants to be confident in the future without looking back at the mistakes of the past - in general, through an audit, everyone pursues their own goals.
Some companies have been cooperating with auditors all these years, while many are just taking their first steps towards such cooperation. Those companies for which auditors have saved considerable money can no longer imagine their activities without auditors as external consultants, and do not need explanations about the need to interact with them. For such companies, auditors are a kind of “family doctors” from the moment of the first mutually beneficial cooperation.
Audit of accounting, financial condition of the facility for incorrect documentation and financial calculations. It is usually carried out to improve the efficiency of the facility, as well as to avoid various incidents during inspections by government agencies. It is advisable to conduct an audit at the facility annually for your own interest - to check the state of affairs of the facility.
Why invite an auditing firm to do your accounting when you can hire an accountant? Do you need an auditor?
I would like to give some explanations about the activities of auditors, supported by experience in communicating with the management of the enterprises we audit. Why do auditors find major mistakes even in the most highly qualified accountants? An accountant, as a rule, takes up the lion's share of his time with current affairs - drawing up primary documents, recording business transactions, working with debtors and creditors, calculating and paying taxes, etc. The auditor is never busy with "routine" - he deals with daily study of accounting and tax legislation, monitors all innovations and problematic issues in their wide range, i.e., constantly deals with those issues for which an accountant usually does not have enough time.
Very often, where a company can afford one (single) accountant, the salary is also not very high. For such positions, a person is hired who has a short work experience or many part-time jobs or many other nuances. On accounting forums you can find: “Good afternoon! I was hired as an accountant, but they couldn’t teach me because the company had just opened. I have a question…". To be honest, it is not clear who should teach whom and whether they should teach them at all, because a person is paid money for working. This raises doubts about the quality of such accounting, and therefore the problems that will arise, and they will certainly arise.
What to do if the accountant does not agree with the auditor’s opinion?
This is the right of an accountant, especially since, as already mentioned, the auditor is an external consultant, and your company has the right to either accept or not accept the auditor’s comments and recommendations. It should be noted that the auditor’s opinion is always based on legislation, with mandatory reference to regulations.
What is the difference between a mandatory audit and an initiative audit?
The criteria for mandatory audit are given in Decree No.
Don't auditors make the work of tax inspectors easier?
The auditor's report on the audit is strictly confidential information, and it is in it that the violations identified by the audit are indicated - this is information inaccessible to the tax authorities. The user of this report is only the audit client. The enterprise itself submits to the tax inspectorate a completely different document - an audit report containing a general opinion on the reliability of the financial statements, and the conclusion is submitted to the Tax Inspectorate only in the case of a mandatory audit.
The presence of an audit report increases the confidence of tax workers in your company, and the audit report helps control the introduction of corrections recommended by auditors by the accounting department and other services. The higher the business reputation of the auditing firm that issued the report, the less desire the tax authorities have to conduct an on-site audit at this enterprise.
Can the cost of an audit exceed the size and cost of tax risks?
Maybe yes, but we have not encountered this in our practice. The fact is that tax legislation is imperfect and often does not have clear answers to emerging questions; in addition, it is dynamic and is in the stage of permanent revision.
At one time we even kept statistics and came to interesting conclusions. On average, the economic effect of an audit (prevention of possible penalties, optimization of taxation, etc.) exceeds the cost of conducting it by 6-7 times. In addition, audit costs are planned and also reduce taxable profit. In comparison, penalties, along with under-accrued taxes identified after a tax audit, are not planned or reserved by enterprises, and accordingly, they have never pleasantly surprised anyone. In addition, the consequences of a tax audit often paralyze the activities of an enterprise, and sometimes, as a result of economic insolvency, even lead to its liquidation.
How, other than his reputation, can an auditor answer for his audit? Is an audit possible with a guarantee?
Indeed, auditors often have nothing to guarantee the quality of their audit. In the event of any disagreements with regulatory authorities, resulting in penalties after an audit, all that the auditor can do is simply sympathize with the customer. After all, as a rule, the working capital and solvency of consulting companies are low, and penalties can be billions. Of course, loss of reputation is the worst thing that can happen to a professional consultant, because a dissatisfied client will tell everyone about it. But this doesn’t make things any easier for the client himself.
So, let's summarize:
Auditor- a person engaged in auditing (revision of accounting books, documents and reports) and consulting activities related to the adjustment of accounting and who has high qualifications and experience to cope with many tasks; this is a “walking bank of knowledge”.
An audit firm is:
The cost of work is at the same level as the expected salary for a hired accountant;
This entire cost of services is included in the gross costs and you do not pay crazy contributions to various funds that take up to 50% of the possible salary of a hired accountant;
You always know for sure that your accounting is carried out accurately and on time;
All “new” legislation has been tracked. And in our country you never know what else the state will come up with to “replenish the budget”;
You can come to our office at any time and receive a summary of your affairs.
Who needs this?
As in any business, we have a circle of Customers, most often they are:
Founders who want to test their accountants for honesty;
Founders, if the company does not work, however, numerous reports must be submitted;
Founders when changing the chief accountant;
Directors, who, like the founders, can hire an audit firm to audit their affairs or do accounting;
Directors when changing the chief accountant;
Chief accountants who check their subordinates or double-check themselves;
All of the above users in preparation for inspection by the tax inspectorate and other authorities;
And finally, a mandatory audit that cannot be avoided.
Besides:
Potential investors;
Potential buyers of the enterprise.
Sources: www.goldenlion.kiev.ua, www.axium.by
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