Since audit findings are the basis of many economic decisions, auditing is highly regulated in all countries. Currently, the following system of regulation of auditing activities is in force in Russia:

1. Law on Auditing;
2. other federal laws and other regulatory legal acts on auditing, issued in accordance with the Auditing Law and not contradicting it;
3. Federal Auditing Standards;
4. standards of self-regulatory audit associations;
5. internal auditing standards.

Thus, the Law on Auditing is the dominant document in the system of direct regulation of auditing activities. It defines the concepts of audit, auditor, legal aspects of organization and operation, criteria for mandatory audits, types of audit-related services, the place of standards and norms of professional ethics, rights and responsibilities of auditors and audited entities, main aspects of quality control in audits, issues of certification for the right to carry out audit activity, the role of self-regulatory audit associations, etc. Compliance with it is mandatory for all auditors and audit organizations, as well as for persons subject to mandatory audit.

Federal auditing standards are mandatory for audit organizations, individual auditors, as well as for audited entities, with the exception of provisions that indicate that they are advisory in nature, they are approved by the Government of the Russian Federation. These standards were developed in Russia in accordance with international standards of auditing (ISA); to enhance the practical focus and uniformity of the audit, methods are being developed on certain issues, for example, for checking inventories or checking income tax calculations, which, unlike standards are purely advisory in nature. The development of these standards in Russia has not yet been fully completed; for example, 23 rules have currently been adopted.

Self-regulatory audit associations have the right to develop their own standards and methodological materials for the application of federal standards, which may establish additional requirements for conducting an audit, but they must not contradict federal standards and the Law on Auditing.

Auditing organizations and individual auditors have the right to establish their own rules (standards) for auditing activities, which cannot contradict the federal rules (standards) for auditing activities and cannot establish requirements lower than those specified in the federal standards.

In addition, auditors, audit organizations, self-regulatory audit associations and their employees are required to comply with the code of professional ethics.

The concept of audit. Legal standards for auditing

Auditing activities (audit)- business activities for conducting audits and providing related services. This means that all audit firms are created for the purpose of making a profit (in accordance with the Civil Code), like any other business structures.

Audit (audit)- independent verification of financial (accounting) statements of organizations. The independence of auditors and audit firms when conducting an audit is a key principle of conducting an audit (the law contains a fairly detailed definition of this concept).

The object of an audit can be not only organizations, but also individual entrepreneurs, since the law does not provide for differences between them when identifying criteria for mandatory auditing.

The audit does not replace state control of the reliability of financial (accounting) statements, carried out in accordance with the legislation of the Russian Federation by authorized government bodies.

At least 50% of the staff of an audit organization must be citizens of the Russian Federation permanently residing on the territory of the Russian Federation, and if the head of the audit organization is a foreign citizen, at least 75%. A person who is the sole executive body of a commercial organization must be an auditor.

The audit organization must have at least five auditors on its staff. According to legislators, this norm, together with the requirement that a statutory audit can be carried out only by an audit organization, should serve to improve the quality of auditing. It is expected that a larger number of qualified specialists in an audit firm will contribute to an overall improvement in the quality of its work.

Auditors and audit organizations must be members of one of the self-regulatory associations and be included in the Unified Register of Auditors and Audit Firms. Only after all these conditions are met can one carry out auditing activities and provide related services related to the expression of an opinion, otherwise the activity is considered illegal, with all the ensuing consequences. The same rule applies to all commercial organizations that use the word “audit” and all derivatives from the word “audit” in their name.

Auditing organizations and individual auditors are required to keep confidential the transactions of the audited entities and persons to whom audit-related services were provided.

Auditing organizations and their managers, individual auditors, audited entities and entities subject to mandatory audit bear criminal, administrative and civil liability in accordance with the legislation of the Russian Federation.

Goals, objectives and general principles of audit

When considering the objectives and general principles of auditing, it is necessary to be guided not only by the provisions of the Auditing Act, but also by standards.

Federal Auditing Standard No. 1 “Purpose and Basic Principles of Audit” establishes common goals and basic principles for conducting an audit of financial (accounting) statements, which the audit organization and the individual auditor are required to comply with. The standard addresses the following main issues:

• purpose of the audit;
• general principles of auditing;
• scope of audit;
• reasonable assurance;
• responsibility for financial (accounting) reporting.

An audit of financial statements is intended to enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an established financial reporting framework. When expressing his opinion, the auditor, in accordance with paragraph 2 of ISA No. 200, “gives a true and objective view” or “presents objectively and in all material respects,” which is equivalent.

The purpose of the audit is to express an opinion on the reliability of the financial (accounting) statements of the audited entities and the compliance of the accounting procedure with the legislation of the Russian Federation. This definition is given both in the law and in the standard; it is complete and exhaustive. Based on this, the purpose of the audit is not to find errors and expose dishonesty.

Although the auditor's opinion may enhance confidence in the financial statements, the user should not accept the opinion as either an expression of confidence in the future viability of the entity or as evidence of the effective conduct of the entity's management.

It is necessary to recall that reliability is understood as the degree of accuracy of financial (accounting) reporting data, which allows the user of these reporting, based on its data, to draw correct conclusions about the results of economic activity, the financial and property status of the audited entities and make informed decisions based on these conclusions.

The auditor's tasks in the audit process are: assessment of the level of organization of accounting and internal control, qualifications of accounting personnel, quality of processing of accounting documentation, correctness and legality of accounting entries reflecting the financial and economic activities of the enterprise and its final results; providing assistance to the enterprise administration by developing recommendations to eliminate shortcomings and violations that affected financial results and the reliability of reporting indicators; based on the study of past facts and the current state of affairs at the enterprise, the orientation of its administration towards those future events that can affect economic activities and final results (conducting a long-term analysis); providing meaningful and accurate information to the client on all unclear issues arising in the process of fulfilling the contract for the provision of audit services.

When performing his professional duties, the auditor must be guided by ethical principles, which are: independence, honesty, objectivity, professional competence and integrity, confidentiality, professional conduct.

The auditor is required to conduct the audit in accordance with the Federal Auditing Standards, which contain basic requirements, procedures and guidelines, as well as advisory provisions and examples.

The independence of the audit organization from the economic entity and its management should be considered from the point of view of both formal and actual circumstances; it is determined in accordance with the legislation of the Russian Federation and federal rules (standards) of auditing activities.

Honesty and objectivity in communication with an economic entity lies in the fact that only a sufficient amount of necessary information can be the basis for the conclusions, recommendations and conclusions of an audit organization. The audit organization should not allow bias, prejudice or pressure exerted on it to affect communication with the management of an economic entity and, consequently, the objectivity of its findings, recommendations and conclusions.

The audit organization should not provide services, recommendations or proposals for assistance in their implementation that go beyond the scope of its powers in accordance with existing licenses for auditing and related activities or professional competence.

The audit organization is obliged to maintain the confidentiality of information received when communicating with the management of an economic entity, without time limits and regardless of the continuation or termination of relations with it. The audit organization is obliged to ensure the safety of confidential information of an economic entity and not to disclose it without the consent of the management of the economic entity, except in cases provided for by the legislation of the Russian Federation.

Professional behavior in dealing with the management of an economic entity is to respect the priority of public interests and the reputation of the profession as a whole. The audit organization must refrain from any actions that could discredit it or undermine respect and confidence in the auditing profession.

From the general list of ethical principles, the concepts of independence and respect for the confidentiality of information received are regulated by law, therefore, they can be called fundamental, and the remaining principles - general ethical ones.

Professional skepticism should be exercised during the planning and execution of the audit, as circumstances may exist that give rise to material misstatement of the financial statements.

The exercise of professional skepticism means that the auditor critically evaluates the substance of the audit evidence obtained and carefully examines evidence that contradicts any documents or statements of management or calls into question the reliability of such documents or statements. In particular, professional skepticism should be exercised during the audit to reduce the risk of overlooking unusual circumstances, making unwarranted generalizations in drawing conclusions, or using erroneous assumptions in determining the nature, timing and extent of audit procedures, and in evaluating their results.

The term "scope of the audit" refers to the audit procedures considered necessary to achieve the objective, which should be determined by the auditor taking into account the requirements of relevant laws and regulations and, if necessary, taking into account the terms of the audit engagement and reporting requirements.

An audit is designed to provide reasonable assurance that the financial statements taken as a whole are free of material misstatement. Sufficient assurance refers to obtaining the audit evidence necessary to enable the auditor to conclude that the financial statements taken as a whole are free from material misstatement. The concept of reasonable assurance applies to the entire audit process.

The federal standard (in accordance with ISA) provides the following types of assurance:

• absolute (rarely happens - on obvious issues);
• reasonable (used in auditing);
• moderate (used for review checks);
• low (no confidence - applied when compiling and executing agreed upon procedures).

While the auditor is responsible for formulating and expressing an opinion on the reliability of the financial (accounting) statements, the responsibility for the preparation and presentation of the financial (accounting) statements rests with the management of the audited entity. An audit of financial (accounting) statements does not relieve the management of the audited entity from such responsibility.

Auditor Ethics

In Russia, the Code of Professional Ethics for Auditors was first approved by the general meeting of the Audit Chamber of Russia on December 4, 1996. The main requirements of the Code of Ethics for Auditors were determined by the International Federation of Accountants. They serve as the basis for the development of ethical requirements, detailed rules and standards of conduct for auditors in each country where auditing is carried out, and they were the basis for the codes of ethics developed in Russia for both auditors and professional accountants. In accordance with these requirements, the auditor must have certain professional knowledge and skills, recognize the importance and profess a high standard of moral values ​​in his work, be aware of his duty and responsibilities to society, and comply with established rules of conduct.

Compliance with these requirements is mandatory for both the auditor and the professional accountant employed by the organization. At the same time, a number of additional ethical requirements are imposed on external audit specialists. These include compliance with the conditions of independence, additional requirements for professional competence, regulation of the procedure for payment of audit services, relations with accountants of audited organizations and other auditors, features of advertising and offers of services. To enhance the emphasis on these provisions and make them mandatory, they are included in the text of the Auditing Act.

The Code contains 15 articles.

• Article 1. “General Provisions” summarizes the ethical standards of professional conduct of independent auditors united by the Audit Chamber of Russia; the moral values ​​that the audit community affirms in its environment are determined.
• Article 2. “Generally accepted moral norms and principles” confirms the obligation of auditors to adhere to universal moral rules and ethical standards in their actions and decisions, to live and work according to their conscience.
• Article 3. “Public interests” provides that the external auditor is obliged to act in the interests of all users of financial statements, and not just the customer of audit services; he must be convinced that the interests being protected arose on legal and fair grounds, otherwise he is obliged to refuse to protect them.
• Article 4. “Objectivity and care of the auditor” emphasizes that objectivity for conclusions is only possible if there is a sufficient amount of required information. Auditors are required to objectively consider all emerging situations and real facts. Pressure on the auditor in any form is unacceptable. Auditors must take their responsibilities carefully and seriously, comply with approved auditing standards, adequately plan and control work, and check subordinate specialists.
• Article 5. “Auditor Independence” implies that in the report or other document drawn up as a result of the professional services provided, the auditor is obliged to consciously declare his independence in relation to the client, both in formal and factual circumstances.
• Article 6. “Professional competence of the auditor” indicates that the auditor is obliged to refrain from providing services that go beyond the scope of his professional competence, as well as those that do not correspond to his qualification certificate. To assist the auditor in solving specific tasks, the audit firm can attract competent specialists.
• Article 7. “Confidential information of clients” provides for the auditor’s obligation to keep confidential information about clients’ affairs obtained during the provision of professional services, without time limitation and regardless of the continuation or termination of direct relations with them. Confidential information should not be used by the auditor for his own benefit or for the benefit of any third party, or to the detriment of the client's interests.
• Article 8. “Tax Relations” states that when providing professional tax services, the auditor must be guided by the interests of the client with mandatory compliance with tax laws. The auditor should not facilitate falsifications in order to evade the client from paying taxes and deceive the tax service. All recommendations and advice in the field of taxation must be provided in writing.
• Article 9. “Fees for Professional Services” provides that the fees for professional services of the auditor must comply with the standards of professional ethics and be paid depending on the volume and quality of professional services. The auditor is obliged to negotiate in advance with the client and establish in writing the terms and procedure for such payment.
• Article 10. “Relations between auditors” implies that auditors must treat other auditors kindly, refrain from unfounded criticism of their activities and other deliberate actions that cause harm to colleagues in the profession.
• Article 11. “Relations of employees with the audit firm” encourages employees to be loyal to their audit firm; with all their activities they must contribute to its authority and further development, and maintain friendly business relations with both the firm’s employees and the client.
• Article 12. “Public information and advertising” indicates that advertising must be informative, direct and honest, excluding the possibility of deception and misleading potential customers.
• Article 13. “Inconsistent acts of the auditor” notes that engaging in any activity prohibited by practicing auditors in accordance with the law is considered incompatible acts of the auditor, violating the law and professional ethical standards.
• Article 14. “Audit services in other states” emphasizes that when conducting an audit, the auditor is obliged to know and apply in his work international auditing standards and standards in force in the state in which he carries out his professional activities.
• Article 15. “Compliance of this Code with international standards” states that the standards of professional conduct determined by the Code of Ethics are based on international ethical standards developed by the International Federation of Accountants.

Professional ethics in communication with the management of an economic entity is defined by the Federal Auditing Standard “Communication with the management of an economic entity”, the objectives of which are:

1. determination of the basic requirements for communication between the audit organization and the management of the economic entity;
2. determining the characteristics of communication between the audit organization and the management of the economic entity at various stages of the audit;
3. determining the specifics of communication between an audit organization and the management of an economic entity on issues of accounting and internal control.

The Institute of Professional Accountants and Auditors of Russia, by decision of the Presidential Council on September 24, 2003, approved the Code of Ethics for members of the IPB of Russia, which came into force in January 2004. This Code was prepared on the basis of and taking into account all the requirements of the IFAC Code of Ethics with maximum preservation of its conceptual approaches and sections.

The Code recognizes that the main purpose of the accounting and auditing profession is to operate at the highest professional level to ensure high-quality performance of assignments and satisfaction of the public interest. Achieving this goal requires meeting four basic requirements:

1. reliability - society has a need for reliable information and information systems;
2. professionalism - clients, employers and other interested parties need specialists who are professionals in the field of accounting and auditing;
3. high quality of services - all services provided by a professional accountant (auditor) must meet the highest quality standards;
4. confidence - persons using the services of professional accountants (auditors) must be confident that the services are provided in accordance with the professional ethical standards that govern them.

The objectives and fundamental principles of the Code are general in nature and are not aimed at solving ethical problems that arise before a professional accountant (auditor) in each specific case. However, the Code contains some recommendations on the practical achievement of goals and compliance with fundamental principles in a number of typical situations encountered in accounting and auditing practice, for example, the Appendix to this Code contains 24 articles on recommendations for applying the principle of independence to specific situations.

At the present stage of development, the IPB of Russia and the Audit Chamber of Russia are the undoubted leaders in the establishment of an audit system and public regulation of the norms of this activity.

Existing government administrative documents contain rules and regulations governing audit activities, retraining, additional courses and also the evaluation of auditors' work. The main protocols regulating the regulatory aspects of auditing in Russia include:

• Accounting Law;
• Federal Law “On Auditing Activities” dated December 30, 2008 No. 307-ΦЗ;
• Federal Law of May 4, 2011 No. 99-FZ “On licensing of certain types of activities”;
• Regulations on the procedure for conducting the qualification exam for obtaining a qualification certificate of an auditor, approved by Order of the Ministry of Finance of Russia dated November 17, 2010 No. 153n;
• The procedure for creating a unified certification commission, approved by order of the Ministry of Finance of Russia dated May 27, 2010 No. 51n;
• Federal rules (standards) of auditing activities, approved by Decree of the Government of the Russian Federation of September 23, 2002 No. 696.

The system of regulatory regulation of auditing activities in Russia

The organization of auditors’ activities in the Russian Federation is based on the experience of world practice and international relations. It highlights two main concepts of conducting and managing audit activities.

The first concept has become widespread in European countries such as Austria, Spain, Germany and France, where the activities of auditors are strictly controlled by the administrative authorities. They exercise control over the functioning of audit companies at the state level.

The second concept is most often used in the USA and Great Britain, where independent regulation of auditing activities is characteristic, which is mainly focused on the requirements of investors, creditors and shareholders. It is regulated through public audit associations.

In the Russian Federation, the system of legal regulation of the activities of auditors is just beginning to develop and take shape. Of the two existing concepts and management mechanisms, the most suitable is the system of regulatory regulation of auditors, consisting of four levels (Table 1.3.1). In the table, these same levels are arranged in order, and illustrate the levels of government regulation, types and names of regulatory documents, the scope of regulation and use, and also the degree of their development.

The first level consists of Federal Law No. 307-ΦZ dated December 30, 2008, one of the main regulatory legal acts that defines the role of auditing in the financial and economic industry, and is its necessary equal element. In this country, this is considered very important, because historically, state control has always prevailed over other types of control, and the adoption of such a law gave auditing activities a chance to exist and function legally.

Table 1. The system of legal regulation of auditing in Russia

Levels of regulation	Types and names of regulatory documents	Scope of regulation and use	Degree of development
	Federal Law "On Auditing" dated December 30, 2008 No. 307-ΦЗ	Determines the place, purpose and objectives of audit in the financial and economic system	The law has been passed
	Federal rules (standards) of auditing activities	Determine general issues of regulation of auditing activities, mandatory for all objects, establish audit standards, mandatory for all subjects of the audit services market	Federal standards (34 rules (standards) have been developed and approved)
	Legislative and by-laws	Establish general provisions for regulating auditing activities for audit organizations and individual auditors	Regulatory documents in the field of certification and licensing of auditing activities, etc. have been developed in accordance with federal legislation.
	Internal rules (standards) of self-regulatory audit organizations	Regulation of specific issues of auditing activities at the level of self-regulatory audit organizations	Developed by self-regulatory audit organizations
	Regulatory documents of ministries and federal services	Regulation of specific features of audit by type: general, insurance, investment institutions, banking	Ministries and federal services have adopted and are developing a number of documents on types of audit
	Internal regulations (auditing standards)	When conducting a tactile audit and related audit and other services	Developed by audit organizations and individual auditors

The second level of documentation that regulates the activities of auditors in Russia includes that which covers the main issues regarding the regulation of auditing activities that are necessary for implementation by auditors. It also includes 33 federal standards developed and approved to date.

The third level of the system of legal regulation of the activities of auditors represents the internal standards of self-regulatory organizations with audit-oriented activities. The main objective of these standards is to consolidate the norms of auditing activities, which are clearly interpreted both by subjects of the financial and economic industry and by arbitration courts. This level also includes regulations of all ministries and federal organizations that regulate audit activities in certain industries, organizations and also with regard to specific issues of taxation, finance, accounting and other industries.

The fourth level consists of internal regulations and internal standards for auditors, which are developed by audit companies and individual auditors based on federal standards and auditing practices. The essence and template of documentation of this kind is individually developed by each organization, and on their basis the level and reputation of the audit firm can be determined.

Law on Self-Regulatory Organizations (SRO)

The adoption of the Law on Self-Regulatory Organizations in the Federal Law of December 30, 2008 No. 307-FZ drew attention to such aspects as SRO auditors and related organizational issues, maintaining a register of auditors and SRO auditors and others.

Let us pay attention to some aspects of the SRO Law. It is a conceptual document that contains regulatory provisions for the activities of auditors in Russia. Along with it, you should also consider other legal documents related to a narrow type of activity, for example, the Civil Code, Tax Code, Accounting Law, SRO Law and others.

The law consists of 26 articles that reflect the main definitions: auditing activities, services attached to the audit, additional services of auditors, auditor, audit firm, SRO (self-regulatory organization) and others.

The main provisions of the law are regulated by:

Rights and obligations of audit firms and their clients with whom an agreement was concluded for the provision of audit services.

Factors to consider when conducting an audit.

The essence of various standards of activity of auditors, the conclusion of the audit process, and also a deliberately false conclusion.

The essence of the Code of Professional Ethics for Auditors.

In addition, the Law explains what exactly should be understood as audit independence, audit firms and individual auditors, control over the activities of audit firms and individual auditors, an auditor’s qualification certificate, and also whether there are grounds for its cancellation and what is the procedure for this process.

The Law on SROs has 7 articles that cover audit management issues, and also focuses on state regulation, the participation of the Audit Council, self-regulatory organizations of auditors, the requirements for participants in this organization and the maintenance of special registers of auditors.

There are also some significant differences between the recently adopted Federal Law “On Auditing” and the previous one.

Conducting a mandatory audit. In accordance with the Federal Law of December 30, 2008 No. 307-ΦZ, not only audit firms, but also individual auditors have the right to conduct mandatory audits. But not counting those organizations that put their securities into circulation on trading stock exchanges and in other organizations that are engaged in trading on the securities market, and also in credit and insurance organizations, pension funds that are not related to the state, organizations, whose authorized capital is at least 25% state-owned, various state-owned corporations and companies and consolidated statements. For such organizations, mandatory audits are carried out only by audit firms (Part 3, Article 5).

Number of employees in the audit firm. At the moment, the company must consist of at least 3 people (Part 2, Article 18).

Public organizations of auditors. Organizations of this type are established as self-regulatory non-profit organizations of auditors. The number of members of such an organization: at least 700 individuals, and at least 500 commercial companies (Part 3, Article 17).

Mandatory membership in a self-regulatory non-profit organization for both individual auditors and audit firms. This membership is a replacement for licensing of audit activities (Articles 3, 4, 17, 18). However, there is a condition that members of such organizations must be both individuals and legal entities.

Components of services provided by auditors. This law introduced a distribution for audit, complementary audit, services and other services related to this activity. External audit is divided into mandatory, initiative and audit for special tasks. The list of services is regulated by federal auditing standards.

Federal auditing standards are approved by a special federal body in accordance with Federal Law No. 307-ΦZ dated December 30, 2008. According to the previous Federal Law dated August 7, 2001 No. 119-FZ, they were approved by the Government of the Russian Federation.

Prior to the ratification of the federal audit standards provided for by federal law, the relevant federal body, mandatory for audit organizations and individual auditors are the federal rules approved before the day when the federal law approved by Decree of the Government of the Russian Federation dated September 23, 2002 No. 696 comes into force. In addition, , during the audit, standards approved by the Commission under the President of the Russian Federation on Auditing Activities are applied (taking into account the decision of the Council on Auditing Activities under the Ministry of Finance of Russia dated September 25, 2008).

This list of changes relates mainly to general provisions. It is also important that for a number of articles of the Federal Law of December 30, 2008 No. 307-ΦЗ, additional legislative documents should soon be approved.

In accordance with this, the Ministry of Finance of Russia, as the federal body governing the field of audit activity, in cooperation with the SRO, should focus all its attention on the following aspects:

Determining the procedure for passing qualifying exams to obtain and confirm an auditor’s certificate in a more simplified manner.

Resolving issues related to the implementation of legal audit activities by auditors who were previously certified (before January 1, 2011) and received audit qualification certificates.

Determination of the formation, content and safety of the SRO compensation fund, as well as the rules and conditions for making payments from this fund and guarantees for the return of funds paid.

Establishing the possibility of actual, and not just formal voting of SRO members (no possibility of vote manipulation).

A clear definition of the prospects for formalizing and registering SRO auditors.

Regulatory support for Federal Law No. 307-ΦЗ dated December 30, 2008 is provided by current federal auditing standards, orders of the Russian Ministry of Finance and other documents (Table 1.3.2).

Knowledge of the Federal Law of December 30, 2008 No. 307-ΦЗ is necessary for individual auditors, heads of audit firms, enterprise accountants, lawyers, economists and other specialists to whom its norms are addressed, employees of the government apparatus, financial and tax authorities.

Table 2. Regulatory legal support of the Federal Law of December 30, 2008 No. 307-FZ

Number, title of the article of the Law		Regulations and legislation in support of this article
	Auditing activities	federal rules (standards) of auditing activities No. 24 "Basic principles of federal rules (standards) of auditing activities related to services that can be provided by audit organizations and auditors"
	Auditing activities	No. 30 "Implementation of agreed procedures in relation to financial information"; No. 31 "Compilation of financial information"; No. 33 "Review of financial (accounting) statements" International Financial Reporting Standard No. 1 PBU 4/99 "Accounting statements of an organization", approved. by order of the Ministry of Finance of Russia dated July 6, 1999 No. 43n
	Legislation of the Russian Federation and other regulatory legal acts that regulate audit activities	Constitution of the Russian Federation Laws on SROs, on accounting, Federal Law of December 26, 1995 No. 208-FZ “On Joint-Stock Companies”, etc. decrees of the President of the Russian Federation decrees of the Government of the Russian Federation normative acts of federal executive authorities normative acts of constituent entities of the Russian Federation federal rules (standards) of auditing activities
	Audit organization	Art. 1, 5, 8, 10, 13, 18, 19, 20 of the Law
		Temporary regulations on the system of certification, training and advanced training of auditors in the Russian Federation Code of Ethics for Auditors of Russia Art. 8, 10, 11, 12, 13, 20 of Law No. 307-ΦЗ
	Mandatory audit	Federal laws “On accounting”, “On banks and banking activities”, “On the organization of insurance business in the Russian Federation”, “On non-state pension funds”, “On consumer cooperation”, “On joint stock companies” Art. 1.6 of the Law Federal Rules (Standards) of Auditing No. 2 “Documentation of the Audit”; No. 3 "Audit planning"; No. 5 "Audit evidence"; No. 10 "Events after the reporting date"; No. 22 "Communication of information obtained from the audit results to the management of the audited entity and representatives of its owner"
	Audit report	Federal Rules (Standards) of Auditing No. 10; No. 22 Russian rule (standard) of auditing activities “Conclusion of an audit organization on special audit assignments”
	Auditing Standards and Code of Professional Ethics for Auditors	federal rules (standards) of auditing activities Russian rules (standards) of auditing activities International auditing standards Code of Ethics for Auditors of Russia Code of Ethics for Professional Accountants - Members of the IPB of Russia, approved. by decision of the Presidential Council of the Institute of Professional Accountants and Auditors of Russia, minutes dated September 26, 2007 No. 09/-07)
	Independence of the audit organization, auditors	Art. 13, 17, 18, 20 of the Law
	Auditor confidentiality
	Quality control of audit organizations and auditors	Federal Rules (Standards) of Auditing No. 7; No. 34 “Quality control of services in audit organizations” art. 17, 19, 20, 23 of the Law, order of Rosstat dated 09/06/2010 No. 306 "On approval of statistical tools for organizing federal statistical monitoring of activities in the field of trade, services, tourism, transport and communications, offenses"
	Auditor qualification certificate	Art. 4, 12 Law Regulations on the procedure for conducting the qualification exam for obtaining a qualification certificate of an auditor, approved. by order of the Ministry of Finance of Russia dated November 17, 2010 No. 153n; The procedure for creating a unified certification commission, approved. by order of the Ministry of Finance of Russia t May 27, 2010 No. 51n; Russian rule (standard) of auditing activities "Auditor Education"
	Grounds and procedure for revocation of an auditor’s qualification certificate	Art. 11 Law
	Rights and obligations of an audit organization, an individual auditor	Art. 4, 8, 18, 20, 23 Laws
	Rights and obligations of the audited entity and the entity that has entered into an agreement for the provision of audit services	Art. 13, 5, 6, 9 of the Law
	State regulation of auditing activities	Art. 16-18, 21-23 of the Law, order of the Ministry of Finance of Russia dated 03/07/2002 No. 47 “On approval of the Regulations on the Department for Organization of Audit Activities of the Ministry of Finance of the Russian Federation”
	Audit Council	Art. 15, 23 Laws Regulations on the Audit Council under the Ministry of Finance of the Russian Federation
	Self-regulatory organization of auditors	Art. 2-4, 7, 10, 11, 15, 18, 19-23 of the Law
	Requirements for membership in a self-regulatory organization of auditors	Art. 17 of the Law
	Maintaining a register of auditors and audit organizations	Art. 3, 4, 17 Law
	Disciplinary measures against audit organizations and auditors	Art. 3, 4 Laws Law on SRO Code of Administrative Offenses
	Maintaining the state register of self-regulatory organizations of auditors	Art. 5.17 Law
	State control (supervision) over the activities of self-regulatory organizations of auditors	Art. 17, 15 of the Law

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Who carries out state regulation of auditing activities

The body playing a leading role in monitoring and regulating the work of auditors is the Ministry of Finance of the Russian Federation. The department for regulation of state financial control, auditing activities, accounting and reporting is directly involved in this area of ​​activity in the Ministry of Finance of Russia (Article 15 of the Federal Law “On Auditing Activities” dated December 30, 2008 No. 307-FZ).

For example, this division of the Ministry of Finance conducts:

• rule-making activities in the area under consideration;
• register of auditors and their SROs, etc.

In addition, there is a Council for Auditing Activities (hereinafter referred to as the Council). It meets periodically (at least once a quarter) under the Russian Ministry of Finance. This body acts more as an expert and critic: it studies draft regulations, makes its proposals and recommendations, and evaluates quality control of the audit. A complete list of functions is given in the regulation “On the Audit Council”, approved by Order of the Ministry of Finance of Russia dated December 29, 2009 No. 146n.

To organize document flow, including making decisions, a working body has been created under the Council.

In addition to everything, auditors organize a non-profit self-regulatory organization (SRO).

Conclusion! Thus, state regulation of auditing activities in the Russian Federation is carried out at several levels.

The system of legal regulation of auditing activities in the Russian Federation

Legal regulation of auditing activities in the Russian Federation includes several levels:

1. The main legal document is Law No. 307-FZ. Its structure will be discussed below.
2. Then follow the International Auditing Standards, introduced on January 1, 2017 by orders of the Ministry of Finance of the Russian Federation dated November 9, 2016 No. 207-n and dated October 24, 2016 No. 192n (replaced by order of the Ministry of Finance of the Russian Federation dated January 9, 2019 No. 2n). The standards describe the procedure for interaction between the auditor and the management of the audited organization, drawing up an audit assignment, and preparing reports.
3. Level 3 includes methodological recommendations and explanations on individual (private) issues approved by the Council.
4. Rules, requirements, clarifications and other regulations established by SROs and private companies providing audit services are also taken into account by auditors. They are at the 4th level of legal regulation of the activities of auditors.
5. Technical issues such as the procedure for maintaining registers (SROs or auditors) or the rules for conducting qualification exams are often regulated by letters from the Russian Ministry of Finance.

Basic provisions of the law on auditing activities

Since Law No. 307-FZ is the fundamental act for organizing and regulating audit activities in the Russian Federation, in this section we will study its structure.

Law No. 307-FZ consists exclusively of articles; it does not have sections or chapters:

• The first 4 articles are introductory, they contain basic concepts (terms) and key points associated with them. For example, in Art. 4 defines the concept of “auditor” and indicates that the status is acquired only after information about the person is entered into the register of auditors.
• After listing the situations in which an audit is carried out without fail (Article 5), Law No. 307-FZ defines what an audit report is, how audit activities are organized in general, and what relates to audit secrecy (Articles 6-9). Of course, it indicates only the main points, which are described in more detail in the regulations of lower levels.
• Art. 10-12 of Law No. 307-FZ are related to quality control of auditors’ work.
• In Art. 13-14 of Law No. 307-FZ lists the rights and obligations of audit participants: auditors and audited entities.
• How state regulation of auditing activities occurs is described in Art. 15-22. It also describes the procedure for organizing an SRO, the conditions for auditors’ membership in the SRO, disciplinary measures against auditors and monitoring the activities of the SRO.
• The last 4 articles of Law No. 307-FZ contain several additional requirements and notes, repeal a number of regulations and put this law into effect.

Thus, Law No. 307-FZ, although laconic, is meaningful and imperative.

A few words about ISA

Thus, the system of regulatory regulation of auditing activities has now acquired complete outlines, having been integrated into international law - the transition to international auditing standards.

Speaking about the system of regulatory regulation of auditing activities in the Russian Federation , First of all, they mention Law No. 307-FZ as a normative act establishing the legal basis for auditing activities. It is followed by the ISA and several regulations still in force that interpret, clarify and supplement almost every provision of this law.

Concept and legal regulation of auditing activities

1. The concept of audit and auditing activities

In recent years, along with the development of accounting, economic analysis, state financial control - audit. The Federal Law “On Auditing Activities” came into force, general principles and federal rules (standards) for auditing activities were developed, the Code of Ethics of Russian Auditors was adopted, Russian auditors were trained and certified, and a concept for the development of auditing activities for the medium term was developed. As noted in this document, audit as a form of independent verification of the financial statements of business entities by persons with authority should become the basis of the financial control system.

The general principles of the audit concept are set out in a number of scientific works. The prerequisites for the effectiveness of the audit concept are:

─ quality auditing standards that comply with International Standards on Auditing;

─ clear rules for the independence of audit organizations and auditors;

─ strict adherence of audit organizations and auditors to the Code of Professional Ethics;

─ uniform qualification requirements for auditors, regardless of what industry or area of ​​the economy they operate in;

─ high qualification level (including in the field of international financial reporting standards) of auditors, ensured by a system of certification and advanced training, including a qualification exam;

─ quality control of the work of audit organizations and auditors by primarily professional public associations;

─ an effective system of state and public supervision of audit organizations and auditors.

Audit has developed as an independent functional science and practice, which has a specific essence and certain connections with other sciences.

Auditing is a functional science of methods and techniques of independent financial control. It is interconnected with such functional sciences as accounting (financial and managerial), analysis of economic activities based on accounting and reporting data, operational management (regulation, coordination and monitoring of plans); financial control, including its various forms.

Audit is included in the financial control system as independent financial control along with other components: national financial control, budgetary and financial control, departmental financial control, public control.

Auditing as a science represents a system of knowledge about the methods and techniques of independent financial control. Auditing as a practice is a type of management activity that boils down to independent financial control of accounting and evaluation of accounting (financial) statements. Consequently, it is the principle of independence that determines the basic essence of audit; this is how it differs from other types of control and is an independent scientific (and educational) discipline and practice.

The subject of the audit is one of the main functions of management, one of the types of socially necessary activities to provide users with reliable information about the accounting (financial) statements of the audited entity for making decisions by users of these statements, i.e. feedback is provided between economic entities and users.

The object of the audit is the accounting (financial) statements of organizations and individual entrepreneurs and a reflection of the economic activities of organizations and individual entrepreneurs, considered in interaction with its technical, social and natural conditions. Economic activities in a market economy are reflected in accounting (financial) statements. Such reporting is the most important object of the audit, but cannot limit the audit when studying the economic activities of the audited entities.

Financial audit control is carried out by subjects of control (audit organizations and individual auditors), whose social status, rights, duties and responsibilities are strictly regulated by regulatory and legislative acts.

The audit method as a general approach to research is based, as in other sciences, on dialectics. Its main features are the unity of analysis and synthesis, the study of indicators in their relationship, development, etc., which determine the methodology and methodology of the audit.

Methodology is the study of structure, logical organization, methods and means of activity, since the latter becomes the subject of awareness, training and rationalization. The audit methodology as a science takes the form of regulations and norms that fix the content and sequence of both certain types of activities and descriptions of the actual activities performed.

Audit methodology is a set of special techniques, i.e. specific procedures, calculations, mathematical models, comparisons used to substantiate an opinion on the degree of reliability of accounting (financial) statements. To confirm the reliability of the accounting (financial) statements, it is necessary to obtain sufficient evidence in order to formulate reasonable conclusions on which the auditor’s opinion is based.

Audit evidence is obtained from performing substantive procedures and tests of internal controls.

Unlike due diligence, i.e. audit, a description of the study of individual elements, components of financial statements or sections of accounting can be defined as a methodology for conducting an audit. It is also necessary to distinguish the actual audit of financial statements from the definitions of such types of “audit” as environmental, managerial (production), technical, personnel audit, personnel audit, performance audit, intellectual property audit, etc.

Theoretical provisions of audit also include audit postulates and audit principles. Along with the concept of “audit”, the term “auditing activity” is also distinguished. In accordance with the Federal Law “On Auditing” and international experience, auditing activities include two components: audit and audit-related services.

Audit is an independent verification of the accounting (financial) statements of organizations and individual entrepreneurs and accounting.

The purpose of the audit is to express an opinion on the reliability of the financial statements of the audited entities. Reliability is understood as the degree of accuracy of financial reporting data, which allows the user of these statements, based on their data, to draw correct conclusions about the results of economic activities, the financial and property status of the audited entities and make informed decisions based on these conclusions.

The essence of the audit lies not only in confirming or not confirming the reliability of the accounting (financial) statements, but also in assessing the effectiveness of the economic activities of the audited entities, their ability to continue further activities, at least during the year following the reporting year.

In accordance with Art. 1 of the Federal Law “On Auditing Activities”:

Services related to auditing (audit activities) - business activities for independent verification of accounting and financial (accounting) statements of organizations and individual entrepreneurs, these are services other than auditing, related to the expression in the prescribed form of an independent opinion about the information of organizations. In this definition, several main components can be distinguished. Firstly, the concept of “entrepreneurial activity” means that all audit firms are created for the purpose of making a profit, like any other business structures. Secondly, the concept of “audit independence” (its fairly detailed definition is given in the Audit Law) is a key principle of conducting an audit. Thirdly, the reporting of not only organizations, but also individual entrepreneurs may be subject to audit; mandatory criteria are also given in the Audit Law.

Auditing organizations and individual auditors can provide audit-related services.

An auditor (from the Latin Auditor - listener, student, follower) is a person who checks the state of the financial and economic activities of an enterprise for a certain period. An auditor differs from an auditor in its essence, in its approach to document verification, in its relationship with the client, in its conclusions drawn from the results of the audit, etc.

The concept of “audit” is much broader than such concepts as “audit” and “control”. The audit ensures not only verification of the reliability of financial indicators, but also, and this is no less important, the development of proposals for optimizing business activities in order to rationalize costs and increase profits. An audit can be defined as a kind of business examination.

In accordance with the Federal Law “On Auditing Activities”, such services include: various types of consulting – accounting, management, legal, etc.; accounting for organizations; analysis of financial and economic activities of organizations; accounting automation and a number of others. For example, analysis of the effectiveness of business activities is included in the concept of “audit activity” as one of the services accompanying the audit. Services related to the audit are performed by a specialist auditor. In modern conditions, an auditor is a professional accountant who has additional professional skills, professional values, possesses professional ethics, professional capabilities and competence, i.e. having additional knowledge.

The current system of regulatory regulation of auditing activities in Russia includes five levels:

First level- Federal Law of December 30, 2008 N 307-FZ “On Auditing Activities” refers to the main legislative acts. This law defines the place of audit in financial and economic activities as its necessary and equal element. This is especially important for Russia, since historically state control has prevailed over other types of control. It is the adoption of the law that allows us to consider that the establishment of audit in Russia has taken place.

First-level documents also include codes of the Russian Federation and decrees of the President of the Russian Federation.

To documents second level include decrees of the Government of the Russian Federation, regulatory legal acts of the authorized federal body for state regulation of auditing activities, ministries and departments designed to ensure the effective functioning of the institution of domestic audit in market conditions, its progressive development and improvement, control over the activities of auditors, such as:

Decree of the Government of the Russian Federation dated 06.02.02 No. 80 “On Issues of state regulation of auditing activities in the Russian Federation.”

Decree of the Government of the Russian Federation dated March 29, 2002 No. 190 “Licensing of audit activities.”

Order of the Ministry of Finance of the Russian Federation dated October 27, 1999 No. 69n “The procedure for submitting reports by audit organizations and auditors holding licenses to carry out auditing activities,” etc.

Third level The system of regulatory regulation of auditing activities is represented by federal standards (rules) of auditing activities and standards of auditing activities. The main purpose of the standards is to establish audit standards that are unambiguously interpreted by all subjects of financial and economic activity, and above all by the arbitration court.

These standards contain the basic rules for conducting an audit and drawing up an audit report. With their help, the auditor will be able to choose both the required scale and depth of the audit, as well as its appropriate methodology. Auditing standards also define criteria by which the quality of an audit can be assessed.

Fourth level- auditing techniques that regulate the procedure for auditors to carry out inspections in relation to specific industries, on certain issues of taxation, finance and on special audit assignments.

Fifth level- internal standards of audit organizations, prepared with the aim of explaining the provisions of auditing activities, providing assistance in their implementation, developing techniques and methods for performing specific audit procedures. They are developed by audit organizations and provide a unified approach to conducting audits and monitoring their results in a given audit organization.

The emerging system of regulatory regulation of audit is presented in Table. 4.

Table 4

The system of regulatory regulation of auditing in Russia

	Documentation	Authorities accepting Documents
I level	Federal - laws, codes, decrees	Federal Assembly, Government of the Russian Federation, State Duma, President of the Russian Federation
And level	Resolutions orders	Government of the Russian Federation, President of the Russian Federation, Ministry of Finance of the Russian Federation, Department of Organization of Audit Activities
Level III	Federal auditing standards, auditing standards	Government of the Russian Federation, Commission on Auditing Activities under the President of the Russian Federation.
IV level	Internal standards	Professional audit associations
Level V	In-house standards	Audit organizations