An audit of an organization is a set of measures to assess the reliability of information in financial statements and their compliance with legal requirements. The check is completed by formulating a conclusion about the correctness of accounting at the enterprise. Let us consider in more detail the features of the organization and conduct of the audit .
Classification
There are various types of organization audits . Classification is carried out according to various criteria. Depending on the category, an independent, internal, state financial audit of the organization is distinguished.
In the first case, the verification is carried out by a third-party company in accordance with an agreement concluded with the management of the enterprise. The organization of internal audit is responsible for a special service operating in the structure of the company. The state audit is carried out by authorized government agencies.
Depending on the profile of the enterprise, the audit can be general, insurance, banking, etc.
Also, inspections are voluntary and mandatory. In the first case, the initiator is the head of the enterprise. It also determines the timing and extent of the audit.
The organizations specified in the legislation are subject to mandatory audit .
Normative base
The concept of an organization’s audit , duties, responsibilities, rights, certification requirements for companies conducting verification are enshrined in Federal Law No. 307.
In addition, in accordance with the specified regulatory act, federal auditing standards have been adopted. They enshrined the verification procedure, the uniform rules of the procedure. The rules are the same for all participants in the audit.
The standards explain the principles of verification, the procedure for drawing up a conclusion. They determined the methodology, depth, scope of audit of organizations .
In addition to domestic, there are also international standards. They set requirements for the quality of the audit, set goals, provide lists of necessary documentation and rules for drawing conclusions.
Instructions for Auditors
Verification of reporting can be carried out by specialized organizations or private specialists. The latter have a number of requirements. A private auditor must be a member of, firstly, an accredited self-regulatory organization. In addition, they must have:
- higher legal or economic education;
- at least three years of experience in the position of assistant auditor or chief accountant;
- certificate of auditor (issued based on the results of a special exam).
Legislation also lays down a number of requirements for audit firms. The organization must be, firstly, commercial, and secondly, formed in any form, with the exception of OJSC. The staff of such a company must have at least three specialists. At the same time, at least 51% of its authorized capital should belong to auditors or other similar organizations.
Subject of verification
In organizations subject to audit at the initiative of the head, control is carried out only on issues stipulated in the contract. For example, a check can only be performed with respect to cash transactions, accounting for fixed assets, intangible assets or current assets, settlements with counterparties or the budget. Accordingly, the specialist will evaluate the correctness of processing only certain categories of documents.
In organizations subject to mandatory audit , all financial documentation and financial statements are checked. In this case, the company must provide all available papers that are related to its business activities. Since such an audit of the organization is carried out by representatives of state structures, it is impossible not to fulfill their requirements.
Mandatory Verification
For most companies, auditing is optional. As a rule, government agencies are involved in checking the accounting documents of large companies, including those using public funds. A mandatory audit is aimed at reducing the risk from the actions of unscrupulous companies, ensuring the protection of the interests of citizens and the state. It is usually performed once a year.
The list of enterprises subject to mandatory verification
An annual audit of the organization’s accounting is carried out if:
- The company is a joint stock company. It is worth noting that in accordance with the latest amendments to the law, verification is carried out in respect of all business entities, regardless of type, type of activity, financial indicators. Accordingly, the audit is carried out both in the company and in the company.
- The company's shares are traded on a stock exchange.
- The company publishes or submits its reports to the competent state authorities. An exception in this case are government agencies.
- The organization is a credit, insurance, clearing, non-governmental fund or uses the financial resources of the population.
- The profit for the previous year exceeded 400 million p. or an asset in the balance sheet at the end of the period is more than 60 million rubles.
This list is not closed. Other cases of conducting a mandatory audit may be enshrined in the law. It is worth noting that the audit of these entities is entitled to be performed exclusively by audit firms.
The timing
The duration of the audit period for a voluntary audit of the organization is determined in the contract. The term depends on:
- The scale of the enterprise.
- Presence of representative offices, branches.
- Duration of activity.
- Scope of verification.
- The quality of accounting.
If a mandatory check is carried out, then the period shall be established by law and regulations. As practice shows, an audit of the organization’s reporting in this case takes 1-2 weeks on average. There are cases of longer checks, but they rarely last more than two months.
Stages
An audit involves 4 interrelated stages:
- Preliminary familiarization with the company.
- Planning.
- The main stage (actually verification).
- Formulation of conclusions.
Preliminary activities
At this stage, the auditor examines the constituent documentation, assesses the risks based on:
- The specifics of the enterprise.
- Indicators of financial situation, production growth rates.
- Staff turnover.
- Qualifications of accountants.
Verification Planning
This stage is considered one of the key in the activities of the auditor. Planning includes 3 stages:
- The conclusion of the contract with the customer. During this stage, the terms, the cost of the audit, the number of specialists are discussed.
- Planning. It includes the definition of a verification strategy.
- Development of an evaluation program. During this stage, measures are formulated, reporting sections are designated that are subject to deep and superficial verification.
Process
During the direct examination of the documentation and its evaluation, the auditor must adhere to requirements and standards. The specialist carries out:
- Collection of evidence, i.e., primary documents reflecting the facts of transactions, information from third parties, etc.
- Evaluation of the results of the sample.
- Studying reporting indicators.
- Assessment of the degree of materiality.
- Definition of audit risk.
- Assessment of compliance of financial transactions with legal requirements.
- Other actions necessary to formulate sound conclusions.
The conclusion
Upon completion of the audit, the auditor draws up an official motivated document. In it, he sets out his opinion on the compliance of reporting with legal requirements.
The conclusion is necessary for internal and external users to form their own ideas about the financial situation of the enterprise. The information in this document contributes to the adoption of sound management decisions.
The conclusion may be:
- Unmodified. It is also called positive. In such a document, the auditor indicates the absence of violations in the financial statements of the company.
- Modified. This type of conclusion is divided, in turn, into 2 subspecies: opinion with reservation and negative conclusion. The first is compiled if the specialist has identified some violations, but they do not have a significant impact on the reliability of the reporting documents. Accordingly, a negative opinion is formed if the violations are significant.
In addition, the auditor may refuse to express his opinion on the verified documents. Such a situation is possible if the specialist did not receive the necessary evidence during the audit process. For example, the assessment was carried out in relation to only one reporting area, the organization refused to provide documentation, etc.
Organization of internal audit
Any manager is interested in ensuring proper control over the effectiveness of the structural units of the company and the integrity of the performance of their duties by their employees. The most important management element is on-farm (internal) audit.
The objectives of control are:
- Minimizing risks and maximizing the profit of the organization.
- Improving the efficiency of decisions regarding the use of enterprise resources.
Internal audit is an activity regulated by local documents related to the control of various areas of the company.
To implement this task, an audit service is being formed at the enterprise. The number of its employees depends on the volume and nature of inspections. In small enterprises, internal audit can be carried out by 1-4 employees. In large firms, the staff of the audit department is quite large. At the same time, the duties of individual employees may go beyond accounting. For example, employees can conduct an assessment, technological, environmental audit, etc.
Key conditions
The correct organization of the audit at the enterprise is impossible without the implementation of a set of measures, including:
- Drafting of the organization of internal audits by industry and area of work. They should clearly indicate the specific functions of those responsible, the rules for their interaction with other units and the management of the enterprise, the status of internal auditors, their responsibility, duties, rights.
- Establishment of qualification requirements for employees of the audit service.
- Development and definition of rules for implementing standards, guidelines, norms in the activities of the audit department.
- Drawing up programs for advanced training and training of internal auditors.
- Forecasting staffing requirements.
Varieties of internal audit
The most common division of audit into operational, financial reporting and compliance with legal requirements.
In addition, there are checks:
- Organizational and technological.
- Functional.
- Management systems.
- Types of activities.
Functional audits are performed to evaluate performance and productivity. For example, an audit may be carried out in relation to operations performed by an employee or unit in the context of his functions.
Organizational and technological audit involves evaluating the work of various parts of the management system. In the course of such verification, the technological or organizational feasibility of their presence and functioning is established.
Cross-functional audit is aimed at assessing the quality of certain functions. For example, it analyzes the efficiency of production and sales, the effectiveness of the relationship and interaction of units responsible for these areas of work.