Audit activities are considered to be control and supervision, and therefore should be strictly regulated by the state. For these purposes, Federal Law No. 307 "On Auditing Activities" was established, fixing the main provisions that relate to the functions and rights of auditors. The law will be examined in detail in the article.
About auditing
What is an audit? According to the law, this is an independent verification of accounting data for compliance with established standards. The accuracy of the financial statements is checked, violations and possible fraud are revealed.
An auditor is a person who provides audit services. All control and supervision activities of the specialist in question must strictly comply with the law. Otherwise, all work performed will not be considered audit.
Federal Law No. 307 "On Auditing" states that an audit cannot replace the control functions of state bodies. These are additional, independent types of work not related to state law enforcement.
Auditors and Audits
What is an audit organization? Law No. 307-FZ "On Auditing" gives the following definition:
- it is an organization created on a commercial basis, which is a union of auditors conducting an independent audit of the accounting (financial) statements of the audited entity in order to express an opinion on its reliability.
Each audit organization must be entered in a special state register. Individuals working in it (auditors) must have with them a qualification certificate that gives permission to carry out professional audit activities.
Mandatory audit is carried out in the following cases:
- Securities of the organization are admitted to trading;
- the organization has the legal form of a joint stock company type;
- the proceeds from the sale of products amounted to more than 400 million rubles for the previous reporting year;
- the organization presents and discloses annual consolidated consolidated financial statements;
- in other cases established by the Federal Law.
A mandatory audit is carried out every year.
Rights and obligations of auditors
Federal Law N 307 "On Auditing" secures the main powers and functions of these associations. So, the auditor has the right:
- on independent determination of methods and forms of providing professional services;
- to study in full the documentation related to the economic and financial activities of the audited entity;
- to check any property specified in the documentation;
- to receive from officials confirmations and clarifications on issues arising during the audit;
- to refuse to carry out their duties if the audited entity does not provide all the necessary documentation;
- to exercise other rights specified in the contract.
Secures the law and the main responsibilities of auditors. So, it is worth noting here:
- the provision by the auditor of the audited entity information about membership in the audit organization;
- timely transmission of audit reports;
- preparation of documents in Russian;
- ensuring the safety of documentation;
- informing audited persons about corruption offenses and much more.
Another responsibility of auditors is strict adherence to professional standards. They will be described later.
Auditing Standards
The seventh article of the Federal Law No. 307 "On Auditing" enshrines the need to use standards and codes of professional ethics of auditors. What it is? The law characterizes standards as a special type of document containing the requirements for audit procedures. Standards should not:
- contrary to international standards;
- create obstacles to the implementation of audit activities.
And what is an auditors code of ethics? According to the law, this is a collection of rules of conduct that are binding on auditors and associations of auditors. The code is drafted and adopted by each self-regulatory organization separately.
On the independence of auditors
Federal Law No. 307 "On Auditing Activities" in Article 8 sets forth the rules stating the independence of auditors and their associations. First, it says who cannot audit. This list includes auditors:
- are the founders of the audited entity, its chief accountant or manager;
- are close relatives of the audited entity;
- individual auditors who, for three years, rendered services to the auditee to restore accounting, maintain it, and prepare financial statements;
- and others, according to the Federal Law No. 307.
It’s easy to guess that all these norms have been introduced to prevent corruption and “protection” of their colleagues. The procedure for remuneration for audit activities and its payments is determined by the parties to the agreement.
Auditors are not entitled to take actions that violate the interests and rights of the audited entities. So, a special concept of auditory secrecy is introduced, which will be described later.
About Audit Secrecy
The Federal Law "On Auditing" (No. 307-FZ) enshrines the concept of audit secrecy. What it is? The ninth article of the law prohibits the disclosure of any information and documents (except for information disclosed by the audited entity itself), information on the conclusion of a contract for the provision of services, as well as the price of these services.
All employees of the audit organization are required to ensure the confidentiality of information that constitutes audit secret. Documents and information constituting this secret cannot be transferred to third parties unrelated to the audit contract.
According to the Federal Law No. 307 "On Auditing", the disclosure of audit secrecy entails the imposition of liability. According to federal law, a person who violates the confidentiality of information is obliged to compensate for losses in the manner prescribed by the legislation of the Russian Federation.
Auditor Control
Adopted Federal Law No. 307 "On Auditing" calls the auditors and their associations independent entities. However, the principle of independence does not exempt from state control.
Article 10 provides for self-control. So, representatives of audit companies are required to:
- establish and comply with the rules of internal control of professional activity;
- pass external control of activities, submit to state bodies all the necessary documentation;
- to take part in the work of a self-regulatory organization of auditors, if they are its members.
Article 11, on the contrary, describes the external control of audit organizations and its members. In particular, subject to external control. This is the observance of the requirements of federal law, as well as the timely execution of legal orders from the state authorities. A little more about the state regulation of auditing will be described below.
State regulation
No. 307 of the Federal Law "On Auditing Activities" (December 30, 2008) enshrines the basic norms of state regulation of the activities of auditors. So, the state is obliged:
- to develop public policy in the field of auditing;
- adopt normative acts regulating it;
- keep a state register of self-regulatory organizations;
- exercise some other powers reflected in article 15 of the federal law under consideration.