Any business entity of market economy carries out its activities for the sole purpose of making profit from commodity-money relations. To achieve this goal, financial activities are carried out. The results of this activity, the financial performance of the company are systematized and analyzed by independent audits. Analysis of financial statements by a third-party organization, and not the business owner, allows you to objectively assess the effectiveness of economic activity, identify weaknesses and identify hidden reserves for increasing the financial well-being of the company. These are the goals pursued by the conduct of an audit based on the legal basis of audit activity.
When did the auditors appear
With the advent in the life of people of financial relations and monetary accumulations, the need for control measures also appeared. In ancient Rome, ancient Egypt and China, special controllers were kept at the courts, monitoring the strict observance of credit and debit operations with the state treasury. Initially, the functions of controllers were performed by high-ranking officials, and the legal foundations of audit activity at that time consisted of a direct order of the ruler. The word "audit" comes from English audio - listen, since the first reviewers based their monitoring function on listening to reports from court scribes and treasury counters.
The appearance of audit in its modern sense is ascribed to England. In the ninth century, a caste of auditors stood out from the class of accountants in this country, checking the correctness and correctness of filling out accounts and conducting all business activities as a whole.
Audit development
With the discovery of the American continent, the overall economic potential increased, commodity circulation increased, financial flows increased. There was a need for a large number of financially competent specialists. The development of the world economy has led to the need to standardize audit activities, to determine its tasks and functions. In 1854, the Union of Accountants was created in Edinburgh, bringing together professional accountants and auditors. The legal basis for the implementation of audit activities has become mandatory for use in the activities of independent auditors.
With the advent on the market of corporations that united several business entities, the need arose for the formation of consolidated financial statements. Accordingly, the importance of verification of reality and the correctness of its compilation has increased.
The development of audit activity in the UK and the United States was due to the need to assess the financial condition of the corporation, the effectiveness and correctness of its activities in the interests of business owners.
The beginning of the audit in Russia
For a long time, there were no legal entities in Russia that involved several shareholder members. Merchants conducted their activities independently, without questioning their entrepreneurial and accounting abilities. Income control was carried out by the state in order to levy taxes.
Before the reign of Peter the Great, in Russia there were no prerequisites for the development of audit activity by independent observers. Tight control over the correctness of treasury spending was a function exclusively of the state. Only trusted civil servants could know and verify the accounts and settlements of business entities.
Under Peter I, the functions of auditors were performed mainly by military personnel and consisted in monitoring the targeted use of state money allocated for the maintenance of the army.
The appearance of the first auditors in Russia became possible only after 1985 during the transition of the economy from a command form to a market form.
Prerequisites for the emergence of auditors in Russia
During the period of perestroika, the number of economic entities of various forms of ownership was rapidly growing in the economy of our country. Using the collapse of the state control system, unscrupulous businessmen independently prepared their reports, made mandatory contributions and paid taxes, hiding the true volume of profit. For the state, there was an urgent need for a controlling function, with which the tax services themselves could no longer cope.
By 1993, the authorities attempted to issue legislative acts that would lay the legal foundations for auditing in the Russian Federation. The first audit firms aimed not only to verify the reliability of the financial report of the enterprise, but also to advise on the optimization of economic activity. Then, the Provisional Rules were adopted, in which the legal basis of audit activity is defined at the legislative level. For the first time in Russia, the goals of independent audits, the object of analysis and the subject implementing it have been approved.
The system of legislative regulation of auditors
Conditionally legislative acts that laid the legal foundations of audit activity in the Russian Federation can be divided into five main stages:
- Federal Law No. 307- On Auditing Activities, adopted in 2008. This law gives a clear definition of the fundamental principles of the audit, the objectives of its conduct, establishes the requirements and control over the work of auditors. Also, the regulatory document broadly and fully describes the legal framework for auditing in the Russian Federation
- Federal level Rules (standards) of audit activity. They were approved by the Government in 2002. They consolidated the foundations of legal regulation of audit activities in the form of a set of 23 specific thematic documents. Each of the standards reveals a specific concept or direction of the audit at the state level. This group includes various legislative acts of federal ministries.
- Auditing standards, which were established by a specially created commission under the President of Russia. Sixteen such standards have been published. All of them were published before the entry into force of the Law on Auditing and were intended to standardize audit procedures, defining the legal basis for audit activities briefly, but revealing the nuances of the functioning of auditors as they arise.
- Guidelines. This group of documents included in the legal framework for auditing in Russia consists of instructions, regulations and procedures that are advisory in nature. Such guidelines, for example, the Code of Honor of Auditors, are published by public associations - the Chamber of Auditors, the Commission under the Ministry of Finance.
- Local regulation. In any audit firm, the legal basis of audit activity is determined by a document that is valid only in this organization. This may be their own developed recommendations for conducting an audit at a particular enterprise or internal rules for drawing up an audit plan.
Activity Licensing
The Law governing the licensing of certain types of activities states that a company must have a permit to carry out inspections.
The license to audit organizations is issued by the Ministry of Finance for a period of five years. This period may be extended as many times as necessary, and the license may be revoked.
Statutory audit
An audit is, first of all, a verification of the reliability of a financial report of an economic entity. In order to control the activities of entities that significantly affect economic processes, the Law provides for the verification of the financial result without fail.
In a mandatory audit, the necessary criteria, as well as the legal basis for the implementation of audit activities, are defined in Article 5 of the Federal Law No. 307. A mandatory audit is carried out when:
- the form of managing the enterprise provides for the presence of shares and participants;
- securities of an economic entity have a quotation;
- the company is an insurance company, a representative of the stock market, a fund (unit or investment), is engaged in credit or clearing activities;
- an economic entity has more than 60 million rubles in assets or has received over 400 million in sales revenue for the year;
- a corporation or group of companies prepares consolidated (generalized) financial statements.
In these cases, every year the activity of the participant in commodity-money relations is subject to mandatory verification, and an audit report is formed based on its results.
What is a conclusion?
The legal basis of audit activity involves drawing up, after verification by an independent auditor, a conclusion on the reliability of the data arising from the results of activities carried out by the audited entity. The legislation imposes certain requirements on this document. The audit report is intended for the organization that was audited. The addressee, his main registration data, as well as the name of the conclusion, must be indicated in it.
The document also indicates:
- name of the inspection company;
- volume and period of audited reporting;
- a list of work carried out during the audit period;
- conclusion on the reliability of financial documents;
- date of verification and its result.
Verification must be independent
An audit is carried out on a contractual basis. Such activities entail profit. Moreover, the verification should be objective, and the conclusion - reliable and reasonable.
In order to prevent any influence on the opinion of an independent expert, the law limits the possibility of conducting an audit by persons having economic or family ties with representatives of the audited entity responsible for the preparation of the financial report.
The fee for the audit, as well as for the related services provided, is paid under the service agreement. Payment for the activities of an independent expert may not depend on the conclusions received by him on the financial statements of the audited company.
Audit secret
Any information that has become known to the auditor in connection with the audit, and the documents generated by its results are not subject to disclosure. The findings of the auditor are intended solely for the owner of the enterprise and cannot be transferred to another person.
Exceptions are cases:
- If the verification customer agrees to publish information about him.
- The fact of an agreement to conduct an audit was disclosed.
- The cost of the audit is publicly announced.
In order to preserve the secrecy of the audit, all reviewers sign confidentiality.
Who can become
Each functioning auditor can work if there is a qualification certificate issued in accordance with the law. It is issued by a self-regulatory audit organization subject to certain conditions:
- Successfully passed the qualification exam.
- At least three years have been worked out in the field of accounting or auditing, including the last two years in an audit firm.
The certificate received does not have a validity period, and the person who receives it is required to study annually according to the established program to maintain his qualifications.
Monitoring the activities of audit organizations
Self-regulatory audit organizations control the activities of their constituent organizations and independent auditors. The function of state control over the activities of inspection firms is performed by the Ministry of Finance. It monitors compliance by participants in audits with applicable law.