The auditor's report affects the amount of loans. Loan audit
In addition to bank loans, organizations use other opportunities to attract borrowed funds by obtaining loans from lenders - not banks (loans), sales (issue) valuable papers(bonds), issuance of financial bills. However, loans to the organization in the form of financial bills are possible only for a limited number of investors.
The methodology for auditing loan transactions is basically the same as for auditing loan transactions. The auditor must make sure that the loan agreement is drawn up and concluded correctly. The auditor must make sure that the loan agreement is drawn up and concluded correctly. Compared to a loan agreement, it has a simplified design, since Art. 808 of the Civil Code of the Russian Federation defines two cases when a loan agreement must be concluded in a simple written form:
if natural persons act as lenders and borrowers and the amount of the agreement is at least 10 times higher than the minimum wage established by law;
if the lender is a legal entity, regardless of the amount.
For an organization, the absence of a written agreement may have negative consequences (for example, in the event of disputes over the amount of interest for using a loan, the procedure and timing of loan repayment; even in the absence of disagreements between the parties, the tax authorities make claims related to the absence of an agreement as a document confirming the fact of transactions under the loan agreement).
Organizations can receive loans from other legal entities (except banks). In accounting, loans, like loans, are divided into short-term (issued for a period of up to one year) and long-term (issued for a period of more than one year).
Loan agreements often include requirements for the borrower to meet certain conditions. These conditions, in particular, may include:
the level of own working capital and income;
providing the lender with periodic information.
Some loan agreements contain default clauses that may accelerate the creditor's right to payment due to prior default or violation of other agreements. Violations of agreements or conditions usually entail a requirement for the borrower to classify the debt as short-term, unless the lender waives this requirement. The auditor should check whether such contracts are consistent with those in force during the past year and on the first day of the new year.
It is necessary to check the legality and validity of the loans received.
The loan agreement is real, i.e. he is considered a prisoner from the moment money or other things are transferred. The moment of transfer of money or other things is the date of reflection of business transactions in the accounting records of the lender and the borrower. If the auditor has doubts about the reality of this agreement, then in this case it is advisable to make a request to the organization that provided the loan in order to confirm the debt on the loan issued, to agree on the amount of the debt and the maturity date. If it turns out that the organization that provided the loan does not register this amount, then after reconciliation of the calculations with the organization that received the loan, it should be reflected as revenue with the accrual of all necessary taxes.
If an organization, every six months, concludes a loan agreement with an organization with which, in addition to these agreements, there are various contractual relations, for example, under a lease agreement, utilities are resold, and other services are rendered, then in such a situation the organization has the risk of tax authorities collecting VAT on amounts received under loan agreements, i.e. based on the named tax rate, in the event that a link is established between organizations for settlements for goods, works and services, the amounts received will not be considered as a loan.
According to Art. 807 of the Civil Code of the Russian Federation, under a loan agreement, the lender transfers money or other things defined by generic characteristics to the borrower's ownership, and the borrower undertakes to return the loan amount or an equal amount of things of the same kind and quality received to the lender. The lender has the right to receive interest from the borrower on the loan amount in the amount and in the manner specified by the agreement. Due to the fact that settlements in the Russian Federation are made only in rubles, obtaining loans in foreign currency from resident organizations that are not banking institutions is prohibited. In relation to loans received from non-residents - non-banking organizations received in foreign currency, the same norms of foreign exchange legislation are applied.
The object of the loan is consumed things (goods, materials, etc.), therefore, not the things that were transferred are subject to return, but others determined only by common generic characteristics with those things that were transferred. Under the loan agreement, the things are transferred to the borrower in ownership. When the things are transferred from the lender to the borrower, the first one has sales turnover for tax purposes, and when the property is returned, the sales turnover arises from the borrower. Monetary funds received in the form of a loan are not subject to VAT, if their receipt is not associated with payment for goods (works, services).
The auditor specifies in what form the loan was taken - about the form of money or a thing. In practice, there are cases when, under the terms of an agreement (especially a long-term one), an organization receives money, and after a certain time, it returns the loan with property or securities, which is not allowed without changing the terms of the agreement.
When checking the repayment of loans, attention is paid to the repayment of loans by selling securities at prices exceeding their nominal value, as well as checking the accounting of the loan against the issued promissory note; reflection in the accounting of exchange rate differences on granted foreign currency loans and borrowings by directions of their use.
The auditor establishes the correctness of reflection in the accounting of the interest accepted for payment for the use of loans.
Loan agreement as opposed to loan agreement, which is always paid, can be either reimbursable (with payment of interest) or gratuitous.
The source of interest payment now does not depend on who the loan was received from, for what purposes it is intended, since PBU 10/99 "Organization Expenses" has established a general procedure for writing off expenses for paying interest on loans and borrowings.
When checking operations related to the repayment of a loan, the auditor should be guided by Art. 809 of the Civil Code of the Russian Federation, which established that if there are no conditions on the amount of interest in the agreement, then their amount is determined by the bank interest rate existing at the location of the lender on the day the borrower pays the amount of the debt or its corresponding part. Interest on a loan is not accrued only in cases when it is expressly stipulated in the agreement (interest-free loan) or other things are transferred to the borrower as a loan. Sometimes the issue of attracting borrowed funds is resolved by concluding a loan agreement with an individual. For an organization - a borrower, the procedure for reflecting the receipt and repayment of a loan and interest on it will be similar to the procedure for reflecting loans received from legal entities. However, in this case, the auditor should check whether income tax has been withheld from the amounts of interest paid to an individual under the loan agreement.
If interest under the loan agreement is received by a person working in this organization, then withholding income tax should be carried out by the accounting department of this organization.
When in loan agreements the amount is expressed in conventional units, the amount to be paid in rubles is determined at the official exchange rate of the corresponding currency or in conventional monetary units on the day of payment, unless another rate or another date of its determination is established by law or by agreement of the parties. In accounting, the amount differences are recorded on account 99 “Profits and losses” as income and expenses not directly related to the production and sale of products, and are reflected in the income statement under the items “Non-operating income and expenses”.
Thus, the following factors influence the risk of errors on received loans and borrowings:
lack of documents for credit relations;
inclusion of interest on loans and borrowings in the cost of production (work, services);
violation of the principles of property valuation;
misapplication of income tax relief for financing capital investments made with loans;
violation of the principles of formation of financial results.
Summing up, the auditor draws conclusions about the ability of the organization to continue its activities in the future, i.e. determines how the organization adheres to the principle of a going concern, for this section checks can be:
availability of loans and borrowings that exceed contractual limits;
non-repayment of loans and borrowings;
non-payment of interest;
the ratio of fixed and borrowed capital.
If the borrowed funds exceed the amount of capital, then the organization exists only through loans. If the situation is the opposite, then the interest on debts is low, therefore, the organization has enough profit to settle accounts with shareholders and pay dividends.
When conducting an audit, the auditor should pay special attention to the fact that since 01.01.2002, the 25th chapter of the Tax Code of the Russian Federation entered into force, which regulates the specifics of attributing interest on borrowed funds to expenses included in the cost of products (works, services) for the purposes of determining the base for paying income tax.
Debt obligations are understood as loans, commodity and commercial loans, loans or other borrowings, regardless of the form of their registration.
In this case, the expense for determining the basis for paying income tax is recognized as interest accrued on a debt obligation of any type, provided that the amount accrued by the taxpayer for promissory note interest does not deviate significantly from the average level of interest charged on debt obligations issued in the same reporting period on comparable terms.
Debt liabilities issued on comparable terms mean debt liabilities issued in the same currency for the same terms under the same quality of collateral and falling into the same credit risk group.
When determining the average level of interest on interbank loans, only information on interbank loans is taken into account.
At the same time, a significant deviation in the amount of accrued interest on a debt obligation is a deviation of more than 20% upward or downward from the average level of interest accrued on a debt obligation issued in the same quarter on comparable terms.
In the absence of debt obligations issued in the same quarter on comparable terms, limit value percent, recognized as an expense, is assumed to be equal to the refinancing rate of the Central Bank of the Russian Federation, increased by 1.1 times - when issuing a debt obligation in rubles, and by 15 percent - on loans in foreign currency.
If the amount outstanding by the taxpayer - Russian organization debt obligations provided by a foreign organization more than 3 times (for credit institutions and organizations engaged in leasing activities - more than 12.5) exceeds the difference between the amount of its assets and the amount of liabilities (hereinafter for the purposes of this clause - equity) on the last day of each reporting (tax) period, then the following rules apply when determining the maximum amount of interest to be included in expenses.
When determining equity capital, debt liabilities in the form of tax and levy arrears, including current arrears in taxes and levies, the amount of deferrals, installments, tax credit and investment tax credit, are not taken into account.
If a taxpayer - a Russian organization has an outstanding debt under a debt obligation to a foreign organization that directly or indirectly owns more than 20 percent of the authorized (pooled) capital (fund) of this Russian organization (hereinafter in this article - controlled debt), then the taxpayer is obliged on the last day of each for the reporting (tax) period, calculate the maximum amount of interest recognized as an expense on controlled debt by dividing the amount of interest accrued by the taxpayer in each reporting (tax) period for controlled debt by the value of the capitalization ratio calculated as of the last reporting date of the relevant reporting (tax) period.
In this case, the capitalization ratio is determined by dividing the value of the corresponding outstanding controlled debt by the amount of equity capital corresponding to the share of direct or indirect participation of this foreign organization in the authorized (pooled) capital (fund) of the Russian organization, and dividing the result by three (for credit institutions and organizations engaged in leasing activities - by twelve and a half).
Conditional positive auditor's report on financial statements from the auditing company, legal address: Tver region, Kimry, st. Troitskaya, 56, license No. 1325/254 issued on 01.10.2001, valid until 01.10.2011, for the board of LLC Electroagregat, legal address: Tver region, Kimry, st. Volodarsky, 111, state registration №554823.
We have reviewed the accompanying balance sheets of Electroagregat LLC and the corresponding consolidated income statements for changes in financial position. The management of the company is responsible for these reports. Our responsibility is to express an opinion based on the audit findings of these reports.
We have carried out an audit in accordance with generally accepted audit standards that require us to plan and perform an audit to obtain sufficient evidence that financial reports do not contain significant errors. We have verified, using tests, information supporting digital material and disclosures in financial statements... The audit reviewed the accounting principles used, the estimates of material items made by the management of the company, and the presentation of the financial statements in general. The most significant from a financial point of view operations, as well as the main documents reflecting these operations were checked:
- * Verification of forms 1, 2, 3, 4 and 5 of the company's financial statements for 2005.
- * Verification of the correctness of maintaining such a form of synthetic accounting used at the enterprise as the journal-order No. 4.
- * Audit of registers analytical accounting and primary documents.
An insignificant violation was revealed during loan repayment, which does not affect the reporting as a whole.
We believe that sufficient data has been collected during the audit for a conclusion.
In our opinion, the financial statements, in all material respects, almost accurately reflect the consolidated position of Electroagregat LLC for 2005 and the consolidated results of operations with loans and borrowings, in accordance with generally accepted accounting principles.
We draw your attention to the fact that during the functioning of the loan agreement at Electroagregat LLC, the pledged property is practically frozen, i.e. the enterprise cannot reduce the amount of its finished goods balances below the amount set by the pledge, which especially negatively affects the financial and economic activity of the enterprise during periods of seasonal increase in demand.
Conclusion: in this chapter, using the example of Electroagregat LLC, a strategy for conducting an audit was considered - a study of credit accounting, starting from financial statements, gradually moving to synthetic accounting registers, analytical accounting registers and primary documents.
The adopted strategy made it possible to maintain a logical sequence of checking the accounting of loans and borrowings at the enterprise. The tactics of the audit conducted at Electroagregat LLC was to check the most significant operations from a financial point of view, as well as the main documents reflecting these operations.
Introduction
In the process of production economic activity many organizations need to borrowed funds to secure their plans and projects. You can get a loan from credit institutions, as well as from enterprises, having drawn up an appropriate agreement.
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 Russian Federation... At the same time, reliability is understood as the degree of accuracy of the data of financial (accounting) statements, which allows the user of these statements, on the basis of its data, to draw correct conclusions about the results of economic activities, financial and property status audited persons and make informed decisions based on these conclusions.
Currently, many enterprises and organizations have a need for borrowed funds. By own means it is not always possible to implement the plan, and then the company is forced to seek help from various kinds of loans: individuals, enterprises with a stable financial position, with free funds.
Obtaining a loan is a very important and responsible step for a company. The importance of obtaining a loan lies in the fact that with its reasonable use, the enterprise gets the opportunity for further development, increasing the volume of sales of products (works, services), and the responsibility lies in the emergence of new obligations, which consist not only in the timely and full repayment of the loan, but also in the payment of interest for the use of borrowed funds.
The relevance of this work is explained by the fact that the correctness of accounting for short-term and long-term loans at the enterprise is of great importance and significantly affects the reliability of the financial statements of the enterprise.
The subject of the research is methodological, methodological and practical issues of organizing short-term and long-term loans.
The object of the research is the current system for auditing short-term and long-term loans in Russian organizations.
The purpose of the study is to examine the theoretical and practical issues of auditing short-term and long-term loans in the light of the modern regulatory framework.
To achieve the goal, the following tasks were set: to study the concept, goals and objectives of the audit of short-term and long-term loans, to evaluate the internal system, preliminary planning and drawing up a general work plan for the auditor, drawing up an audit program for short-term and long-term loans to the organization, to identify errors and violations during the audit, and also study the auditor's report.
1. Theoretical basis audit of short-term and long-term loans of the organization
1.1 The concept of audit of short-term and long-term loans of the organization
audit long-term loan control
In addition to bank loans, organizations use other opportunities to attract borrowed funds by obtaining loans from lenders - not banks, selling securities, issuing bills of exchange (Table 1).
The loan agreement is governed by Art. 807 of the Civil Code of the Russian Federation. According to this article, under the loan agreement, one party (the lender) transfers to the ownership of the other party (the borrower) money or other things defined by generic characteristics, and the borrower undertakes to return to the lender the same amount of money (loan amount) or an equal number of other things he received of the same kind and quality. Loans, like loans, are divided into short-term (up to one year) and long-term (over one year).
When starting the verification of borrowed funds, the auditor must select the necessary verification procedures (methods) that are most appropriate for the organizational structure, technological processes, etc. of the audited enterprise.
The result of these procedures will influence the formation of the auditor's opinion:
· on the level of internal control over the correctness of reflection in the accounting of transactions on borrowed funds;
· completeness of reflection;
· the presence in the accounting of transactions with borrowed funds without sufficient grounds. For example, the organization includes in its balance sheet borrowed funds, which are actually advance payments for the supplied products. Such errors lead to overestimation of reporting indicators and distortion tax reporting value added tax;
· observance of the principle of temporary certainty of the facts of economic activity.
· Errors can be associated with incorrect distribution of transactions for reporting periods. So, in practice, there is a reflection in the accounting of interest for the use of borrowed funds at the time of payment, and not at the time of accrual;
· the correctness of reflection of borrowed funds on the relevant accounts based on the results of the inventory.
These transactions are identified by examining the debt based on the reconciliation of entries in the accounting registers with the data of the presented contracts, monetary documents and reconciliation with the persons who provided the borrowed funds.
During the examination of loans, auditors will have to establish:
· are the loan agreements drawn up correctly;
· whether the principal amount of the debt and the interest on the loans were repaid on time;
· whether the transactions on the loans received, including the accrual and transfer of interest, were correctly reflected in the accounting;
· reliability of analytical and synthetic accounting of loan settlements.
When studying loan agreements, auditors should pay attention to the presence in them of instructions on the loan repayment period, its form, the availability of collateral, the amount of interest and the procedure for their payment.
When studying a loan agreement with an individual, it is checked whether the agreement is notarized. It is necessary to check the legality and validity of the loans received.
If the auditor has doubts about the reality of such an agreement, then in this case it is advisable to make a request to the organization that provided the loan in order to confirm the debt on the loan issued, to agree on the amount of the debt and the maturity date. If it turns out that the organization that provided the loan does not register this amount, then after reconciliation of the calculations with the organization that received the loan, it should be reflected as revenue with the accrual of all necessary taxes.
In practice, there are cases when, under the terms of a contract (especially a long-term one), an enterprise receives money, and after a certain time, it returns the loan with property or securities, which is not allowed without changing the terms of the contract. Therefore, the auditor specifies in what form the loan was taken - in the form of money or a thing.
When checking the repayment of loans, attention is paid to the repayment of loans by selling securities at prices exceeding their nominal value, as well as checking the accounting of the loan against the issued promissory note; reflection in the accounting of exchange rate differences on granted foreign currency loans and borrowings by directions of their use.
The auditor establishes the correctness of the reflection in the accounting of the interest accepted for payment for the use of the loan.
When checking operations related to the repayment of a loan, the auditor should be guided by Art. 809 of the Civil Code of the Russian Federation, which established that if there are no conditions on the amount of interest in the agreement, then their amount is determined by the rate existing at the location of the lender bank interest on the day the borrower pays the amount of the debt or its corresponding part. Sometimes the issue of attracting borrowed funds is resolved by concluding a loan agreement with an individual. In this case, the auditor should check whether income tax has been withheld from individuals from the amounts of interest paid to an individual under a loan agreement.
1.2 Regulatory regulation of accounting of short-term and long-term loans of the organization
Audit in the Russian Federation is carried out in accordance with regulatory documents with different status. Some of them are mandatory, others are advisory in nature.
The regulatory system in Russia consists of four levels of documents. The first group of documents includes:
· Federal Law "On Accounting" dated November 21, 1996 No. 129-FZ (as amended on September 28, 2010 No. 243-FZ). The federal law applies to all organizations located on the territory of the Russian Federation, registered as a legal entity in accordance with the legislation of the Russian Federation. The norms contained in other federal laws and affecting the issues of accounting and bookkeeping must comply with the Federal Law. In the event of a conflict with the content of other federal laws, the norms of law that are the subject of the Federal Law have priority.
· Federal Law "On Auditing" dated December 30, 2008 No. 307-FZ (as amended on December 28, 2010 No. 400-FZ). He defines legal basis regulation of audit activities in the Russian Federation.
· Russian Federation. Government of the Russian Federation. Order of approval federal regulations(standards) of auditing activities dated September 23, 2002 N 696 (as amended on January 27, 2011 N 30).
· tax code RF, which defines the concept of expenses and the procedure for their recognition for the purposes of tax accounting; established taxes levied on agricultural enterprises and included in the cost of production.
· Civil Code RF, which regulates the legal framework credit relations... Contains the procedure for the conclusion and termination of civil contracts.
The second group of documents is regulated by the RF Ministry of Finance and other executive authorities. The second-level documents include provisions, regulating principles and accounting rules for individual objects of accounting supervision, which constitute a system of national standards focused on International Financial Reporting Standards. Currently in Russia a system of national standards - provisions for accounting includes 22 provisions, of which:
· Regulation on accounting "Accounting policy of the organization" PBU 1/2008 of 06.10.08 N 106n (as amended by the Order of the Ministry of Finance of the Russian Federation of 08.11.2010 N 144n). This provision establishes the basis for the formation and disclosure of accounting policies of organizations that are legal entities according to the legislation of the Russian Federation. The regulation stipulates the procedure for the formation of accounting policies, i.e. by whom it is drawn up and approved, while it is said about which documents are approved, its disclosure and change.
· Regulation on accounting "Accounting for expenses on loans and borrowings" PBU 15/2008 dated October 6, 2008 N 107n (as amended by the Order of the Ministry of Finance of the Russian Federation of 08.11.2010 N 144n). Establishes the features of the formation in accounting and financial statements of information on costs associated with the fulfillment of obligations on loans and credits received by organizations that are legal entities under the legislation of the Russian Federation.
The third-level documents include the Chart of accounts of accounting of the financial and economic activities of the organization and the Instructions for its use, approved by order of the Ministry of Finance of the Russian Federation No. 94n of October 31, 2000 (as amended on November 8, 2010 No. 142n), constitute the basis for organizing accounting at all enterprises, regardless of subordination, forms of ownership, organizational and legal form. The chart of accounts is a scheme for registering and grouping the facts of economic life in accounting and contains the names and codes of accounts. The Instructions for the Application of the Chart of Accounts contain a brief description of accounts, disclosed their structure and purpose, the economic content of the facts generalized on them, the procedure for accounting for the most common transactions.
The third level also includes instructions and guidelines developed and put into effect in the context of individual Accounting Regulations.
Fourth level documents are developed by the enterprise and approved by the head of the organization. These include:
Enterprise charter;
Order "On accounting policy organizations ";
Organization's working chart of accounts;
Document flow schedule.
The main tasks of the audit of loan settlements include:
study of loan agreements;
study of the lawful spending of loan funds;
assessment of the state of synthetic and analytical loan accounting;
establishment of the legality of the reflection on the accounting accounts and in the financial statements of loans;
checking the timely and complete repayment of loans;
analysis of interest accrual for use and their write-off.
2. Planning and organizing the audit of short-term and long-term loans of the organization
.1 Assessment of the internal control system
Before checking specific areas of accounting, the auditor must assess the state of the control environment, the effectiveness of building the accounting system, as well as the reliability of the organization's internal control system. This is necessary to determine the likelihood of misstatements in the client's accounting and to build the further work of the auditor.
The control environment is the circumstances and factors that are not directly related to accounting, but have a significant impact on its effectiveness.
The auditor studies the control environment from the moment he first gets to know the company (its manager, accountant). The main points he needs to figure out are:
· Influence organizational structure, the type and scope of the enterprise on the features of accounting;
· The structure of the management system, separation of powers and responsibilities;
· Features of the relationship of owners with direct managers of affairs, between the director and the chief accountant, the degree of mutual trust;
· The attitude of the administration, directors and owners of the organization to accounting issues;
· The attitude of the accounting personnel to their duties.
The necessary information on the listed issues is obtained as a result of observation, personal conversations, familiarization with the constituent documents. Subjectively assessing the environment in which the accounting system operates, the auditor studies the accounting system itself. Particular attention should be paid to the level of professionalism of accountants, to determine their competence and, if possible, honesty. To a greater extent, it is these qualities that determine the effectiveness of the robots of the entire accounting system.
The internal control system is a set of organizational measures, methods and procedures used by the management of the audited entity as a means for orderly and efficient conduct of financial and economic activities, ensuring the safety of assets, identifying, correcting and preventing errors and distortion of information, as well as timely preparation of reliable financial (accounting) statements. ICS as a process is organized and carried out by representatives of the owner, management, as well as other employees of the audited entity, in order to provide sufficient confidence in achieving goals in terms of reliability of financial (accounting) reporting, efficiency and effectiveness of business operations and compliance of the audited entity's activities with regulatory legal acts ...
The internal control system is based on:
1.separation of duties. Segregation of storage responsibilities is required to prevent abuse and theft. material values, transactions and accounting. In addition, in the case when each department will keep records of its activities in full, then the risk of providing them with false data in order to improve performance increases.
2.effective procedures for authorizing transactions. To carry out operations, a solution is required responsible persons completing all formalities.
.timely proper documentation of operations. With a long time interval between the execution of an operation and the fact of its accounting, the probability of an error increases.
.actual control over property and documentation. That is, the use of technical means and procedures to prevent the loss, withdrawal or unlawful change of accounting documentation.
.implementation of independent audits. This is one of the functions of internal audit.
The auditor should study and understand each of the elements of the internal control system in the enterprise. In this case, the auditor must take into account two aspects: what methods and procedures are provided in the enterprise and whether they are applied in practice.
When examining internal control, the auditor needs to take into account the inherent flaws of any internal control system. The system cannot be one hundred percent efficient. The most obvious limitation is due to the need to keep in reasonable, i.e. economical, within the cost of carrying out control procedures, so that these costs are not disproportionate to the detected losses from errors and fraud. Factors constraining the effectiveness of internal control include: the orientation of most types of internal control towards expected types of transactions, rather than infrequent transactions; the possibility of an error that may be made by internal control personnel due to negligence, absent-mindedness, confusion or misunderstanding of instructions; the likelihood that the person in charge of monitoring could abuse his position. Finally, internal controls can be circumvented by conspiracy by a number of individuals, both internally and externally.
However, despite the flaws inherent in any control system, the presence of even simple species control can help the auditor achieve confidence that all transactions are properly recorded in the accounting registers. When assessing internal control, the auditor's goal is to determine the level of confidence that he can give to this control. The results of the study of the internal control system influence the determination of the type, timing and scope of independent audit procedures.
Risk assessment procedures for controls include:
· obtaining information from employees of the audited entity;
· monitoring the functioning of specific;
· means of control;
· verification of documents and reports (inspection);
· tracking the reflection of business transactions in information systems related to the preparation of financial (accounting) statements, etc.
A comprehensive assessment of the risks of material misstatement of information (business risk and control risk) is carried out by the auditor on the basis of professional judgment. As a result of a comprehensive assessment of the risks of material misstatements of information (risk of business activities and risk of controls) at the level of prerequisites for the preparation of financial (accounting) statements, the auditor should reduce the risk of the possible presence of material misstatements of information to an acceptable level. low level... To this end, the auditor performs substantive procedures to collect the necessary audit evidence of material misstatements.
In the event that the auditor establishes that the risks of material misstatements in relation to the financial (accounting) statements cannot be reduced to an acceptably low level, he should express an appropriate opinion on the reliability of the financial (accounting) statements.
The audit risk assessment carried out during the audit planning stage is subject to change. Questions to ask the auditor to the management of the economic entity at the time of planning the loan audit program. The change in the risk assessment obliges the auditor to make changes to the planned substantive procedures and the auditor's working papers (overall plan and audit program).
.2 Pre-planning and general work plan
In accordance with the Federal Rule (Standard) of Auditing Activity "Audit Planning" (clause 10), approved by the Government of the Russian Federation No. 696 of September 23, 2002, in the process of planning an audit, an audit program should be drawn up and documented - a document defining the nature of the audit. , the timing and extent of the planned audit procedures required to implement the overall audit plan.
Audit planning is one of the most important processes in the implementation of an audit.
The audit planning process includes:
Determination of his strategy and tactics;
Drawing up a general audit plan;
Development of an audit program;
Determination of specific audit procedures;
Assessment of the scope of the audit.
In accordance with the standard, an auditing organization or an individual auditor must plan an audit even before writing a letter of commitment and concluding an agreement with an economic entity on conducting an audit, during a preliminary meeting with a potential client.
A high-quality audit is impossible without developing a general strategy for further work and a detailed approach, determining the time and scope of audit procedures. The scope of planning depends entirely on the size of the audited enterprise, the complexity of the audit, previous audit experience at the enterprise and knowledge of the client's activities.
Planning time is 5-10% of the time spent on a review that is not the first for this client. In cases when the audit is carried out at the enterprise by this audit firm for the first time, the time spent on planning can be up to 20%. The main reason for this is that audit planning should be based on knowledge of the client's activities, a thorough study of its characteristics and the conditions surrounding the client. economic environment.
During the implementation of the audit program, audit evidence is formed and reflected in working documents.
Audit evidence in accordance with FSAD No. 5 "Audit evidence" can be carried out in two forms:
Detailed tests assessing the correctness of the reflection of transactions and the balance of funds on accounting accounts;
Analytical procedures.
Audit evidence must satisfy two requirements - that the audit evidence is sufficient to make a reasonable conclusion and that the audit evidence collected is appropriate.
Sufficiency is a quantitative measure of audit evidence.
Appropriateness is the quality aspect of audit evidence. It is this characteristic that determines the coincidence of the audit evidence obtained with a specific prerequisite for the preparation of financial (accounting) statements and its reliability.
Audit evidence is usually not exhaustive because the auditor generally finds it necessary to rely on that evidence that only provides reasons to support a particular conclusion. Therefore, auditors mainly collect (receive) audit evidence from various sources or from documents of different content in order to confirm the same business transaction or a group of similar business transactions.
2.3 Drawing up an audit program for fixed assets
When starting the development of the overall audit plan and program, the audit organization should use prior knowledge of the economic entity, as well as the results of the analytical procedures performed.
Using analytical procedures, the auditing organization should identify areas of relevance to the audit. The complexity, volume and timing of analytical procedures of the audit organization should vary depending on the volume and complexity of the data in the financial statements of the economic entity.
In the process of preparing a general plan and audit program, the audit organization evaluates the effectiveness of the internal control system (ICS), which the economic entity has, and assesses its risk (control risk). The ICS can be considered effective if it warns in a timely manner about the occurrence of inaccurate information, and also reveals inaccurate information. When assessing the effectiveness of the ICS, the audit organization must collect a sufficient amount of audit evidence. If the auditing organization decides to rely on the ICS and the accounting system to obtain a sufficient degree of confidence in the accuracy of the financial statements, it should adjust the scope of the upcoming audit accordingly.
When preparing a general plan and audit program, the audit organization should establish an acceptable level of materiality and audit risk, which would allow the accounting statements to be considered reliable. When planning the audit risk, the audit organization determines the intra-business risk of financial statements and the control risk that are inherent in these statements, regardless of the audit of an economic entity. Using the identified risks and materiality levels, the firm identifies areas of relevance to the audit and plans the required audit procedures. During the audit, circumstances may arise that affect the change in audit risk and materiality levels identified during planning.
When drawing up a general audit plan and program, the audit organization should take into account the degree of automation of accounting information processing, which will also allow it to more accurately determine the scope and nature of audit procedures.
The audit organization, if necessary, can agree with the management of the audited economic entity on certain provisions of the general plan and audit program. At the same time, the audit organization is independent in the choice of audit techniques and methods, reflected in the general plan and program, but bears full responsibility for the results of its work in accordance with this general plan and this program.
The results of the firm's procedures in preparing the overall plan and program should be documented in detail, as they are the basis for planning the audit and can be used throughout the audit process.
The overall plan should serve as a guide for the implementation of the audit program. In the course of the audit, the audit organization may have grounds for revising certain provisions of the general plan. The auditor should document the changes made to the plan, as well as the reasons for the changes.
In general terms, the audit organization determines the method of conducting the audit based on the results of preliminary analysis, assessment of the reliability of the internal control system, assessment of audit risks. In case of a decision to conduct a selective audit, the auditor forms an audit sample.
An integral part the overall plan are provisions for planning the management and quality control of the audit performed. In general terms, it is recommended to provide:
Formation of the audit team, the number and qualifications of auditors involved in the audit;
Distribution of auditors according to their professional qualities and job levels for specific areas of the audit;
Instructing all team members about their responsibilities, familiarizing them with the financial and economic activities of the economic entity, as well as with the provisions of the general audit plan;
Control of the head over the implementation of the plan and the quality of work of the auditor's assistants, over their maintenance of working documents and the proper registration of audit results;
Clarification by the head of the audit group of methodological issues related to the practical implementation of audit procedures;
Documenting dissenting opinion of a member of the audit team (performer) in the event of a disagreement in the assessment of a fact between the head of the audit team and its ordinary member.
The audit organization defines in general terms the role of internal audit, as well as the need to involve experts in the audit process.
The audit program is a development of the general audit plan and is a detailed list of the content of audit procedures necessary for the practical implementation of the audit plan. The program serves detailed instructions for the auditor's assistants, and for the heads of the audit organization and the audit group - at the same time a means of quality control of work.
The auditor should document the audit program, numbered or code each audit procedure performed so that they can refer to them in their working papers in the process.
The audit program should be designed as a program of tests of controls and as a program of substantive audit procedures.
The program of tests of controls is a list of a set of actions designed to collect information about the functioning of the internal control and accounting system. Control tests help identify significant deficiencies in an entity's controls.
Depending on the conditions of the audit and the results of audit procedures, the program may be revised. The reasons and results of the changes should be documented.
Audit procedures are essentially a detailed check of the correct reflection in accounting of turnovers and account balances. The program of audit procedures, in essence, is a list of auditor's actions for such detailed specific checks. For substantive procedures, the auditor should determine which sections of accounting he will audit, and draw up an audit program for each section of accounting.
The auditor's conclusions for each section of the audit program, documented in the working documents, are factual material for the preparation of the audit report (written information to the management of the economic entity) and the auditor's report, as well as the basis for the formation of an objective opinion of the auditor on the financial statements of the economic entity.
At the end of the audit planning process, the overall audit plan and program should be documented and endorsed in the prescribed manner.
The program for the audit of short-term and long-term loans of the organization is presented in table 2. (Appendix 2).
3. Audit of short-term and long-term loans of the organization
.1 Identification of errors and irregularities during the audit
The auditor assesses the state of internal control of the audited entity using a specially compiled questionnaire (questionnaire), provides a preliminary assessment of the state of internal control over borrowed funds, identifies the most vulnerable places from the point of view of violations and abuse, and plans the composition of the main procedures (audit procedures in essence).
The composition of the procedures may vary depending on when the audit begins - during the reporting period, the reporting for which will be confirmed by the auditor's report, or after the end of this reporting period.
Signs of the absence or inadequacy of internal control over the state of borrowed funds for enterprises are:
the presence of signs of formal inventory of borrowed funds - the appointment of the same persons in the commission for inventory of the obligations of the same persons, the absence of working records of the audit commission attached to the act;
granting the right to sign a loan, additional agreements to them to persons whose official powers are not reflected in the orders (orders) of the head of the enterprise;
attraction of borrowed funds in amounts leading to a significant decrease in the financial stability of the enterprise;
attraction of borrowed funds under unjustified high interest rates;
missing the deadline for the return of borrowed funds, payment of interest on them.
Responsibility for the timely repayment of debt obligations rests with the heads of the enterprise, so the auditor receives from them the explanations and explanations he needs.
Internal control in each organization and in each enterprise is organized in such a way as to prevent any specific violations (unintentional or deliberate) that may arise in the course of business transactions. There are no exceptions to this rule for organizing internal controls and transactions for the movement of funds from loans.
All violations cannot be prevented. Internal controls are aimed at identifying those violations that have already happened and the reasons and conditions that allowed them to happen are clear.
The list of typical violations when reflecting in accounting transactions related to obtaining loans:
Lack of documents
No loan agreement
Lack of accounting references, calculations for the accrual of interest under loan agreements.
No additional agreements to the loan agreement that change interest rate, loan repayment terms and other terms of the agreement. Lack of analytical accounting for overdue loans.
Assignment to tax expenses interest on loans that cannot be included
Inclusion in tax expenses of accrued interest for the use of borrowed funds, but actually at the end of the reporting period not paid to the lender (if cash method)
Lack of formation of deferred tax liabilities
No formation of deferred tax assets
Inclusion in tax expenses of interest on loans in excess of the standard amount of interest
Inclusion in tax expense of interest on loans in excess of the average rate of interest charged on debentures issued on comparable terms.
3.2 Auditor's report
the main objective audit- This is the registration of an objective opinion on the reliability of the accounting (financial) statements of the organization, which is formalized in the content of the auditor's report.
An auditor's report is an official document intended for users of financial (accounting) statements, containing the opinion of an auditing organization or an individual auditor expressed in the prescribed form on the reliability of the accounting (financial) statements of the audited entity and the compliance of the procedure for maintaining its accounting with the legislation of the Russian Federation.
The auditor is obliged, within the period established by the contract for the provision of audit services, transfer the auditor's report to the audited person who has entered into an agreement for the provision of audit services. The content and procedure for issuing an auditor's report is determined by FSAD No. 1/2010 "Auditor's report on financial (accounting) statements and the formation of an opinion on its reliability."
Mandatory elements of the auditor's report:
1.The title of the document is "Auditor's report".
2.Name (name) of the addressee: the person provided for by the legislation of the Russian Federation and (or) the audit agreement. As a rule, the auditor's report is addressed to the owner of the audited entity (shareholders), the board of directors, etc.
.information about the auditor: name of the organization, state registration number, location, name self-regulatory organization auditors, of which the specified audit organization is a member, number in the register and audit organizations of the self-regulatory organization of auditors.
.information about the audited entity: organizational and legal form and name, location, number and date of the certificate of state registration.
.The composition of the audited financial statements
.part "Responsibility of the audited entity for the financial statements":
a) an indication of the persons authorized by the audited entity who are responsible for the preparation and accuracy of financial statements in accordance with the legislation of the Russian Federation;
b) a description of the responsibility of these persons for the preparation and accuracy of financial statements in accordance with the reporting rules.
7.Part "Audit Responsibility"
a) the auditor's responsibility is to express an opinion on the basis of the audit;
b) the audit was conducted in accordance with federal standards audit activity, and also that those standards require that the applicable requirements of professional auditor ethics are followed and that the audit is planned and performed in such a way as to obtain reasonable assurance that financial statements reliable in all essential respects.
C) the auditor believes that the evidence obtained during the audit provides sufficient and appropriate grounds for expressing an opinion.
8.date of the auditor's report;
9.auditor's signature.
The auditor's report is prepared in the number of copies agreed by the auditor and the audited entity. Moreover, the auditor and the audited entity must receive at least one copy of the auditor's report with accounting statements.
There are two main types of auditor's opinion on the reliability of financial (accounting) statements: unmodified and modified.
The unmodified is that the financial statements reflect fairly, in all material respects, the financial position of the audited entity and the results of its financial activities in accordance with the reporting rules.
The modified auditor's report may be:
Qualified: A qualified opinion should be expressed when the auditor concludes that it is impossible to express an unreservedly positive opinion, but the impact of a disagreement with the auditee's management or audit scope limitation is not material and profound enough to express a negative opinion, or refuse to express an opinion. It must contain wording. "Except in circumstances ...".
§ negative: A negative opinion should be expressed only when the effect of any disagreement with the management of the audited entity is so material to the financial statements that the auditor concludes that the clause is not adequate to disclose the misleading or incomplete nature of the financial statements ...
§ with disclaimer of opinion: a disclaimer of opinion occurs when the limitation on the scope of the audit is so significant and profound that the auditor cannot obtain sufficient evidence and, therefore, is unable to express an opinion on the reliability of the financial statements.
The date on which the auditor's report was signed should be the same as the date on which the audit was completed, but not earlier than the date on which the audited entity's financial statements were signed or approved. Events after the reporting date are events that occur from the end of the reporting period until the date of signing the auditor's report and facts discovered after the date of signing the auditor's report.
The management of the audited entity is responsible for the content of the financial (accounting) statements and the introduction of changes in them in the event of occurrence of facts that significantly affect its reliability. The auditor is responsible for expressing an opinion on the assessment of these events.
The auditor's report must contain the signatures of the following persons:
§ the head of the audit organization or other authorized person;
§ the head of the audit with an indication of the number, type qualification certificate and its validity period.
The auditor's report must be signed by the head of the audit organization and the head of the audit (the person who conducted the audit) indicating the number and validity period of his qualification certificate, or by an auditor - an entrepreneur. Signatures are affixed with the seal of the audit organization.
Conclusion
The relevance and need to consider this topic is justified by the fact that at present most enterprises have a need for borrowed funds, and they are forced to seek help from credit institutions, individuals, enterprises with a stable financial position with free funds.
Loans are a system economic relations arising from the transfer of property in cash or in kind from one organization or persons to another organization on the terms of return, urgency and payment.
Loan relations are formalized by an agreement. Loan settlements audit consists in checking the correctness of execution and reflection on the accounting accounts of operations to repay the loan; confirmation of intended use; checking the validity of the establishment and correctness of the calculation of the amounts of payments for the use of the loan and their write-off at the expense of appropriate sources; the correctness of registration and reflection on the accounts of the accounting of loans received from other organizations and individuals.
The working documents of the auditor during the audit are: a questionnaire for planning the verification of the organization's obligations in loans, the auditor's working documents for the section, audit area, a questionnaire for checking the organization's obligations.
Typical errors and non-standard situations identified during audits include:
lack of internal regulatory and administrative documentation;
inclusion in the cost of products (works, services) of interest on loans that cannot be included in it;
violation of the principles of property valuation;
violation of the principles of formation of financial results.
When checking the issues of obtaining and using a loan, the auditor must evaluate the effectiveness of the invested funds for those activities for which they were intended.
Thus, accounting fully reflects the functions of loans as a measure of the effectiveness of the organization's economic activities and as a means of incentives.
Bibliography
1.Civil Code of the Russian Federation (part 1) of 30.11. 1994 No. 51 - FZ (as amended on 02/11/2013) (as amended and supplemented, coming into force on 03/01/2013)
2.Civil Code of the Russian Federation (part two) "dated 26.01.1996 N 14-FZ (as amended on 14.06.2012)
.Tax Code of the Russian Federation (part two) of 08/05/2000 N 117-FZ (as amended on 04/05/2013)
.Federal Law of 21.11.1996 N 129-FZ (as amended on 28.11.2011) "On accounting"
.Order of the Ministry of Finance of the Russian Federation of July 29, 1998 N 34n (as amended on December 24, 2010) "On approval of the Regulations on accounting and financial reporting in the Russian Federation"
.Melnik, M.V. Audit: Textbook / Ed. M.V. Miller. - M .: Economist, 2004 .-- 412 p.
.Sotnikova, A.V. Accounting and audit / A.V. Sotnikova - Moscow: Accounting, 2002 .-- 288 p.
.N.V. Parushina Credits and loans // Accounting. - 2003
.Sotnikova L.V. Audit of credit and loan accounting. -M .: UNITI, 2004
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.Kovaleva, O.V. Accounting and audit of financial statements of commercial enterprises. / O.V. Kovaleva. - Rostov n / a: Phoenix, 2010. - 512s.
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1. Audit of the accounting of credits and loans in Electroagregat LLC for 2005 was carried out.
2. When planning and conducting an audit of accounting for loans and borrowings, the state of internal control of Electroagregat LLC was considered. The head of the enterprise is responsible for the organization and state of internal control.
3. We reviewed the state of internal control solely in order to determine the scope of work required to form an auditor's opinion on the reliability of the reflection of loans and borrowings in the financial statements. The work done during the audit does not mean a complete and comprehensive check of the internal control system in order to identify all possible shortcomings in Electroagregat LLC.
4. During the audit, we discovered facts from which we can conclude that the internal control system of Electroagregat LLC is quite high.
5. We have not found any serious violations of the established accounting procedure that could significantly affect the reliability of the data on loans and borrowings reflected in the financial statements.
6. The results of our audit show that the operations with loans and borrowings were carried out by Electroagregat LLC in accordance with Russian legislation.
7. The revealed violation is not significant, but we recommend that you follow the agreement with accuracy in the future, or such assumptions should be stipulated in it.
Audit report.
Conditionally positive auditor's report on financial statements from an auditing company, legal address: Tver region, Kimry, st. Troitskaya, 56, license No. 1325/254 issued on 01.10.2001, valid until 01.10.2011,
for the board of LLC "Electroagregat", legal address: Tver region, Kimry, st. Volodarskogo, 111, state registration No. 554823
We have reviewed the accompanying balance sheets of Electroagregat LLC and the corresponding consolidated income statements for changes in financial position. The management of the company is responsible for these reports. Our responsibility is to express an opinion based on the audit findings of these reports.
We conducted our audit in accordance with generally accepted auditing standards, which requires us to plan and perform an audit to obtain sufficient evidence that the financial statements are free from material errors. We have verified, using tests, information supporting digital material and disclosures in financial statements. The audit reviewed the accounting principles used, the estimates of material items made by the management of the company, and the presentation of the financial statements in general. The most significant from a financial point of view operations, as well as the main documents reflecting these operations were checked:
* Verification of forms 1, 2, 3, 4 and 5 of the company's financial statements for 2005.
* Verification of the correctness of maintaining such a form of synthetic accounting used at the enterprise as the journal-order No. 4.
* Audit of analytical accounting registers and primary documents.
An insignificant violation was revealed during loan repayment, which does not affect the reporting as a whole.
We believe that sufficient data has been collected during the audit for a conclusion.
In our opinion, the financial statements, in all material respects, almost accurately reflect the consolidated position of Electroagregat LLC for 2005 and the consolidated results of operations with loans and borrowings, in accordance with generally accepted accounting principles.
We draw your attention to the fact that during the functioning of the loan agreement at Electroagregat LLC, the pledged property is practically frozen, i.e. the enterprise cannot reduce the amount of its finished goods balances below the amount set by the pledge, which especially negatively affects the financial and economic activity of the enterprise during periods of seasonal increase in demand.
Auditing Company
Conclusion: in this chapter, using the example of Electroagregat LLC, a strategy for conducting an audit was considered - a study of credit accounting, starting from financial statements, gradually moving to synthetic accounting registers, analytical accounting registers and primary documents.
The adopted strategy made it possible to maintain a logical sequence of checking the accounting of loans and borrowings at the enterprise. The tactics of the audit conducted at Electroagregat LLC was to check the most significant operations from a financial point of view, as well as the main documents reflecting these operations.
It is a time requirement to present information in auditors' reports in such a way that this presentation gives confidence to users in the reliability of the financial information presented, and to auditors in the adequate perception of this information by users.
Development market economy requires active attraction of market capital in the industrial and banking sectors. Capital market investors are interested in truthful, reliable, comparable information provided by companies that attract investors. Investors can obtain such information mainly from audited financial statements. Therefore, with the development of the capital market, the responsibility of auditors and self-regulatory audit associations to investors and other external users of the organization's financial statements increases for expressing an independent opinion on the reliability of financial statements.
When familiarizing with the auditor's report, the user should inquire about the experience of this organization in the audit services market, as well as a member of which self-regulatory audit association it is.
In accordance with the draft federal law "On auditing", all audit organizations are required to be members of a self-regulatory audit association, membership in which also guarantees the implementation of external quality control of the audit organization. The draft federal law "On Amendments to the federal law“On Auditing” ”not only assigns a supervisory function to self-regulatory audit associations, but also stipulates their responsibility to the Audit Council. The Council includes representatives of users of financial (accounting) statements of the relevant government agencies, federal executive bodies, The Central Bank Of the Russian Federation and representatives of the audit profession.
According to the discussed draft law, the membership of the Audit Council in mandatory no more than two representatives of the authorized federal body are included, one representative each from the Central Bank of the Russian Federation, the federal executive body performing the functions of developing public policy and normative legal regulation in the field of entrepreneurship, the federal executive body exercising the functions of control and supervision over financial markets, no more than two representatives of the audit profession. The latter are included in the Board on Auditing Activity on the representation of self-regulatory audit associations.
Members of the Council for Auditing Activity cannot be members of the working body of the Council (except for representatives of the authorized federal body).
MAIN CATEGORIES OF AUDIT REPORT
Investors first of all need to pay attention to the type of audit report. It should clearly indicate the main principles of financial reporting and express the opinion of the independent auditor on the reliability and fairness of the financial information presented in the financial statements in all material aspects.
The category “materiality” is decisive in the audit, since it is with its help that auditors establish the permissible amount of distortion of the financial statements, which accordingly affects the auditor's opinion on the reliability of the financial statements. According to clause 3 of Rule (standard) No. 4 "Materiality in audit", approved by Resolution of the Government of the Russian Federation No. 696 dated September 23, 2002, information on individual assets, liabilities, income, expenses and business transactions, as well as the components of equity, is considered material if its omission or misstatement could affect economic solutions users adopted on the basis of financial (accounting) statements.
Materiality depends on the value of the indicator of the financial (accounting) statements and / or errors, assessed in the event of their absence or distortion. The Russian standard "Materiality in Audit" in its content is close to the international standards ISA 320 "Materiality in Audit" and ISA 400 "Risk Assessment and Internal Control", but in practice there are differences in the understanding of materiality arising from modern conditions development of audit and accounting in the conditions of Russian reality. Very often national auditing standards, despite the fact that they are based on international auditing standards, offer different methods for determining materiality.
For example, American Auditing Standards (GAAS) allow a materiality level of up to 10% of the balance sheet total. To determine the materiality of the income statement in many countries that use ISA, take 5% of revenue.
It is known that the World Bank requires auditors approved by the bank to apply materiality equal to, for example, 1–2% of the amount of loans granted. The current Russian national auditing standard No. 4 "Materiality in audit" invites audit companies to independently determine the level of materiality, while the audit standard "Materiality and audit risk" that was in force in Russia until October 2002, approved by the Audit Commission under the President of the Russian Federation, proposed determining materiality as a percentage applied to the baseline.
For example, the balance sheet profit of an enterprise is 5%; gross sales (excluding VAT) - 2%; balance currency - 2%; equity capital - 10%; total costs of the enterprise - 2%.
This method of determining materiality is also recommended by some intercompany standards of international audit companies.
Materiality is important for planning the audit, determining the materiality factor, that is, the number of units of account audited, and determining the amount of error that could be allowed to affect the type of auditor's report. In the event that the detected error is greater than the level of materiality, the auditor believes that this error may affect the perception of users of the financial statements. Therefore, the errors identified by the auditors greater than the materiality determined by them lead to a modified auditor's report. A modified auditor's report may also result from the fact that the correction of a detected error results in a change in sign. financial result, for example, in the event of a significant amount of overdue receivables reflected by the company in the balance sheet asset, or in the event of a change in the financial result when it is written off.
Similarly, the audit of the item "Financial investments" is carried out. The main condition financial investments is the fact of their profitability. Otherwise, the items in this item will be treated as receivables or expenses incurred.
Similarly, the reflection in the financial statements of defective goods or defective products under the balance sheet item "Inventories" may result in a modified auditor's opinion in the event that no devaluation of this item has been made in accounting and the amount of the required devaluation exceeds the permissible level of materiality or the reflection of the devaluation in the financial reporting will lead to a change in the sign of the financial result.
An important part of the auditor's report is also an assessment of the organization's internal control system. International Auditing Standard ISA 400 "Risk Assessment and Internal Control" and Russian Auditing Standard No. 8 "Assessment of Audit Risks and Internal Control Performed by the Audited Entity" define the internal control system as policies and procedures adopted by the management of the audited organization to facilitate and implement the objectives of management , providing, as far as practicable, the orderly and efficient conduct of business, including strict adherence to management policies, ensuring the safety of assets, preventing and detecting fraud and errors, accuracy and completeness accounting records, as well as the timely preparation of reliable financial information.
TYPES OF AUDIT REPORT
The internal control system includes:
1) accounting system;
2) control environment.
By studying the description of the internal control system, the user of financial statements should understand what is the risk in the organization of making mistakes in the financial statements and what is the risk of not detecting the mistakes made. International Auditing Standards ISA 700-799 "Auditor's Conclusions and Preparation of Reports (Conclusions)", ISA 700 "The Auditor's Report on Financial Statements" and Russian Auditing Standard No. 6 "Auditor's Report on Financial (Accounting) Statements", approved by the Decree of the Government of the Russian Federation of September 23, 2002 № 696, provide definitions of the main types of audit reports and factors influencing the choice of the type of audit report.
An unconditionally positive opinion should be expressed when the auditor comes to the conclusion that the financial (accounting) statements give a reliable and fair presentation in all material aspects about financial situation and the results of the financial and economic activities of the audited entity in accordance with the established principles and methods of accounting and preparation of financial (accounting) statements. An overwhelmingly positive opinion indicates that all changes in accounting principles and methods of their application, as well as their impact, are properly identified and disclosed in the financial statements.
The auditor's report is considered modified if you have:
1) factors that do not affect the auditor's opinion, but are described in the auditor's report in order to draw the attention of users to any situation in the audited entity and disclosed in the financial (accounting) statements;
2) factors influencing the auditor's opinion that may lead to a qualified opinion, a disclaimer or a negative opinion.
Under certain circumstances, the auditor's report can be modified by the inclusion of an additional paragraph drawing attention to the situation affecting the financial (accounting) statements and discussed in detail in the notes to the financial (accounting) statements. As a rule, this additional paragraph is included in the conclusion after the paragraph expressing the opinion on the reliability of the financial statements.
In accordance with auditing standards, the auditor may not be able to express an unconditionally positive opinion if at least one of the following circumstances exists, and in accordance with the auditor's judgment, this circumstance has or may have a significant effect on the reliability of the financial (accounting) statements:
- the admissibility of the selected accounting policy;
- the method of its application;
- the adequacy of information disclosure in financial (accounting) statements.
1) there is a limitation on the scope of the auditor's work;
2) there is a disagreement with the management regarding:
These circumstances may lead to the expression of a qualified opinion, to a refusal to express an opinion or to a negative opinion.
Qualified opinion should be expressed if the auditor concludes that an unreservedly positive opinion cannot be expressed, but the impact of a disagreement with management or a limitation on the scope of the audit is not material and profound enough to warrant a negative opinion or refrain from expressing an opinion. As a rule, a paragraph with a disclaimer is entered at the conclusion before the paragraph expressing an opinion on the reliability of the financial statements.
Disclaimer of opinion takes place in cases where the limitation of the scope of the audit is so significant and deep that the auditor cannot obtain sufficient evidence and, therefore, is not able to express an opinion on the reliability of the financial (accounting) statements.
Negative opinion should be expressed only when the effect of any disagreement with management is so material and profound on the financial (accounting) statements that the auditor concludes that the inclusion of a qualification in the auditor's report is not adequate to disclose a misleading or incomplete nature financial (accounting) statements.
If the auditor expresses any opinion other than an unconditionally positive opinion, he should clearly describe all the reasons for this in the auditor's report and, if possible, give quantification possible impact on financial (accounting) statements. As a rule, this information is presented in a separate part, preceded by an opinion or refusal to express an opinion, and may include a link to more detailed information (if any) in the notes to the financial (accounting) statements.
The modified auditor's report means that the misstatement of an item disclosed in the auditor's report disclaimer is material and has a significant effect on the entity's financial condition.
Therefore, investors should understand what caused the disclaimer and whether they are willing to invest in an entity whose financial statements are misstated by the amount specified in the modified auditor's report.
The modified auditor's report may contain several qualifications concerning material items of the financial statements. But this means that all other material items of the financial statements are reliable.
The maximum number of clauses in the audit report that the author has encountered in practice was in the audit report of one of the Big Four companies issued to a large Russian monopolist and containing three clauses.
POSSIBLE RISKS
The investor should pay attention to the date of the auditor's report. The fact is that the auditor is responsible for the data presented in the financial statements, including the period before the issuance of the auditor's report. Accounting Regulation "Events after the reporting date" PBU 7/98 establishes the procedure for reflecting events after the reporting date in the financial statements of commercial organizations. An event after the reporting date is a fact of economic activity that has had or may have an impact on financial condition, traffic Money or the results of the organization's activities and which took place between the reporting date and the date of signing the financial statements for the reporting year. Events after the reporting date include:
- events confirming the economic conditions that existed at the reporting date in which the organization conducted its activities;
- events indicating the economic conditions that have arisen after the reporting date in which the organization conducts its activities.
Very often, financial statements are approved at a meeting of shareholders of open joint stock companies, when the auditor's report has already been issued by auditors. Typically, the official auditors are invited to the shareholders' meeting and speak at the meeting by reading out the auditor's report. In this case, auditors should monitor the organization's activities up to the date of approval of the financial statements. For the period between two dates - the date of issuance of the auditor's report and the date of approval of the financial statements at the meeting of shareholders - there may be events about which shareholders should be warned.
This primarily concerns the conditional facts of economic activity. For example, there was a trial. The company was awaiting a final decision on the outcome of the case in its favor, since there were positive decisions of the primary courts. The auditors issued an auditor's report with an unconditional positive opinion on the financial statements. Litigation data was disclosed in Explanatory note to financial statements.
But Arbitration court The Russian Federation decided the case not in favor of the organization, and the court decision became known before the approval of the financial statements by the meeting of shareholders. In this case, the auditors were required to notify the shareholders of the changes in their speech or send a letter to the shareholders' meeting with notification of the events, since the amount of the claim turned out to be significant for this organization and the reflection of this amount as expenses should inevitably lead to a change in the financial result from the economic activity of the organization in the reporting period.
Such facts may be indicated in an additional paragraph, which does not affect the type of the auditor's report when it is issued. Therefore, investors should inquire about the consequences of the possible events specified in the additional paragraph. By the way, the announcement of annual dividends based on the results of operations is also recognized as an event after the reporting date. joint stock company for the reporting year, which are approved at the meeting of shareholders.
Of course, investors must understand all the risks if auditors refuse to express an opinion or issue a negative opinion. But in practice, there are cases when investors buy such organizations. For example, when an investor is interested in real estate registered with an organization, or when investors acquire a business competitor.
International audit practice has developed general rules to assess the reliability of financial statements. Such material misstatements of the financial statements are possible, in the presence of which the auditors cannot issue an unconditional auditor's opinion on the reliability of the financial statements:
- reporting data are overestimated or underestimated by a significant amount;
- the reporting of data is largely inconsistent with the actual state of affairs;
- the reporting has been drawn up on the basis of principles different from those of the previous period (principles of comparability and consistency are not observed), except for those cases when an explanation is given in the explanatory note;
- the data of the financial statements contradict the requirements of the accounting policy;
- there are cases of concealment of essential information;
- the presentation of reporting data is complicated and not fully disclosed;
- the identified violations lead to a change in the financial result in the profit and loss statement of the organization's economic activity for the reporting period;
- the auditor has significant doubts about the going concern of the entity.
Thus, the auditor must ensure that the financial statements reflect material information and that all financial information presented is fully disclosed.
In addition to the auditor's report, the investor must independently pay attention to possible risks in the organization, for example, the fact of a decrease in the item of the financial statements "Fixed assets". Alarming are the facts of growth of the item "Work in progress" with a slight increase in revenue and the item " Finished products», Growth of production costs. The item "Administrative expenses" requires special attention.
As a rule, investors understand that they can manage these expenses, although there are certain risks of their increase.
IMPORTANCE OF THE EXPLANATORY NOTE
There is a case of non-recognition of the costs of running a local tax office rendered by the management parent company located in Moscow to a local large plant. Tax office considered the high management costs ineffective and economically unjustified, since a large plant had losses from economic activities. When administrative expenses were counted as expenses that do not reduce tax base, the activities of the plant turned out to be profitable.
Particular attention in such cases is given to the Explanatory Note, which is part of the financial statements and in which all financial information must be disclosed in detail. Russian standards accounting and international financial reporting standards regulate the preparation of the Explanatory Note.
When confirming financial statements, auditors need to carefully check the preparation of this financial reporting form.
First of all, the Explanatory Note should highlight all changes in accounting policies and reflect all the disclosures that are required by accounting standards.
For example, the Regulation on accounting "Accounting for fixed assets" PBU 6/01 requires the following disclosures of this article to be provided:
- initial cost, accrued depreciation by groups of fixed assets at the beginning and end of the year;
- useful lives by groups;
- methods of calculating depreciation by groups;
- movement of fixed assets during the year by groups;
- methods for evaluating fixed assets received under contracts providing for the fulfillment of obligations (payment) with non-monetary funds;
- changes original cost fixed assets (revaluation, completion, etc.);
- the cost of non-depreciable fixed assets;
- leased and leased fixed assets;
- fixed assets pledged;
- operated fixed assets that are in the process of state registration;
- a significant drop in the value of fixed assets after the reporting date (clause 4.7);
- major transactions with fixed assets after the reporting date and / or planned (clause 18);
- acquisition / plans to acquire an enterprise as a property complex after the reporting date (clause 4.8).
Similar disclosures should be made under the item "Intangible assets".
Under the item "Non-current assets", the costs of items of the item, including R&D items, must be disclosed.
The standards require disclosure of information on long-term financial investments, in particular on the assessment of financial investments, created reserves for their impairment, as well as their profitability.
Disclosures under Inventories should include how inventories are measured, changes in how they are measured and their implications, allowances for impairment, the amount of pledged inventories.
Separately, there should be disclosed the item "Deferred expenses", the composition and procedure for write-off.
The article "Value added tax on acquired values" must be disclosed.
Article " Receivables»Must disclose the amount of the formed reserve under this item.
The Explanatory Note must disclose all affiliated persons and all transactions with affiliated persons, as well as all information about the organization's participation in joint activities.
Disclosure of discontinued operations and contingent facts of economic activity require special attention.
The explanatory note should also contain information about the organization's activities by segment.
It is important that the Explanatory Note should disclose not only quantitative, but also qualitative aspects of information, such as the type of client's activity, the stability of his position in the market, financial condition (for example, any amount may be insignificant in relation to the volume gross margins, but be important in identifying development trends).
The absence of the required disclosures in the Explanatory Note may also affect the type of the auditor's report.
Reading and understanding financial statements requires investors to have a certain level of literacy and knowledge, as well as to understand where and how an investor can obtain information of interest to him.
Thus, investors should definitely pay attention to:
- the type of the auditor's report, and in particular the reason for the modified auditor's report;
- the main financial indicators of the organization;
- disclosure of all necessary financial information in the Explanatory Note.
- With the help of such a criterion of social development as the successes of science and technology, it is possible to show the progressive nature of
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