Audit. Audit of income tax calculations (lecture notes)

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Audit. Audit of income tax calculations (lecture notes)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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Table of contents (expand)

Accepted abbreviations and abbreviations
Theoretical foundations of auditing. Prerequisites for the emergence of audit and its place in the control system in the Russian Federation (Control in a market economy. Prerequisites for the emergence and development of audit. Development of audit in Russia)
Regulation of auditing activities in the Russian Federation (The system of regulation of auditing activities. The concept of auditing. Legal norms of auditing. Goals, objectives and general principles of auditing. Ethics of the auditor)
Types of audit and conditions for carrying out audit activities (Types of audit. Mandatory audit. Audit-related services. Independence of auditors, audit organizations and individual auditors. Internal audit. Certification and licensing of audit activities. Quality control of audit organizations and individual auditors)
Standards in auditing activities (Basic principles of auditing standards. International auditing standards. Rules (standards) of auditing in the Russian Federation. In-house auditing standards)
Organization of audit (Stages of an audit. Audit planning. Overall audit plan. Audit program. Audit contract. Examination and evaluation of accounting and internal control systems during the audit. Applicability of the going concern assumption. Use of the work of an expert)
Audit risk and its relationship with materiality and audit sampling (Audit risk and its assessment. Assessment of materiality (materiality) in an audit. Audit sampling. The concept of affiliates in an audit)
Audit evidence: features of obtaining and reflecting in working documentation (Audit evidence. Documentation of the audit. Verification of compliance with the requirements of regulations. Actions of the auditor when errors and dishonesty are identified. Analytical procedures in auditing. Types and features of application. Features of the audit of estimated values. Audit in the conditions of computer data processing)
The final stage of the audit (Informing management about the results of the audit. Auditor's report. Date of signing of the audit report and reflection in it of events that occurred after the date of preparation and presentation of financial statements. Auditor confidentiality)
Audit methodology. Audit of accounting policies (Goals and objectives of the audit of accounting policies. Changes in accounting policies. Testing of individual provisions of accounting policies)
Audit of cash transactions (Goals and objectives of the audit of cash transactions. Program for checking cash transactions and testing the control system. Organization of the working stage of the audit. Checking the execution of primary documents. Checking registers and reporting forms. Features of computerized accounting of cash transactions. Checking the correctness, timeliness and completeness of cash receipts funds. Inventory of the cash register. Checking compliance with the cash balance limit in the cash register. Audit of collected amounts of money. Checking compliance with the procedure for using cash registers. Audit of cash documents in the cash register. Responsibility of the management of the audited entity for organizing the accounting of cash transactions)
Audit of current and other bank accounts. Audit goals and objectives (Audit of transactions on a current account. Checking the documentation of transactions on bank accounts. Checking the legality of writing off funds from a current account. Checking transactions on foreign currency accounts. Audit of transactions on other bank accounts)
Audit of fixed assets and intangible assets (Goals and objectives of the audit of fixed assets and intangible assets. Assessment of the accounting and internal control system. Plan and program for the audit of fixed assets and intangible assets. Methods for obtaining audit evidence. Acquisition of fixed assets. Leasing of fixed assets. Acquisition of equipment requiring installation. Modernization fixed assets. Reserve for repairs of fixed assets. Depreciation of fixed assets. Retirement of fixed assets. Acquisition of intangible assets. Depreciation of intangible assets. Audit procedures)
Audit of inventories (Goals and composition of an audit of inventories and accounting procedures. Criteria for obtaining audit evidence during an audit of inventories. Stages of collecting audit evidence. Methods for obtaining audit evidence. Planning an audit of inventories. Audit of the correctness of accounting for materials. Features of an audit in an organization accounting of inventories at accounting prices. Acquisition of inventories, the cost of which is expressed in foreign currency. Material costs. Transfer of raw materials for processing. Accounting for goods. Audit of production and sale of finished products. Inventory of inventories. Audit of reporting forms)
Audit of financial investments (Prerequisites for verification. Concept and classification of financial investments. Formation of initial cost. Audit of loans. Audit of bills. Audit of shares. Audit of contributions to the authorized capital of other organizations. Audit of information on financial investments in reporting)
Audit of expenses and income of an organization (Audit of expenses. Audit of work in progress accounting. Audit of settlements with customers and the procedure for determining revenue. Completed stages of work. Audit of financial results)
Audit of contractual relations (Purchase and sale agreements. Construction contracts. Donation agreements. Agency agreement. Agreements for research and development work. Loan agreements. Surety agreements)
Audit of payroll calculations (Goals and objectives of the audit of wage calculations. Preparation of working documentation for the audit. Methods for obtaining audit evidence. Planning the scope of the audit. Accrual and payment of wages. Deductions from wages. Audit of wage payments. Providing leave. Unified social tax, pension contributions fund and insurance fund. Payment of benefits for temporary disability. Dismissal of employees. Audit of other issues regarding accruals and payments to the organization’s personnel)
Audit of settlements with accountable persons (Goals and objectives of the audit of settlements with accountable persons. Audit of accounting of settlements with accountable persons. Payment for business trips)
Audit of authorized capital and settlements with founders (Goals and objectives of the audit of the authorized capital. Audit program of the authorized (share) capital. The influence of the organizational and legal form on the responsibility of the founders. Basic legislative aspects of regulating the formation of the authorized (share) capital. Issue of shares. Audit of settlements with founders. Payment of dividends)
Audit of income tax calculations (Goals and objectives of the audit. Recommendations on the organization and methodology for verifying income tax expenses and obligations to the budget at various stages of the audit. Risk assessment. Determination of permissible error (level of materiality). Analysis of accounting policies. Generalization and assessment of audit results. Classification of violations by income tax. Documentation of audit results)
Literature

TOPIC 20. AUDIT OF INCOME TAX CALCULATIONS

20.1. Goals and objectives of the audit

The auditor is recommended to use the Guidelines for checking income tax and liabilities to the budget when conducting an audit and providing related services (approved by the Audit Council under the Ministry of Finance of the Russian Federation, Minutes No. 22.04.2004 dated April 25, XNUMX).

The relevance of the methodology for checking income tax during an audit is due to the fact that taxes are part of the relationship of an economic entity with state and regulatory authorities, and violations in this area can lead to significant consequences for an economic entity.

The objectives of the audit of financial statements in the field of income tax are determined by such qualitative aspects of reporting.

Existence - income tax expense and tax liability to the budget, reflected in the financial statements, actually exist and relate to the audited reporting period.

Completeness - income tax expense and tax liability to the budget are reflected in the financial statements in full.

Valuation (measurement) - income tax expense and tax liability to the budget indicated in the financial statements are correctly calculated and truthfully reflect the result of the organization's activities.

Classification - the organization's tax liability is correctly divided into current and deferred.

Presentation and disclosure - the liability to pay and return taxes, as well as the income tax expense, are correctly classified and disclosed in the financial statements with a sufficient level of detail. The criteria used by the auditor in evaluating evidence when conducting an audit of income tax and liabilities to the budget:

1) requirements of legislative and regulatory acts of the Russian Federation on accounting;

2) the tax legislation of the Russian Federation on income tax;

3) international financial reporting standards.

20.2. Recommendations on the organization and methodology for checking income tax expenses and liabilities to the budget at various stages of the audit

There are the following stages of the audit.

Audit planning:

▪ assessment of audit risk and acceptable error (materiality level);

▪ analysis of accounting policies;

▪ drawing up a substantive audit program, choosing audit procedures.

Conducting an audit:

▪ carrying out substantive audit procedures;

▪ detailed testing;

▪ analytical procedures;

▪ collection of audit evidence;

▪ preparation of working documents.

Completion of the audit:

▪ generalization and evaluation of audit results;

▪ documentation of audit results.

20.3. Risk assessment

When conducting an audit of income tax and settlements with the budget, the auditor should strive to minimize audit risk. A reliable assessment of audit risk is achieved by a combined risk assessment (inherent risk, control risk, and detection risk) during the audit planning stage as a whole.

In the event that inherent and control risks are high, an income tax audit should be organized in such a way as to reduce the amount of detection risk as much as possible and thereby reduce the overall audit risk to an acceptable value. To do this, it is necessary to obtain more audit evidence during substantive procedures.

At low levels of inherent and control risk, the auditor is free to accept a higher level of detection risk and thereby reduce the overall audit risk to an acceptable level.

The assessment of the inherent risk in relation to account balances and groups of transactions associated with the calculation of income tax is influenced by such factors as the complexity of the financial and economic transactions of the audited entity, the presence of transactions for which there is no unambiguous interpretation in accounting and tax legislation, the presence of industry-specific features in accounting, etc.

20.4. Determination of the allowable error (significance level)

The level of materiality is established by the auditor based on his professional judgment. An auditor working in an audit firm should apply in his practice an intra-company standard that regulates the procedure for determining the level of materiality.

When planning an audit on income tax and liabilities to the budget, the level of materiality is determined in relation to the following elements:

1) balances on accounts 68 "Debt to the budget for income tax", 09 "Deferred tax assets", 77 "Deferred tax liabilities";

2) groups of transactions that form the tax base for income tax (objects of taxation).

When determining the level of materiality, not only the quantitative, but also the qualitative aspect of misstatements should be taken into account.

The qualitative aspect of distortion includes:

1) non-compliance with accounting policies;

2) insufficient or inadequate description of accounting policies and disclosure of income tax information in the financial statements.

When determining the quantitative aspect of misstatements, the auditor needs to consider the possibility of misstatements in relation to relatively small amounts, which together can have a significant impact on the formation of the tax base for income tax and financial statements.

To calculate the materiality level, the auditor selects the basic indicators of financial statements based on his professional judgment.

Then the percentages of these indicators are set to determine their calculated and average values. The amount of interest can be the same for all indicators or individual for each indicator and is determined by the professional judgment of the auditor.

After carrying out the calculations and excluding the indicators with the largest and smallest deviations from the average, the overall level of materiality is determined, which will be further distributed among the verification elements.

The procedure for assessing the level of materiality must be documented by the auditor.

The indicators chosen by the auditor may be different depending on the types of activities carried out and the presence of non-operating transactions with the audited entity.

The sources of information on the amounts of accrued income and expenses incurred are tax declarations and consolidated tax accounting registers of the audited economic entity.

In the event that the errors noted during the audit and the expected errors are greater or less, but in general are close in magnitude to the value of the materiality level and (or) there are discrepancies in the tax accounting and reporting of the audited entity with the requirements of the relevant regulatory documents, however, the discrepancies clearly cannot be recognized as material, the auditor, using his professional judgment, assumes responsibility and decides whether or not to conclude material errors and violations in this situation or to conclude that appropriate disclaimers are included.

20.5. Accounting policy analysis

For an effective approach to conducting an audit in the field of income tax and obligations to the budget, the auditor must get an idea of the accounting policy of the audited entity and assess the impact on profit of existing discrepancies in the methodology of accounting and tax accounting.

Accounting policy analysis is carried out in order to:

1) establishing discrepancies in determining the base for calculating profit for accounting and for tax purposes due to the difference in the assessment and recognition of assets, liabilities, income and expenses;

2) identification of permanent and temporary differences in the calculation of profit;

3) identification of key risk elements;

4) expressing an opinion on the applied accounting policy of the audited entity for tax purposes.

At the stage of conducting a substantive audit, it is necessary to implement procedures to collect sufficient and appropriate audit evidence to express an opinion, document audit evidence.

The auditor independently determines the scope of documentation for each specific work and area of the audit, guided by his professional opinion. However, the scope of the documentation should be such that, if it becomes necessary to transfer the work to another auditor who does not have experience in this assignment, the new auditor could understand the work done and the validity of the decisions and conclusions of the former auditor solely on the basis of these working documents.

The form and content of the working papers of the audit is essentially determined by the nature of the audit engagement, the requirements for the audit report, the nature and complexity of the activities of the audited entity, the state of the accounting and internal control systems of the audited entity, the need to give tasks to auditors and control the quality of audit services, methods of collecting audit evidence .

The auditor's working papers containing information on the audit of a particular period refer to the current audit files.

20.6. Summarizing and evaluating the results of the check

At the final stage of the audit, an analysis of the implementation of the audit program is carried out, the identified errors and violations are classified, the results of the audit are summarized and formalized, and the types of income tax clauses for the audit report on financial (accounting) statements are formulated.

Analytical procedures at the audit completion stage should be documented by the auditor.

The final working papers of the auditor reflect:

1) the reasons for violations of the norms of tax legislation on income tax;

2) the tax consequences of these violations for the audited entity;

3) practical recommendations for eliminating the negative consequences of the identified violations.

20.7. Classification of Income Tax Violations

By the nature of the actions, errors may be made as a result of inadvertent actions or bad faith.

By the nature of the occurrence, there are errors in determining the base for income tax and liabilities to the budget, associated with the unreasonableness of accounting records, periodization, assessment, classification, recognition and presentation.

According to the consequences - errors that directly or indirectly affect the correctness of the calculation of income tax.

By significance - errors in the calculation of income tax, which have a subsequent impact on the results of operations and the financial position of the audited entity.

20.8. Documenting the results of the audit

The results of the audit on the section of income tax and liabilities to the budget are reflected in the "Written information (report) on the audit of financial statements" or in a separate document (during a tax audit).

The written information (report) of the auditor to the management and (or) owners must contain information about the following identified during the audit:

1) violations of the accounting policy for taxation purposes;

2) deficiencies in the system of tax accounting and internal control that have led or may lead to violations in the calculation of income tax and the fulfillment of obligations to the budget;

3) quantitative deviations in the formation of the income tax base in accordance with tax legislation;

4) misrepresentations in the presentation and disclosure of information on income tax and liabilities to the budget in the financial statements.

In the written information (report), the auditor should provide references to legislative and regulatory acts, violations of which were revealed during the audit, and give proposals for eliminating these violations.

When conducting an audit on a special assignment (tax audit), the auditor's report expresses an opinion on the degree of completeness and correctness of the calculation, reflection in tax registers and tax returns of data on income tax, as well as the timeliness of settlements with the budget for this tax. In addition, conclusions and proposals on optimizing tax policy, building a tax accounting system, automating the accounting process, etc. can be reflected.

The auditor's report on material misstatements and limitations that affect the auditor's opinion on the fair presentation of the financial statements may include the following disclaimers regarding income tax:

▪ on disagreements regarding tax policy and tax accounting methods;

▪ on disagreements regarding the disclosure of information on income tax and liabilities to the budget in financial statements (classification of tax liabilities into current and long-term, compliance with the principle of prudence in relation to tax assets);

▪ on events that occurred after the reporting date and contingent facts in business activities related to the obligation to the budget for income tax (for court cases and tax audits);

▪ for significant amounts of understatement of income tax expense and obligations to the budget;

▪ restrictions on the scope of the auditor's work.

An example of a modified auditor's report on observations relating to income tax and liabilities to the budget.

In the part containing an opinion with a reservation due to the facts of incorrect reflection of information on income tax

"In our opinion, the financial (accounting) statements incorrectly reflect information on the net profit received for the reporting period, due to the absence of the amount of the deferred tax asset in the statements";

"In our opinion, in the financial (accounting) statements, the obligation to the budget for income tax was incorrectly formed due to a significant distortion of the tax base";

"In our opinion, the financial (accounting) statements incorrectly reflect the deferred tax asset due to the lack of sufficient confidence in the possibility of its repayment in the future."

In the part that attracts attention regarding information on income tax

"Without changing our opinion on the reliability of the financial (accounting) statements, we draw attention to the fact that currently the legal proceedings between the audited entity and the tax authority on the issue of the correct calculation of the tax base for income taxes have not been completed. The amount of the claim is XXX thousand rubles The financial (accounting) statements do not provide for any provisions for the fulfillment of obligations that may arise as a result of a court decision not in favor of the audited entity.

Regarding disclaimer of opinion on income tax information

"Due to the lack of accounting data on deferred tax assets and deferred tax liabilities, we do not express our opinion on the issue of completeness and correctness of disclosure of information on income tax expenses and liabilities to the budget in the financial (accounting) statements."

Authors: Erofeeva V.A., Piskunov V.A., Bityukova T.A.

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