Audit. Standards in auditing activities (lecture notes)

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Audit. Standards in auditing activities (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 4. STANDARDS IN AUDITING ACTIVITIES

4.1. Basic principles of auditing standards

In the system of normative regulation of audit activities, the rules (standards) of audit occupy an important place. The implementation of their requirements in practice serves as a certain guarantee of the quality of the check.

The main principles of auditing standards are expressed as follows:

1) auditing standards formulate common basic requirements that define the regulatory requirements for the quality and reliability of the audit and provide a certain level of assurance of the results of the audit if they are observed. As economic conditions change, auditing standards are subject to periodic revision to best meet the needs of users of financial statements;

2) on the basis of audit standards, training programs for the training of auditors, as well as uniform requirements for conducting exams for the right to engage in audit activities, are formed;

3) auditing standards serve as the basis for proving in court the quality of the audit and determining the degree of responsibility of auditors;

4) standards define the general approach to the audit, the scope of the audit, the types of auditors' reports, methodology issues, as well as basic principles.

The meaning of the standards is that they:

▪ ensure high quality of audit;

▪ promote the introduction of new scientific achievements into audit practice;

▪ help users understand the audit process;

▪ create a public image of the profession;

▪ eliminate state control;

▪ help the auditor negotiate with the client;

▪ provide connection between individual elements of the audit process.

4.2. International Auditing Standards

The creation of a system of international economic relations necessitated the harmonization of audit standards at the international level, which made it possible to expand the circle of users of financial statements, facilitated the comparison of financial performance of companies from different countries and made it possible to assess the competence and professionalism of audit firms.

International Standards on Auditing (ISA) is a reference book for professional auditors, which contains a description of generally accepted auditing methods. Russian practicing auditors can apply international standards in their activities, which will contribute to further integration into the international audit community.

Several organizations are involved in the development of professional requirements at the international level, including the International Federation of Accountants (IFAC), established in 1977. The Committee on International Auditing Practices (CMAP), which is a standing committee of the IFAC Council, is directly involved in auditing standards.

International Standards on Auditing issued by the Committee should:

▪ promote the development of the profession in those countries where the level of professionalism is lower than the global one;

▪ to unify, as far as possible, the approach to auditing internationally.

Status of International Standards on Auditing. ISAs are intended to be used in the audit of financial statements, as well as in the audit of other information and the provision of related services. ISAs contain the basic principles and necessary procedures, relevant guidelines, presented in the form of explanatory and other material. The full text of the ISA, including the explanatory and other material contained therein, must be taken into account in order to ensure that the basic principles and required procedures are understood and correctly applied, along with the relevant guidance. And only in exceptional cases the auditor can deviate from ISA. At the same time, he must be prepared to argue for such a retreat.

The ISAs do not override local regulations governing the audit of financial or other information in any given country. To the extent that ISAs comply with local regulations in a particular case, an audit of financial or other information in a particular country, conducted in accordance with local regulations, should comply with ISAs. In the event that local regulations differ or conflict with the ISAs in a particular case, IFAC member organizations must comply with the membership obligations stipulated in the IFAC Constitution in relation to these ISAs.

Status of the Regulations on International Auditing Practice. The Regulations on International Auditing Practices (PIAP) are developed to provide practical assistance to auditors in meeting standards and ensuring good auditing practice.

The approved text of a draft for review, standard or regulation is the text published by IFAC in English. IFAC member organizations are entitled to translate these documents after obtaining the appropriate permission from IFAC for the purpose of publishing them in the language of their country. Translation of documents is carried out at the expense of member organizations and must include the name of the organization that prepared it, as well as a reference to the fact that this document is a translation of the approved text.

The first edition of the ISA in Russian was an important step in the transition of Russian auditors to international standards. However, this edition was full of errors and inaccuracies, which caused criticism from those Russian auditors who were familiar with the English-language source. The ISA 1999 edition in Russian was still undergoing the editing process when the International Federation of Accountants IFAC released the 2000 edition in English. This circumstance created new objective prerequisites for the discrepancy between the latest version of ISA and Russian developments based on the official Russian translation of 1999.

In the ISA 2001 edition, a number of documents differ significantly from the 1999 edition, in addition, new standards have appeared by this time. The text of the new translation was taken by Russian developers as a basis for the preparation of new Russian federal auditing standards.

In the ISA, all standards are collected in 10 semantic sections: introduction; responsibilities; planning; internal control system; audit evidence; using the results of the work of third parties; audit findings and opinions; special areas of audit; accompanying services; provisions on international audit practice.

4.3. Rules (standards) of audit activity in the Russian Federation

At the end of 1993, for the first time in Russia, the Temporary Rules for Auditing Activities in the Russian Federation were adopted, in accordance with which the Commission on Auditing Activities under the President of the Russian Federation gradually approved 38 rules (standards) that regulated the activities of auditors in detail.

After the adoption of the Law on Auditing Activities, a legal vacuum formed for some time, since decisions on some issues were already dictated by the Law. This problem was resolved by the publication of the Federal Auditing Standards, which define the requirements for the procedure for conducting an audit or providing related services.

Federal auditing standards are divided into:

1) federal rules (standards) of audit activity;

2) internal rules (standards) of auditing activities in force in professional audit associations, as well as rules (standards) of auditing activities of audit organizations and individual auditors.

All federal rules (standards) in Russia can be classified into three groups:

1) Russian rules (standards) of audit activity, similar in content to the relevant ISAs;

2) Russian rules (standards) of auditing activities that differ from ISAs, of which they are analogues, in some significant respects;

3) Russian rules (standards) of audit activity and ISAs that have no mutual analogues.

As of August 1, 2006, 23 federal auditing standards have been developed and adopted in the Russian Federation:

No. 1 "The purpose and basic principles of the audit of financial (accounting) statements";

No. 2 "Audit Documentation";

No. 3 "Audit Planning";

No. 4 "Materiality in audit";

No. 5 "Audit evidence";

No. 6 "Auditor's report on financial (accounting) statements".

No. 7 "Internal audit quality control";

No. 8 "Assessment of audit risks and internal control carried out by the audited entity";

No. 9 "Affiliates";

No. 10 "Events after the reporting date";

No. 11 "Applicability of the Assumption of Business Continuity of the Audited Entity".

No. 12 "Agreement on the terms of the audit";

No. 13 "Responsibilities of the auditor to address errors and fraud during the audit";

No. 14 "Taking into account the requirements of regulatory legal acts of the Russian Federation during the audit";

No. 15 "Understanding the activities of the audited entity";

No. 16 "Auditor sample";

No. 17 "Obtaining audit evidence in specific cases";

No. 18 "Obtaining by the auditor of confirming information from external sources";

No. 19 "Features of the first check of the audited entity";

No. 20 "Analytical procedures";

No. 21 "Features of the audit of estimated values";

No. 22 "Disclosure of information obtained as a result of the audit to the management of the audited entity and representatives of its owner";

No. 23 "Statements and clarifications of the management of the audited entity".

This list of standards is not final, as the development of standards in Russia continues, and at the same time the process of making changes and additions to already adopted standards is underway. The adoption at the national level of auditing standards that comply with ISAs is an important step towards reforming Russian auditing towards integration with international requirements.

4.4. Intracompany auditing standards

Federal auditing standards and the provisions of the Law on Auditing have given greater independence to auditors in solving certain practical problems of auditing. Many issues can be settled by the auditors on their own and fixed by them in the internal audit rules.

Internal audit standards define uniform requirements for the procedure for conducting an audit and its quality, create, if they are observed, an additional level of guarantee of the audit results. Intra-company auditing standards can be divided into two groups: standards of self-regulatory audit associations (accredited) and intra-company standards proper.

Self-regulatory audit associations have the right to develop their own standards and methodological materials on the application of federal standards, where they may establish additional requirements for auditing, but they should not contradict federal auditing standards and the Law on Auditing.

Auditing organizations and individual auditors have the right to establish their own rules (standards) of audit activity, which cannot contradict the federal rules of audit activity and cannot establish requirements lower than those specified in federal standards. These may include instructions adopted and approved by the organization, methodological developments, manuals and other documents that reveal the internal approaches of the company to the audit.

Internal standards according to their purpose can be combined into the following groups:

1) standards containing general provisions on audit;

2) establishing the procedure for conducting an audit;

3) establishing the procedure for the formation of conclusions and conclusions of auditors;

4) specialized standards;

5) establishing the procedure for providing audit-related services;

6) on education and training of personnel.

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

<< Back: 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)

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