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Initiative audit: description, purpose, features of the conduct and value

The activities of any enterprise require strict control in order to avoid mistakes and their negative consequences, as well as to identify economic crimes and persons who are associated with them. To this end, conduct special checks - mandatory and proactive audit. Know the essence of these concepts, what are their differences and what they are in practice, will be useful not only for economists, accountants and financiers, but also for modern educated people.

Concept and essence

The word "audit" is used to refer to the verification of economic, economic and financial activity of an enterprise by independent specialists who have received special training and are certified in accordance with the current legislation, as well as by state (federal) or international standards. There are several types of such expertise, the most common among which are two - mandatory and proactive. An audit that is conducted to comply with legal requirements is called mandatory. For example, such audits should be conducted by joint stock companies, professional participants in the financial or stock market, insurance companies, banks, etc. The results of this audit are sent to state bodies that oversee the activities of such firms. The situation with the initiative audit is completely different. From its very name it follows that such a check is not mandatory, but is performed solely at the desire or internal necessity of the enterprise. The results of this audit are not directed anywhere, but are used by owners or managers to study and make appropriate decisions.

Initiators of the

The decision to conduct an optional inspection can be taken:

  • For the joint -stock company - shareholders, supervisory board or audit committee (these bodies are mandatory for such organizational and legal form of the legal entity), as well as the executive body (board of directors, board, etc.).
  • For a limited liability company, a company with additional responsibilities, a limited partnership, a private enterprise , etc.-proprietors, a supervisory board or an audit committee (if their election or appointment is provided for by internal documents). In addition, the decision can also be made by the executive body (director, manager, president of the company according to the Charter of the legal entity).
  • For an individual entrepreneur , the entrepreneur himself.

Terms and features

Initiative audit is usually carried out suddenly, i.e. without warning to interested persons (chief accountant, financial director, etc.) in order to avoid substitution of documents or change of information. Such a test does not last long, without disrupting the normal operation of the enterprise, except for the need for an inventory.

Initiative audit is undesirable to entrust the same company or firm that advises the enterprise in the course of its activities. This will help to identify errors and inaccuracies that occurred during the activity and were missed by the auditor earlier, accidentally or intentionally, as the collusion between the accountant and the audit firm is infrequent, but still happens.

Subject of study

Since initiative audit is carried out exclusively at will, the customer himself determines the objects of study. These may include:

  • Correctness of accounting and tax accounting (compilation and recording of primary documents, chart of accounts and posting, calculation of taxes and fees, etc.).
  • Conformity of the terms of contracts and contracts to market conditions.
  • Correctness of drawing up and submission of financial and other accounts to the bodies of the fiscal service and other state structures exercising control over the activities of the enterprise.
  • Financial and economic performance of the company (liquidity, financial independence, resistance to market fluctuations, etc.).
  • Corporate governance (compliance with legislative requirements for the procedure for convening and holding meetings of shareholders or founders, for taking decisions, etc.).
  • Inventory of stocks and finished products, money and other assets, as well as fixed assets.
  • Checking the correctness of pricing.

When is it necessary to conduct?

An initiative audit of an enterprise is the work of highly paid specialists, therefore enterprises do not conduct it on a regular basis, but only when necessary. Such a verification may be necessary, for example, in the following cases:

  • Before the beginning of the planned audit of fiscal bodies (tax service).
  • To determine the value of the company with the intention to sell it.
  • When planning to attract investment, as well as obtaining a large loan or loan.
  • For making important business decisions related to the financial and economic state of the enterprise.
  • If there are suspicions regarding the activities of the chief accountant or director, and also with the intention to change the persons occupying these positions.

Verification results

An initiative audit provides owners and managers with an opportunity to control the work of accounting, economists and financiers, as well as assess the performance of the entire company. In addition, the specialists will give recommendations on the elimination of errors and inaccuracies, and will also suggest how to avoid this in the future. Based on the results of the audit, the auditor can also help in making the right decisions both for major transactions of the enterprise itself, as well as about intentions of owners about its sale, and merger or acquisition.

Report on the work of the auditor

Initiative audit is completed by the transfer to the customer of a full report, called "Auditor's report". This document must contain:

  • Description of the verification object. For example, the annual financial statements, the correctness of maintaining accounts, the reliability of inventory management and finished products, etc.
  • The audit period, as well as the time interval covered.
  • Normative documents that were used in the work of the auditor.
  • Calculation of coefficients.
  • Conclusions and recommendations.
  • Full information about the auditor, data of his state registration and certification.

The conclusion is necessarily stitched, signed and stamped. The auditor is responsible for the audit results and conclusions, therefore this document can be used in court if necessary, but only if the customer and the auditor are not related persons.

To be or not to be?

If the credibility of the accountant is one hundred percent, and also there are no big turns, intentions to sell or major transactions, how necessary is a small company to initiate an audit? The purpose and value of such verification is that it is performed by high-level specialists, which small businesses can not afford to maintain on a permanent basis. Recently, fines of fiscal services and other supervisory and regulatory bodies have increased substantially, and no one has insured against mistakes in accounting or tax records. That is why even small firms should at least once a year conduct an initiative audit.

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