- National standards of accounting and
- International financial reporting standards and international accounting standards ( IFRS-IAS)
Audit is the verification of accounting data and financial reporting statements of a unit of economic activity with a view to express an independent auditor’s opinion on their authenticity and compliance with law requirements, accounting provisions (standards) IFRS-IAS or other rules (internal regulations of units of economic activity) according to users’ demands.
1. Audit of historical financial information, in particular of financial statements. Audit provides the highest degree of confidence, so called “audit guarantee” of the inspection results. Audit envisages the inspection through testing proof for amounts indicated in reports. The auditor decides what procedures to choose and how to evaluate risks of failure to detect serious flaws in financial statements regardless of their causes (fraud or error). While evaluating the risk, the auditor considers internal control related to the process of drafting and presenting of financial statement in order to elaborate a proper audit procedure rather than to form opinion on effectiveness of internal control of an enterprise. Audit also includes evaluation of applied accounting principles and essential accounting evaluations performed by administration as well as evaluation of submission of financial statements in general.
2. Review of historical financial information including financial statements. The review gives moderate confidence that the reports do not contain serious distortions and is generally limited to interviewing client’s personnel and analytical procedures applied by the auditor to financial data and which therefore give less confidence than audit.
3. Tasks of building confidence that are neither audit nor review of historical financial information. - evaluation/verification of effectiveness of a) the system of internal control (audit); b) application of production capacity; c) functioning of the management system; d) the system of material stimulation and payment for personnel’s work; e) systems of personnel management; f) informational systems (technologies); g) systems of information security of an enterprise functioning; h) systems of corporative management; i) an enterprise functioning and compliance with requirements of the legislation (tax, customs, economic etc); j) management decisions or individual economic transactions and their compliance with requirements of the legislation; - evaluation (testing) of reliability of the accounting system; - evaluation (testing) of adequacy of professional competence of personnel involved into financial and economic activity; - requested calculations (economic, financial, strategic and other types of analysis) for evaluation of the state and results of economic activity; - verification of foreseen financial information; - other tasks.
