5 Reasons Why You Need To Audit Your Financial Statements

An agreed (repeated) audit is performed by this auditor or audit firm repeatedly or regularly. Such cooperation is convenient for both auditors and a client who receives highly qualified, comprehensive, long-term assistance based on long-term cooperation and evaluation.

Reason 1:

According to Article. 5 of the Federal Law “On Auditing” dated December 8, 2008 No. 307-FZ, obligatory audit is conducted in cases when:

  • The organization has an organizational and legal form of an open joint-stock company;
  • The organization is a credit organization, a bureau of credit histories, an insurance organization, a mutual insurance company, a commodity or stock exchange, an investment fund, a state off-budget fund, a fund whose source of education is voluntary contributions of individuals and legal entities;
  • The volume of proceeds from the sale of products (works, services) of the organization (excluding agricultural cooperatives and unions of these cooperatives) exceeds 50 million rubles for the previous reporting year or the balance sheet assets at the end of the year preceding the reporting year exceed 20 million rubles. For municipal unitary enterprises, the law of a constituent entity of the Russian Federation may reduce financial indicators;
  • In other cases established by federal laws.

Reason 2:

Mandatory audit is conducted annually

Compulsory audit of the accounting (financial) statements of organizations whose securities are admitted to trading at stock exchanges and (or) other trade organizers on the securities market, other credit and insurance organizations, non-state pension funds, as well as consolidated reporting is conducted only by audit organizations. Thus, it is important to engage a professional that provides internal audit services for you.

Reason 3:

Audit allows one:

  • To get a reliable idea of ​​the adequacy of the reality of financial and accounting reporting
  • Identify the facts of incompetence of employees and deliberate misrepresentation of accounts
  • Comply with mandatory requirements of law, bank and counterparty
  • Get an idea of ​​the compliance of accounting and tax accounting with regulatory requirements
  • Assess the system of internal control of the client for compliance with regulatory requirements, scale and nature of the activity
  • To identify significant risks in the tax sphere and in relations with other enterprises and individuals
  • To Identify and use all legitimate opportunities for tax optimization

On the basis of the information received during the audit, develop proposals for the elimination of identified shortcomings, as well as control the results of their implementation.

Reason 4:

The Variations

The audit is divided into the initial and the periodic (repeated, agreed).An initial audit is an audit that is conducted for the customer for the first time. In this case, the risk and complexity of the audit significantly increase, since the auditors do not have the necessary information about the characteristics of the client’s activities, the system of its internal control, etc.

Reason 5:

The Extensions

According to this provision, licensing of audit activities is carried out by the Ministry of Finance (hereinafter – the licensing authority). The license for auditing is granted for 5 years. The term of the license may be extended upon the application of the licensee in the manner provided for the re-issuance of the document confirming the existence of the license.

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