Selection of clients by audit firms. Selection of clients by audit organizations. Choice of audit firms by economic entities

To reduce the risk of failure audit, auditors and accounting firms must have reliable criteria for evaluating potential clients.

An unsuccessful, ill-considered choice of a client can lead to significant financial and moral costs and damage the image of the company and the auditor. It is especially important to have a well-thought-out system for selecting clients by audit firms during the period of market formation in Russian Federation when a significant number of commercial structures violate the current rules of conduct accounting and reporting Clients of an audit firm can be divided into several types depending on the client-auditor relationship during the audit:

· formal-official: clients of this type do not intend to establish close contacts with the auditor and require the fastest conducting an audit checks;

· informal: clients establish close contact with the auditor and hope for his help. In this case, the external auditor performs some of the functions of internal audit and provides a number of related services (consultations, analysis, etc.).

Auditors should begin their work by becoming familiar with the entity being audited, for which they study the constituent documents, types of activities, accounting policies of the organization, etc. Conversations with the management and specialists of the organization, and conducting an express audit through oral testing can be of great help in this regard. It is also necessary to familiarize yourself with the reporting and its main displays in order to identify the scale of the organization’s activities and the results of its work for the period under study.

The main client selection procedures include:

· assessment of the nature of the industry;

· determination of the purpose of the audit of this client and the possible use of its results;

· clarification of the characteristics of managers;

· preliminary assessment of the potential labor intensity and complexity of the audit, as well as audit risk;

· assessment of the reasons for the change or changes of auditors;

· familiarity with the caveats of previous audit reports on audit results;

· clarifying the nature and problems of relationships with tax authorities, banks, partners, shareholders and other consumers of information financial statements potential client;

· express analysis of reporting;

· preliminary acquaintance with the state of accounting and reporting, current and upcoming problems of the client;

· assessment of the audit firm's or auditor's own ability to perform the work (taking into account the availability of appropriate personnel, knowledge of the client's industry, etc.).

At the preliminary planning stage, relevant organizational issues related to the creation of normal working conditions and payment for these services should also be discussed and agreed upon with the management of the economic entity.

Great care is required to check those organizations that have complex problems. dubious reputation. Therefore, before closing. agreement with such organizations on conducting an audit, it is necessary to find out who their leader, founders are, the level of qualification of the organization’s accounting and financial work, what are the results of previous audits in this organization (if this is possible ), obtain information about the forms and methods of organizing management and accounting, evaluate the effectiveness of the on-farm control system, etc.

Only as a result of a preliminary study of an economic entity can one determine the approximate volume and labor intensity of the work ahead, as well as the continuation of the audit. The cost of the audit is determined in accordance with the volume of work, its complexity and duration.

Having received a letter of proposal to conduct an audit, the auditor (audit firm) must also check compliance with the principle of independence, currently enshrined in Art. 12 of the Law “On Auditing Activities.

An audit cannot be carried out:

1) auditors who are:

· founders;

· owners or shareholders;

· managers and others officials of the audited entity, who are responsible for compliance with financial statements or who are closely related to these persons (parents, spouses, brothers, sisters, sons, daughters, as well as brothers, sisters, parents and children of spouses).

2) audit firms in relation to economic entities that are:

· their founders, owners, shareholders, creditors, insurers;

· their subsidiaries, branches and representative offices or having an audit firm share in their capital,

· as well as audit firms in relation to which the subject being audited is:

· founder;

· owner or shareholder.

3) auditors and audit firms that provide accounting services or preparation of financial statements to a given economic entity.

If the listed circumstances are clarified after concluding an agreement for inspection or issuing an order, the agreement is subject to termination and the order is revoked.

If the auditor (audit firm) deliberately conceals such circumstances, the customer will be reimbursed for expenses incurred in connection with the conclusion of the contract, and the auditor’s license may be revoked.

Based on the results of preliminary planning, the audit organization must decide whether it agrees to work with this client. Several factors influence this decision. Firstly, the audit organization must be convinced that it is fundamentally possible to conduct an audit. Secondly, the auditor must evaluate subject factors factors that influence his desire to work with the client: the client’s reputation, payment, etc. Thirdly, the auditor must assess the availability of the necessary personnel in his organization.

If, based on the results of the preliminary planning, the audit organization and the economic entity came to an agreement on the possibility of an audit and agreed on the fundamental aspects of its implementation, they must move on to documenting their relationship.

When carrying out audit activities, important signs have no choice audit organizations(individual auditors) of enterprises to conduct audits.

It is very important for audit organizations to have a balanced selection system and reliable criteria for assessing potential clients.

This will reduce risks during the audit and avoid significant financial and moral losses.

The following basic techniques for selecting clients by audit organizations are identified.

1. Determine the audit objectives pursued by the client and possible use its results. Penalties for conducting an inspection can be very diverse: mandatory audit in accordance with legal requirements; the presence of accounting problems that need to be given special attention; the need to verify the reporting of subsidiaries and dependent companies; examination consolidated statements etc. The goals set influence the scope of audit procedures, labor costs and the cost of the audit.

2. Preliminary assessment of the potential labor intensity and complexity of the audit, as well as audit risk. In a preliminary risk assessment, it is assumed that the client has low risk, If:

There are prospects for long-term performance;

Funding is stable;

A well-functioning system operates internal control;

Accounting uses conservative rather than aggressive approaches;

Financial statements are prepared on a timely basis;

Management is honest and competent.

3. Determination of the client’s reputation and clarification of the features of enterprise management. When studying the client's reputation, the absence or presence of lost or unfinished court cases, problems with tax and other government authorities is considered. When analyzing the characteristics of management, they consider the composition of the board of directors, the list of main shareholders, highlighting their share in the joint stock

capital, to determine the actual owners of the organization, etc.

4. Features of the client’s business. Here it is necessary to study the industry of activity and types of products (services provided) to determine the ability of the audit organization to conduct an audit, as well as the required number of specialists of the required specialization or additional experts.

It is also necessary to assess in advance the possibility of the enterprise functioning in the future in order to determine whether there is a threat of bankruptcy of the client. A list of main buyers and suppliers is established in order to determine whether there is a dependence on one counterparty. Financial information about the client’s activities is studied: balance sheet currency, accounts receivable and payable, equity, revenue, profit before tax - to establish financial situation and financial stability of the enterprise.

5. Assessing the reasons for changing the previous auditor. The period of work of the previous audit firm with this client, the types of services provided, the form of the issued audit report and disagreements between the auditor and the client on the form of the report, on the problem of reflecting events that occurred before the date of drawing up the audit report, or other issues are taken into account.

6. Clarification of the nature of relationships with third parties: tax authorities, banks, partners, other consumers of financial reporting information of a potential client. Information obtained from lawyers is very important in identifying actual and potential litigation. In the presence of high probability loss of court cases for significant amounts, the auditor must warn the management of the client enterprise about the possibility of expressing a qualified or negative opinion.

7. The presence of problems associated with violation of the independence of auditors (related, property, financial, etc.).

If the results of studying these issues imply high risk for the audit organization or the tasks set by the client are unrealistic to complete, the client is not accepted for service.

Also, the audit organization should consider the advisability of concluding an agreement with the client if the following problems exist: incompetence of the enterprise management; the existence of circumstances indicating fraud and abuse; high staff turnover; low reliability of the internal control system; non-compliance of the accounting system with regulatory requirements; a large volume of suspicious, from the point of view of auditors, transactions; limiting the scope of the audit.

More on the topic Selection of clients by audit organizations:

Rights and responsibilities of audit organizations and individual auditors when performing an audit

To reduce the risk of audit failure, auditors and accounting firms must have reliable criteria for evaluating potential clients.

An unsuccessful, ill-considered choice of a client can lead to significant financial and moral costs and damage the image of the company and the auditor. It is especially important to have a well-thought-out system for selecting clients by audit firms during the period of market formation in the Russian Federation, when a significant number of commercial structures violate the current rules of accounting and reporting. Clients of an audit firm can be divided into several types depending on the “client-auditor” relationship during the audit:

formal-official: clients of this type do not intend to establish close contacts with the auditor and require the fastest possible audit check;

informal: clients establish close contact with the auditor and hope for his help. In this case, the external auditor performs some of the functions of internal audit and provides a number of related services (consultations, analysis, etc.).

The main client selection procedures include:

assessing the nature of the industry;

determining the purpose of the audit for a given client and the possible use of its results;

clarification of the characteristics of managers;

preliminary assessment of the potential labor intensity and complexity of the audit, as well as audit risk;

assessing the reason for the change or changes of auditors;

familiarity with the caveats of previous audit reports on audit results;

clarification of the nature and problems of relationships with tax authorities, banks, partners, shareholders and other consumers of financial reporting information of a potential client;

express analysis of reporting;

preliminary acquaintance with the state of accounting and reporting, current and upcoming problems of the client;

assessment of the audit firm's or auditor's own ability to perform the work (taking into account the availability of appropriate personnel, knowledge of the client's industry, etc.).

An audit cannot be carried out:

1) auditors who are:

founders;

owners or shareholders;

managers and other officials of the audited entity who are responsible for compliance with financial statements or who are closely related to these persons (parents, spouses, brothers, sisters, sons, daughters, as well as brothers, sisters, parents and children of spouses).

2) audit firms in relation to economic entities that are:

their founders, owners, shareholders, creditors, insurers;

their subsidiaries, branches and representative offices or having an audit firm share in their capital,

as well as audit firms in relation to which the audited entity is:

founder;

owner or shareholder.

3) auditors and audit firms that provide accounting services or preparation of financial statements to a given economic entity.

If the listed circumstances are clarified after concluding an agreement for inspection or issuing an order, the agreement is subject to termination and the order is revoked.

Based on the results of preliminary planning, the audit organization must decide whether it agrees to work with this client. Several factors influence this decision. Firstly, the audit organization must be convinced that it is fundamentally possible to conduct an audit. Secondly, the auditor must evaluate the subject’s factors that influence his desire to work with the client: the client’s reputation, payment ability, etc. Thirdly, the auditor must assess the availability of the necessary personnel in his organization.

IN modern conditions mutual choice of participants in the audit services market occupies an important place in the system of socio-economic relations of business entities.

Moreover, this choice should be based not only on legal aspects, but also on compliance with the requirements of moral and ethical principles. Their material and moral well-being largely depends on the correct mutual choice of participants in the audit services market, and risks are minimized.

Therefore, to reduce the risk of audit failure, the auditor and audit firms must have proper criteria for evaluating potential clients.

If the results of the listed procedures (see Fig. 10) reveal a high audit risk or the task turns out to be too complex and time-consuming for auditors, then the client is denied service.

The audit firm must record all facts of client requests.

Large audit firms have checklists that are used to evaluate potential clients on a risk scale.

Currently in the Russian Federation there is a large number of audit firms and before economic entities there is a problem of choice.

Main criteria for selecting audit firms:

1) number of personnel and their experience;

2) the company's turnover;

3) the largest client companies;

4) price level for services;

5) possible benefits provided;

Rice. 9. - Basic procedures for selecting clients by audit firms

1) degree of responsibility for the quality of the audit;

2) availability of finance in the region;

3) duration of work on the market;

4) range of services provided.

The number of personnel and turnover of an audit firm can be found out from the ratings of audit firms regularly published in the press. Since in market conditions the price for audit services varies among different firms, economic entities have the opportunity to choose audit firms based on this parameter.

Some audit firms provide their regular customers certain benefits in the price of the service, the time of provision of the service, the provision of specific auditors, etc. This factor should also be taken into account when choosing an audit firm.

An important criterion for choosing an audit firm is the degree of responsibility for the quality of its work that the audit firm is willing to assume under the audit contract. Moreover, the amount of responsibility that an audit firm agrees to assume under an audit contract has a very wide range.

The time spent on the audit services market is also good criterion, because indicates existing experience.

The presence of branches in the regions is only an auxiliary criterion in cases where this is important for an economic entity.

Of course, an economic entity should make sure that the audit firm has a license for the appropriate type of services and that this license is not expired.

The wider the range of services provided by an audit firm, the more convenient it is for an economic entity. If necessary, you can get comprehensive information on solving a particular problem in one place.

Preparation of a letter of engagement is determined Russian rule(standard) of auditing activities “Letter of commitment from an audit organization on consent to conduct an audit.”

The engagement letter is preceded by a formal proposal from the audit organization requesting the provision of audit services. A letter of commitment is sent to the executive body of the enterprise before concluding an audit contract in order to avoid misunderstanding of the terms of the upcoming contract. The letter of commitment of the audit organization documents the consent to conduct the audit.

The enterprise confirms in writing its consent to the audit conditions proposed by the audit organization. In this case, the terms of the letter remain in force for the duration of the audit agreement.

If the parties have entered into a long-term agreement, then a letter of commitment may not be drawn up annually.

The engagement letter contains the following mandatory instructions on the conditions of the audit:

about the object and purpose of the audit, in particular, about the procedure for conducting an audit of branches and divisions of the audited enterprise, if any;
on legislative acts and regulations on the basis of which the audit is carried out;
about additional issues resolved during the audit;
on the form of reporting by the audit organization based on the results of the audit;
on the responsibility of the audit organization for the services provided;
on the audit organization's obligation to maintain commercial secrets;
about the risk of not detecting significant inaccuracies or errors in the accounting and reporting of the audited enterprise due to the selective nature of the audit procedures used and the imperfection of the internal control system.

The letter of commitment contains mandatory instructions on the obligations of the inspected enterprise:

on the responsibility of the inspected enterprise and its executive body for the completeness and accuracy of the submitted documentation and financial (accounting) statements;
on ensuring free access to primary documents and accounting registers, computer database and any other documentation and information necessary to conduct the audit;
on the sending by the organization, at the request of the auditor, of letters to debtors and creditors about their confirmation (non-confirmation) of the relevant debt;
about the impossibility of putting pressure on the audit organization in any form in order to change its opinion about the reliability of the financial (accounting) statements of the audited enterprise.

At the discretion of the audit organization, taking into account the wishes of the client, the following information may additionally be included in the text of the engagement letter:

general information about the services provided by the audit organization, personnel qualifications, the most large clients, membership in Russian and international professional associations;
approximate audit schedule;
composition of the audit team;
characteristics of the testing methods used;
terms of payment for the audit;
the enterprise’s consent to use the results of the work of the previous audit organization;
proposal for further development contractual relations between the audit organization and the enterprise.

During a repeat audit, the audit organization sends a letter of commitment to the audited enterprise if:

there are facts of misunderstanding by the management of the enterprise of the goals and scope of the audit, the responsibility of the audit organization and the enterprise;
the conditions for conducting an inspection by the executive body of the enterprise change;
there have been changes in the management of the enterprise;
the profile or scope of the enterprise’s activities has changed significantly;
The legislation affecting the provisions set out in the commitment letter has changed.

Understanding the activities of an economic entity

Understanding the activities of the audited enterprise is necessary in order to identify and correctly evaluate events, operations, and accounting methods used, which have a significant impact on the reliability of financial (accounting) statements and the progress of the audit. Therefore, before starting an audit or providing audit-related services, the auditor must study in detail the activities of the audited enterprise.

The corresponding rule (standard) establishes the requirements for the audit organization to obtain information about the activities of the audited enterprise.

Studying the activities of the audited enterprise is necessary for the auditor to understand the following factors:

economic policy of the enterprise for reporting period;
accounting policy enterprise and its compliance with the activities carried out;
correct application of regulations governing operations carried out by the enterprise.

Understanding the activities of the company being inspected implies understanding, among other things, economic situation in the country and in the industry and the behavior of the audited enterprise in existing conditions.

Factors influencing the financial and economic activities of an enterprise can be divided into a number of groups. 1. General economics:

the state of the economy as a whole (for example, growth or decline in production);
size interest rates and financing opportunities;
inflation rate;
public policy, including monetary, fiscal, fiscal, financial incentives, tariffs, trade restrictions;
courses foreign currencies and exchange controls.

1. Industry:

market conditions and competition;
cyclicality (seasonality) of activity;
changes in production technology;
entrepreneurial risk;
industry decline or expansion;
unfavorable conditions (for example, falling demand, problems with production capacity, serious price competition);
accounting features business transactions;
basic economic indicators and statistical data;
requirements and problems related to environmental protection;
regulatory framework.

2. Customized:

corporate structure - private, public, state enterprise;
shareholders and third parties (local, foreign, business reputation and experience);
capital structure (including any ongoing or planned changes);
organizational structure;
goals and strategic management plans;
acquisitions, mergers or downsizing (planned or carried out in Lately);
sources and methods of financing;
composition of the board of directors; business reputation and qualifications of managers on the board; independence from the executive body and control over its activities; frequency of meetings; the presence of an internal control service and the scale of its activities, etc.;
qualifications and reputation of the enterprise management; staff rotation; leading personnel and their status in the organization; Providing accounting personnel; system of incentives and incentives, etc.

3. Economic:

the nature of the organization’s activities (trade, production, import or export operations and so on.);
location production facilities, warehouses, offices;
market condition work force(location, salary level, collective agreements, etc.);
products and markets (main customers and contracts, payment terms, market share, competitors, exports, guarantees);
main suppliers of goods and services (for example, long-term mi (tracts, stability of supply, payment terms, imports);
inventories (quantity, location);
categories of basic expenses;
research and development work;
legislative and regulations that have a significant impact on the activities of the enterprise;
debt structure, including terms and restrictions;
income forecasting systems and financial flows;
leasing and other financial agreements (credits, loans);
availability of loans;
transactions with securities.

Before starting an audit, the audit organization must generally understand the impact of external factors on the activities of the enterprise being audited. A detailed analysis of internal factors is carried out directly during the audit process.

Before conducting an audit, the audit organization must obtain initial knowledge of the above factors and assess their sufficiency for conducting the audit. The auditor uses the acquired knowledge in the audit planning process.

The management of the audited enterprise must ensure complete and timely provision of information necessary for understanding its activities.

The main methods of obtaining knowledge about the activities of the audited enterprise may be:

study of general economic conditions of activity of the inspected enterprise;
analysis of regional characteristics of activities (geographical location, economic and tax conditions region);
taking into account industry specifics of activity;
familiarization with the organization and technology of production;
collection of information about personnel, product range, and accounting methods used;
collection of information about organizational and production structures, marketing policies, main suppliers and customers;
analysis of the activities of the inspected enterprise on the securities market;
studying relationships with branches and subsidiaries, methods of consolidating financial statements and the procedure for distributing profits remaining at the disposal of the enterprise;
collecting information on legal and financial obligations;
familiarization with the organization of the internal control system. If the organization has activities that require specialized knowledge, the auditor should determine whether there is a need to obtain advice from other specialists.

Sources for obtaining information about the company being inspected can be:

official publications in periodicals, professional, industry and regional journals and monographs;
statistical data, official reports of enterprises;
regulatory and legislative acts regulating the activities of the inspected enterprise;
clarifications and confirmation received from staff;
inquiries to third parties;
constituent documents, minutes of meetings of the board of directors and shareholders, contracts and agreements, financial (accounting) statements of previous periods, plans and budgets, regulations on accounting, accounting policies, document flow, working chart of accounts and postings, diagram organizational and production structures;
inspection of the workshops, warehouses and services of the organization being inspected, as well as a survey of personnel not directly related to the field of accounting;
results of analytical procedures, identification of unusual business transactions;
results of work with involved expert specialists;
materials tax audits and litigation.

Agreement for the provision of audit services

The contract for the provision of audit services can be one-time or long-term. When concluding a long-term contract, its subject may simultaneously be audit services, as well as services related to the audit.

When the agreement is preceded by a letter of commitment on consent to conduct an audit, the text of the agreement sets out a description of the essential conditions of future cooperation, the rights and obligations of the parties.

The contract discloses the following main aspects and essential conditions.

1. Subject of the contract for the provision of audit services.

2. Conditions for the provision of audit services - the purpose of providing audit services and the objects of audit, the timing and stages of providing audit services, references to legislative acts and regulatory documents on the basis of which audit services are provided.

3. Rights and obligations of the audit organization - the need to strictly comply with the requirements of the legislation of the Russian Federation, independently determine the forms and methods of the audit; the ability to check any documentation of the enterprise necessary for conducting an audit, access to the system computer processing data, receipt upon written request of information necessary for an audit from third parties, refusal to conduct an audit or refusal to express an opinion on the reliability of the audited statements in auditor's report in case the enterprise fails to provide the necessary documentation, contacts a third-party consultant or expert if such a need arises, the requirement to ensure the safety of documents received during the audit, and non-disclosure of their contents with the consent of the owner, etc.

4. Rights and obligations of the audited enterprise - the need to create conditions for auditors to conduct timely and complete inspections and provide services, provide them with all necessary documentation, provide access to the computer information processing system, as well as issue

and the request of auditors for clarifications and explanations in oral and written form, obtaining from audit organizations information about the legal requirements relating to the audit, including those that are the basis for audit observations and conclusions, prompt elimination of violations of the accounting procedure identified during the audit and preparation of financial (accounting) statements, prohibition of any actions in order to limit the range of issues to be clarified during an audit, etc.

5. Cost and payment procedure for audit services.

6. Responsibility of the parties and procedure for resolving disputes. Additionally, at the request of the parties, the text of the agreement may include:

be included: an approximate calendar plan for the provision of audit services and the composition of the group of auditors, general characteristics applied inspection methods, level of materiality possible errors established during the audit, the procedure for paying additional expenses arising during the provision of audit services, etc.

The contract must indicate the number and date of issue of the license for the right to carry out auditing activities, as well as the body that issued the license to the audit organization.

An example of a letter of commitment from an audit organization on consent to conduct an audit, given in the rule (standard) of auditing activities “Letter of commitment from an audit organization on consent to conduct an audit”

Form Official name

or corner stamp of an economic entity,

audit organization Full name and position of the responsible person

Outgoing number [...],

date of signing

Letter of commitment of consent to conduct an audit

Dear [. . . ] !

We hereby officially confirm the acceptance of your proposal to conduct an audit of the financial (accounting) statements of [name of economic entity]. According to the current audit regulations and standards, the balance sheet, financial results statement, appendices to the balance sheet, accounting registers and individual source documents for [the period covered by the audit].

The audit is carried out by us in accordance with current legislation Russian Federation [indicates legislative and regulatory acts regulating auditing activities and the procedure for preparing financial (accounting) statements]. The purpose of the audit is to express the opinion of the audit organization on the reliability of the financial (accounting) statements of [name of economic entity] for [ given year or

other reporting period] in all material respects. During the audit, the activities of [a list of branches, divisions and subsidiaries of the economic entity subject to audit] will also be checked. To substantiate our conclusions, we use a number of tests and procedures to verify reliability and sufficiency accounting information, the state of internal control, in the implementation of which we hope for the help of the employees of your organization.

Due to the large volume of documents subject to audit, the selective nature of tests and other inherent limitations of an audit, there is a certain risk of undetecting individual errors and inaccuracies. We will do everything to reconcile this risk to a reasonable minimum, but (as is generally accepted in auditing) we cannot guarantee the absolute accuracy of the conclusions. About identified deviations in accounting and reporting from the established procedure, as well as about the facts of intentional distortions that we discovered financial statements You will be informed by our written report.

In addition, we can provide you with the following Additional services on your instructions [list].

We will be responsible for the services provided in the manner prescribed by the current legislation on auditing activities and the audit agreement.

We undertake to maintain the trade secrets of your organization.

We remind you of the responsibility of the executive body [name of the economic entity/ for the preparation of financial statements, including the appropriate reflection of primary accounting data, ensuring the adequacy accounting records and internal control, selection and application of accounting policies. We ask the management of [name of economic entity] to provide written confirmation of the accuracy and completeness of the information provided for the audit.

We hope for full cooperation with your staff and that we will be provided with accounting documentation, computer databases and any other information necessary for us to conduct a full audit. It is also your responsibility to send letters to the addresses of debtors and creditors about their confirmation (non-confirmation) of the relevant debt according to the list provided by us.

We expect that our employees will not be pressured in any form to change our opinion about the reliability of your financial statements. Violation of this condition is, according to the standards accepted in auditing, the basis for our early termination of the audit contract.

The cost of services provided is determined depending on the time required to conduct the audit, based on the hourly rates applied by [name of audit organization]. Payment individual species work may vary in accordance with the degree of responsibility, experience and required level of qualifications of auditors. The procedure and timing of settlements will be determined in the audit agreement.

We request that you sign and return the attached copy of this letter indicating its appropriate

To ensure your understanding of the agreements on auditing the reliability of financial (accounting) statements or send us comments on its content.

Head of the audit organization [signature, full name, position, date]

I agree with the conditions for conducting an audit of the reliability of financial (accounting) statements.

Supervisor executive body economic entity

[signature, full name, position, date]