According to ISA 700, The Auditor's Report on Financial Statements, the main elements of the auditor's report are:

1. Title.

2. Addressee.

3. Introductory paragraph (introduction).

4. A paragraph describing the scope of the review.

5. The paragraph that expresses the auditor's opinion on the financial statements.

6. Date of issue of the auditor's report.

7. Auditor's address.

8. Auditor's signature.

The recipient is determined in accordance with the terms of the audit engagement and local regulations. Typically, the report is addressed to the shareholders or board of directors of the entity being audited.

The introduction contains a list of the audited statements, date and reporting period, a reference to management's responsibility for the financial statements and the assertions contained therein, and the auditor's responsibility to express an opinion on the financial statements only based on the audit performed.

The scope of the audit paragraph should refer to ISAs or relevant standards and regulations and state that the audit was planned and performed to obtain reasonable assurance that the financial statements are free of material misstatement. In addition, it is indicated that the check included:

Analysis of evidence supporting the amounts and information contained in the statements;

Determining the accounting principles to be applied;

Investigation of significant accounting estimates made by management;

Assessing overall reporting presentation.

The report must also contain the auditor's confirmation that the audit provides a reasonable basis for the opinion.

The auditor's opinion paragraph states whether the financial statements give a true and fair view (perhaps "presented fairly") of the financial position and results of operations of the entity being audited in accordance with the established financial reporting framework.

An unqualified opinion is expressed when the auditor believes that the financial statements are presented fairly, in all material respects, in accordance with the established financial reporting framework.

The conclusion is considered modified if it contains an explanatory paragraph or an opinion other than an unconditionally positive one. The auditor should modify the report by including an additional paragraph if there is a factor that indicates that the going concern assumption is not appropriate or there is a significant uncertainty that may have a future impact on the financial statements. These factors do not influence the auditor's opinion, which should be reflected in the report.

The auditor is unable to express an unqualified opinion if one of the following circumstances exists:

1) limitation of the scope of the audit;

2) disagreement with management regarding the admissibility of the chosen accounting policy, methods of its application or the sufficiency of financial disclosure in the statements.

If the impact of these circumstances is material to the financial statements, the auditor expresses an adverse opinion. If the influence of these factors is not so significant and deep, but an unconditionally positive opinion cannot be expressed, then the auditor expresses a conditionally positive opinion.

If there is a significant limitation in scope that prevents the auditor from obtaining sufficient and relevant audit evidence, a disclaimer of opinion should be issued.

If the report differs from an unqualified opinion, the auditor should describe all significant reasons for this and, if possible, quantify the possible effect on the financial statements.

The report is dated on the date corresponding to the date of completion of the audit and not earlier than the date of signing or approval of the financial statements. The audit report is usually signed on behalf of the audit firm and personally on behalf of the auditor. The address indicates the city and place where the office of the auditor responsible for conducting the audit is located. The following is an example of an unconditional audit report:

Untitled Document

Auditor's report

ABC Company Shareholders

We audited the following financial statements of ABC Company:

balance sheet as of December 31, 20_g.;
profit and loss statement for 20_year;
cash flow statement for 20_g.

ABC Company's management is responsible for the financial statements and the statements contained therein. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those standards require us to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The audit includes:

obtaining evidence confirming the amounts in the financial statements and the information disclosed therein, based on testing 1 ;
a study of the accounting principles used by the management of ABC Company;
assessing the overall presentation of the financial statements.

We believe that our audit provides sufficient information to enable us to express our opinion.

In our opinion, the financial statements present a true and fair view of the financial position of ABC Company as at 31 December 2020, its results of operations and cash flows for the year then ended in accordance with International Financial Reporting Standards.

On behalf of XYZ audit firm

Head of the company (signature)

Auditor (signature)

Reconciliations are the corresponding amounts and other disclosures for the preceding financial period or other periods presented for comparison purposes. ISA 710 Comparisons sets out standards and guidance regarding the auditor's responsibilities relating to comparisons.

Indicators for comparison could be as follows:

Relevant indicators are included as part of the financial statements for the current period. Are considered only in connection with indicators for this period (for example, the amounts of income and expenses for the current and previous periods shown in the income statement for the reporting period);

Comparable financial statements are financial statements for a prior period presented for the purpose of comparison with the financial statements of the current period.

The auditor must determine whether the comparisons are consistent with the financial reporting frameworks relevant to the statements being audited. In relation to comparisons, the auditor determines:

Compliance of the accounting policies of the current and previous periods, the presence of necessary adjustments and disclosure of information;

Reconcile the figures with the amounts and disclosures presented for the previous period.

When drawing up the audit report, the auditor does not separately indicate the relevant indicators, since he expresses an opinion on the reporting as a whole. The following cases are exceptions:

1. The previously issued audit report for the previous period contains an opinion that is different from an unconditionally positive one, and the issue that caused the modification of the report has not been resolved. In this case, the auditor modifies the report on the current year's financial statements in relation to the relevant indicators.

2. The previously issued auditor's report contains an unconditionally positive opinion, but the auditor learned of significant misstatements affecting the reporting for the previous period. In this case, if the financial statements have not been revised and the information has not been properly disclosed, then the conclusion on the financial statements for the current period is modified in relation to the relevant indicators, and if the relevant indicators are presented in the financial statements for the current period properly, then an explanatory paragraph can be included in the conclusion regarding relevant indicators.

If the financial statements containing the relevant items are audited by a new auditor, the report must either state that the prior period's financial statements were audited by a different auditor or indicate that the prior period's financial statements were not audited. If, during the audit, the new auditor discovers that the relevant indicators are distorted, he should require management to review them and, in case of refusal, modify the audit report.

In reporting comparable financial statements, the auditor specifically refers to comparisons. The opinion applies to each individual financial statement presented, and the auditor, if necessary, can express an opinion other than unqualified for certain periods and at the same time issue a separate opinion on the remaining statements. If the opinion on the prior period accounts formed during the current audit differs from that previously expressed, the auditor discloses the significant reasons for the difference in an explanatory paragraph.

If the statements for the previous period were audited by another auditor, then one of the following options is possible:

1. The previous auditor can re-draw up an audit report on the statements he audited, and the new auditor draws up a report only for the current period.

2. The new auditor issues a report that contains information that the accounts for the previous period were audited by another auditor and the type and date of the report issued by the predecessor.

When reviewing the financial statements, the new auditor may discover a material misstatement that was not noticed by the previous auditor and affects the financial statements for the previous period. In this case, the new auditor should discuss this issue with management and, after obtaining consent, approach the predecessor with a proposal to re-issue the report for the previous period. If the predecessor agrees to issue an opinion, then the new auditor issues an opinion for the current period. If the previous auditor refuses to comply with these requirements, the new auditor may note in his report that the previous report on the financial statements was prepared before the reissue and that the necessary adjustments were made during the reissue.

If the statements for the previous period were not audited, the new auditor should indicate this fact in the report and review the opening balances of the current period. If, during the audit, it is discovered that the indicators for the previous period are distorted, the auditor should require management to revise them, and in case of refusal, modify the auditor's report.

Other information- This is financial and non-financial information contained with the financial statements in a published document (for example, data included in the annual report on officials, employment, planned capital expenditures, analytical ratios and other information). According to ISA 720, Other Information in Documents Containing the Audited Financial Statements, the auditor is not required to express an opinion on that information, but should review it to identify material inconsistencies with the audited financial statements because such inconsistencies may cast doubt on the conclusions contained in the auditor's report. . Other information should be obtained by the auditor prior to the date of the auditor's report. The auditor is not responsible for determining whether other information is presented appropriately.

If inconsistencies are discovered, the auditor should determine whether amendments need to be made to the audited accounts or other information. If adjustments are required to the financial statements, but the entity does not comply with these requirements, the auditor must express a qualified opinion or an adverse opinion. If amendments to other information are required, but the entity refuses to make them, the auditor includes in the report an explanatory paragraph describing the discrepancy, or takes other action (refuses to issue an opinion or continue the audit).

If the auditor detects misrepresentations of facts in other information that are not related to the content of the audited statements, he should discuss this issue with the management of the entity and, depending on the results of the discussion, ask management:

Consult a competent third party;

Eliminate misrepresentation.

If management refuses to correct a misstatement, the auditor should take steps to notify those responsible for the overall management of the entity of its concerns, obtaining legal advice if necessary.

If the auditor does not have access to other information before the date of the report, he should become familiar with it at the earliest opportunity. If inconsistencies or misstatements are discovered, the auditor should determine the need to revise the audited statements or other information. If a restatement of the financial statements is necessary, the auditor follows the guidance in ISA 560, Subsequent Events, and if a restatement of other information is required, the auditor asks management to inform users of the restatement that the restatement has been undertaken. If management refuses, the auditor takes steps to communicate concerns about the other information to those responsible for the overall management of the entity.

In the public sector, the auditor may have additional responsibilities to review other information, in which case the application of the above provisions is not appropriate.

1. What are the essential elements of the auditor's report on financial statements?

2. What information is included in the paragraph describing the scope of the review?

3. What types of auditor opinions are there?

4. What is meant by a modified conclusion?

5. What circumstances may lead to a modification of the auditor's report?

6. In what cases is a conditionally positive auditor’s opinion formulated?

7. What may be the reason for the auditor’s refusal to express an opinion?

8. What types of comparisons are defined by international auditing standards?

9. What information regarding comparisons must be verified?

10. When does the auditor provide an opinion on comparisons when reporting?

11. What are the considerations for drawing up an opinion on comparable financial statements if the statements for the previous period were audited by another auditor?

12. What are the purposes of the auditor's review of the other information included in the financial statements?

13. What actions does the auditor take if other information is found to be inconsistent with the information contained in the financial statements?

“Standards for reporting the results of audit assignments”

ISA provides three standards for preparing an auditor's report:

ISA 700 describes how to draw up an auditor's report in cases where the auditor expresses an unqualified opinion and does not modify the report;

ISA 701 provides guidance on the drafting of modified opinions due to the inclusion of a compelling paragraph, as well as for the expression of a qualified opinion, an adverse opinion or a disclaimer of opinion;

ISA 800, The Auditor's Report on Special Purpose Engagements, is intended for special purposes (see Topic 6).

The auditor's report must contain the auditor's clear opinion on the financial statements. The test for the correctness and fairness of the presentation of audited information is the applicable financial reporting framework, as set out in ISA 200.

After examining and evaluating the conclusions drawn from the evidence obtained, the auditor determines whether the information is prepared in accordance with the established financial reporting framework and forms an opinion on the financial statements as a whole. This determination includes consideration, in the context of the applicable financial reporting framework, of the following:

- compliance of the selection and application of accounting policies with the requirements of the financial reporting framework;
- validity of the estimated values determined by the client’s management;
— the relevance, reliability, comparability and understandability of the information in the financial statements, including accounting policies;
- sufficiency of disclosure in the financial statements to enable interested users to understand the impact of significant transactions and events on the financial statements.

The auditor's report is considered modified if it contains an explanatory paragraph or an opinion other than an unqualified positive one.

ISA701 defines two types of aspects that lead to modification of the conclusion:

- not influencing the auditor’s opinion (the modification is expressed in the form of an additional paragraph);
- influencing the auditor’s opinion (in this case, a qualified opinion, a negative opinion or a disclaimer of opinion is expressed).

The auditor should modify the report by including an additional paragraph if there are factors indicating:

- problems of compliance with the going concern assumption;
- significant uncertainty that may affect the financial statements in the future;
- inconsistency of other information contained in the audited statements with the indicators given in these financial statements.

The factors mentioned do not influence the auditor's opinion, which should be reflected in the report, and these paragraphs are given in the report after the opinion expressed by the auditor.

The auditor is unable to express an unqualified positive opinion if one of the following circumstances exists:

- limitation of the scope of the audit;
- disagreement with management regarding the admissibility of the chosen accounting policy, methods of its application or the sufficiency of financial disclosure in the statements.

If the impact of these circumstances is significant and profound on the financial statements, then the auditor expresses an adverse opinion.

If the influence of these factors is not so significant and deep, but an unconditionally positive opinion cannot be expressed, then the auditor expresses a qualified opinion.

If the scope limitation is material and prevents the auditor from obtaining sufficient and relevant audit evidence, a disclaimer of opinion should be issued. In this case, a paragraph on the auditor’s responsibilities is not included in the conclusion, and the description of the scope of the audit is omitted or adjusted.

If the report differs from an unqualified opinion, the auditor should describe all significant reasons for this and, if possible, quantify the possible effect on the financial statements.

Information about the reasons why the auditor considers it necessary to express an opinion other than unconditionally favorable is given in the auditor's report before expressing the opinion.

Reconciliations are the corresponding amounts and other disclosures for the preceding financial period or other periods presented for comparison purposes. ISA 710 sets out standards and guidance regarding the auditor's responsibilities relating to comparisons. Indicators for comparison could be as follows:

- relevant indicators - are included as part of the financial statements for the current period and are considered only in connection with the indicators for this period (for example, the amounts of income and expenses for the current and previous periods shown in the income statement for the reporting period);
- comparable financial statements - financial statements for the previous period, presented for the purpose of comparison with the financial statements of the current period.

The auditor must determine whether the comparisons are consistent with the financial reporting frameworks relevant to the statements being audited. When drawing up the audit report, the auditor does not separately indicate the relevant indicators, since he expresses an opinion on the reporting as a whole.

If the statements for the previous period were audited by another auditor, then one of the following options is possible:

1. the previous auditor can re-draw up an audit report on the statements he audited, and the new auditor draws up a report only for the current period;
2. the new auditor draws up a report that contains information that the statements for the previous period were audited by another auditor and the type and date of the report issued by the predecessor.

When reviewing the financial statements, the new auditor may discover a material misstatement that was undetected by the previous auditor and affects the financial statements for the previous period.

In this case, the new auditor should discuss this issue with management, and after receiving consent, contact the predecessor with a proposal to re-issue an opinion for the previous period on the reissued financial statements. If the statements for the previous period were not audited, the new auditor should indicate this fact in the report and review the opening balances of the current period. If the audit reveals that the figures for the previous period are distorted, the auditor should require management to revise them, and in case of refusal, modify the audit report

Other information is financial and non-financial information contained with the financial statements in a published document. Under ISA 720, the auditor is not required to form an opinion on this information, but should review it to identify material inconsistencies with the audited accounts, as such inconsistencies may cast doubt on the conclusions contained in the auditor's report. Other information should be obtained by the auditor prior to the date of the auditor's report. The auditor is not responsible for determining whether other information is presented appropriately.

If inconsistencies are discovered, the auditor should determine whether amendments need to be made to the audited accounts or other information.

If the auditor does not have access to other information before the date of the report, he should become familiar with it at the earliest opportunity. If inconsistencies or misstatements are discovered, the auditor should determine the need to revise the audited statements or other information. If a restatement of the financial statements is required, the auditor follows the guidance in ISA 560, and if a restatement of other information is required, the auditor requests management to inform users of the restatement. If management refuses, the auditor takes steps to communicate concerns about the other information to those responsible for the overall management of the entity.

Introduction

Organization of international audit

1 The essence and objectives of international audit

2 The role of the International Federation of Accountants in the development of a modern regulatory framework for international auditing

3 Purpose and basic principles of international auditing standards

Registration of audit results in accordance with international standards

2.1 Auditor's report on the financial statements

2 Independent auditor’s report

2.3 Comparisons

Conclusion

Bibliography

Introduction

The topic of international standards is currently relevant for all countries of the world and, especially for Russia, where auditing standards are still in the process of development and cause a lot of controversy, both in the professional environment and at the level of government bodies.

The need to unify audit methodology is recognized by most specialists in the field of auditing and accounting, which is explained by a number of objective reasons. First, the evolution of auditing standards is largely influenced by the development of accounting and financial accounting standards. The development of generally accepted accounting requirements and principles leads to greater uniformity in reporting, which makes it possible to apply common approaches to auditing. The same result is achieved by the growth of transnational corporations (TNCs), which apply uniform accounting principles in all their divisions and different countries of the world. In addition, in the context of the dynamic development of the stock market, the largest companies whose shares are listed on the stock exchange are faced with the need to create universal accounting and reporting principles so that the reporting is understandable to interested users in any country in the world.

Secondly, the development of generally accepted standards is facilitated by the growth of monopolism in the field of auditing and consulting services. Currently, the largest market share in this area belongs to no more than ten largest companies and associations. And this number continues to decline due to mergers of some leading audit and consulting firms. Leaders in the field of providing audit services - mainly TNCs - apply uniform standards in all their branches, of course, taking into account the requirements of legislation and the specifics of the country where these branches operate. Third, audit standards limit the very possibility of conducting a poor-quality audit, since, following them, The auditor must perform at least the minimum required set of audit procedures, and his work can subsequently be verified by examining his working papers.

The purpose of the course work is to study the organization of international audit and registration of audit results in accordance with international standards

To achieve the goal, the following tasks were set:

1. Determine the essence and goals of international audit;

2. Identify the role of the International Federation of Accountants in the development of a modern regulatory framework for international auditing;

3.Describe the auditor's report on the financial statements;

Consider the opinion of an independent auditor.

When developing the test work, various methods of processing information about the economic activities of the enterprise were used, such as: - dialectical - allowing to identify phenomena and processes in constant development; - method of systems approach, which is used to study the relationship of indicators, their interaction and interdependence; - method of calculating and summarizing the results of the economic activity of an enterprise; - factor analysis method; - method of chain substitutions; - graphical method of analysis.

international audit conclusion

1. Organization of international audit

1 The essence and objectives of international audit

Until the beginning of the 20th century, the number of scientific sources on audit problems was insignificant. In particular, in the USA only sources published in England were used. Therefore, the first and still relevant scientific work in this field of knowledge was the publication of R.Kh. Montgomery book “Audit: Theory and Practice” (later - “Montgomery Audit”). Its appearance was primarily due to the difference between American auditing practice and English practice, used in the United States by auditors who were educated in Great Britain before the turn of the 20th century. In the early years of the 20th century, interested users of accounting (financial) information considered the balance sheet to be the main indicator of the reliability of any economic entity (company, factory, etc.). For this reason, all auditors initially paid special attention to this particular reporting form. The first official ruling on auditing in the United States, prepared by the American Institute of CPAs (now the American Institute of Certified Public Accountants - AICPA), was on the "audit of balance sheets" and published in 1917.

Beginning in 1939, the American Institute of CPAs began publishing its research on auditing procedures in the form of bulletins and reports. This is considered the first step towards the overall standardization of auditing.

The first report of the Audit Procedures Committee reflected the seven fundamental provisions that had been developed by that time, which formed the basis for the development of modern auditing. A special place in this report was occupied by research in the field of internal control, which makes it possible to ensure the reliability of registration, classification and summarization of accounting information of any economic entity. In addition, for the first time, it was recommended to formulate an audit report based on the accounting (financial) information provided by economic entities in the form of a standard template.

The next, no less important stage in the development of modern auditing is the end of the Second World War. At this time, the number of generally accepted procedures for both accounting and auditing increased significantly. In 1948, the American Institute of CPAs first adopted “Generally Accepted Standards of Auditing,” and the Institute of Internal Auditors published “The Responsibilities of the Internal Auditor.”

Since the 60s of the 20th century, there has been a tendency to simplify the accounting process. However, the unsatisfactory quality of accounting (financial) statements reflecting the results of financial and economic activities and the financial position of a particular company continued to exist.

Despite the fact that in a number of cases, various economic entities engaged third-party, independent accountants-auditors to maintain accounting records and prepare reports, the lack of unity in their views on the state of affairs, as well as uniform approaches to the provision of audit services, did not improve the existing situation.

The process of preventive measures regarding the identification and settlement of various violations in the field of accounting and, as a consequence, the performance indicators reflected in the accounting (financial) statements required the development of uniform accounting standards and reporting, based on specific, detailed and uniform standards for all rules, without which the process of further improvement of both accounting and auditing itself was impossible.

In 1978, in the USA, the Institute of Internal Auditors (PA) issued a list of standards dedicated to internal auditing. Around the same time (August 12, 1969), in France, by decree of the President of the Republic, the National Commission of Independent Auditors (Account Commissioners) was created, the development of which over the years went towards increasing the role of auditors and turning their conclusions into an official reporting document of any economic entity for all interested users.

In addition to auditors called upon to provide control functions over the reliability of accounting (financial) information, the Order of Accounting Experts has been created in France, which carries out accounting, prepares accounting (financial) statements and provides consulting services in this area.

Sweden also plays a very significant role in the process of establishing audit: on May 18, 1995, the Riksdag adopted a new Law on Auditors, and on June 1, 1995, two most important government documents appeared - the Regulation on Auditors, which provides detailed explanations on the application of the above law , and the Resolution with instructions of the Commission on Auditing.

The Law on Auditors spells out the basic requirements for certification and licensing of auditors and audit firms, the function of supervision over their activities and liability measures.

It should also be noted that no less important role in the process of formation of the auditing profession was played by British auditing companies, which, along with activities within their state, have been working in the USA, African and South American countries since the 19th century.

With the growing number of transnational corporations, the need to internationalize audit companies has arisen. In this regard, in the early 80s of the 20th century, the “Big Eight” was formed, consisting of eight leading audit companies, and in the early 90s - the “Big Six”.

At the same time, the continuous process of improving existing and developing new professional requirements for audit services continues.

Within the framework of the International Federation of Accountants (IFAC), the International Auditing Practices Committee was formed, which acted as an autonomous and permanent committee until 2002. It was designed to develop and improve International Standards audit - International Standards on Auditing (ISA), as well as the basic rules for the provision of audit-related services.

In world practice, a very extensive number of audit definitions are used that reveal the above aspects. For this reason, before we begin to consider the main provisions governing international auditing, it seems necessary to disclose a number of the most significant definitions of auditing.

The Committee on Basic Auditing Concepts of the American Accounting Association (AAA) and the American Institute of Certified Public Accountants define auditing as “the systematic process of obtaining and evaluating objective data on economic actions and events, establishing the level of their compliance with a certain criterion and presenting the results to interested users.”

The Audit Practices Committee (APC) has simplified this definition somewhat, suggesting that an audit is nothing more than “an independent examination by a specially appointed auditor of the financial statements of an enterprise and the expression of an opinion on them, subject to the rules established by law.”

The famous English scientist R. Dodge, who presented in Russia one of the first works related to international auditing standards, gives his definition: “An audit is an independent verification and expression of an opinion on the financial statements of an enterprise.”

According to prominent American scientists A. Arens and D. Lobbeck, “auditing is a process by which a competent independent worker accumulates and evaluates evidence of quantifiable information related to a specific economic system in order to determine and express conclusion, the degree to which this information meets the established criteria.”

Various interpretations of audit indicate that the process of its formation is currently not yet completed. The development of accounting is an almost continuous and endless process, indicating the continuity of improving auditing and, as a consequence, determining its essence, goals and objectives.

As an element of market relations, audit has gained recognition almost all over the world. Currently, the audit field is one of the most actively developing in the segment of accounting and legal services. Users of audit services are legal entities and individuals who are interested in the reliability of financial statements, since their content makes economic sense to them in terms of reducing business risk. Therefore, to improve the quality and reliability of the audit, a system of rules, regulations and requirements has been developed, the observance of which ensures an appropriate level of quality of the audit.

Auditing rules (standards) are general guidelines and rules that help auditors fulfill their responsibilities for conducting audits and regulate the basic principles and features of auditing activities.

With the development of the market and integration processes in the economies of different countries and the transformation of individual audit organizations into large international groups, the need arose to unify auditing on an international scale. For this purpose, certain rules and regulations have been developed - international standards, which allow us to approach auditing in different countries and in different industries from the same positions.

2 The role of the International Federation of Accountants in the development of a modern regulatory framework for international auditing

According to the Constitution of the International Federation of Accountants (IFAC), its mission is “the worldwide development and strengthening of the accounting profession, guided by harmonized standards, with the aim of providing high quality services in the public interest.” For this reason, a permanent Committee on International Auditing Practices (CIAP) was formed under the IFAC Council, which in 2002 was renamed the International Auditing Standards Board. It develops and publishes auditing standards and regulations, as well as related services.

National regulations in the field of audit may have the force of law and at the same time differ significantly from each other, therefore, in order to take into account the breadth of opinions and approaches of the world community when developing international regulations in this area, representatives of both IFAC member countries are included in the temporary subcommittees of the Council, and those that are not. As a result, the Council pays special attention to the specifics of national regulations, which, in turn, allows the information received to be taken into account when developing International Auditing Standards.

The process for developing International Standards and Regulations on Auditing and Related Services is as follows:

The Council selects certain topics for detailed study by temporary subcommittees created for this purpose;
The Board delegates to subcommittees the responsibility for the preliminary preparation of draft audit standards and regulations;
the subcommittee examines preliminary information flows consisting of provisions, recommendations, as well as regulations and other materials or draft standards issued by countries that are members of IFAC, as well as regional and other professional organizations;
After approval by the Council, the project is submitted for consideration to all members of the IFAC, as well as international organizations that are not members of the IFAC, but are interested in adopting standards. In this case, a certain time is given, about which the entire interested public is informed;
comments and proposals received are considered by the Council, which makes the necessary adjustments and changes to the project;
the new edition is approved and published in the form of an international auditing standard or regulations on international auditing practice, which come into force from the date specified therein.

Regulatory documents (standards, projects and regulations) must be approved by three-quarters of the votes of the Council members present at the meeting, provided that at least ten votes are given in support. The approved document is issued as a final document in English.

The conceptual framework of International Standards on Auditing is a coherent system of interrelated objectives and principles from which consistent standards can be developed and which defines the nature, functions and boundaries of audit services provided by auditors to interested users.

The development and improvement of various audit fundamentals can be carried out without developing a conceptual framework. However, this, as a rule, leads to the lack of complexity and inconsistency of such provisions. Therefore, the International Federation of Accountants, before starting to develop standards and regulations on international auditing practice (IAP), developed a conceptual framework that made it possible to clearly distinguish between the audit itself and audit-related services.

According to the proposed conceptual framework, audit-related services include review, agreed procedures, and compilations.

As a result of a review of the accounting (financial) statements, based on the materials of the conducted surveys and analytical procedures (which, however, do not provide the evidence necessary to conduct the audit in full), the auditor, while attempting to cover all material aspects, may determine that there is a number of signs that allow us to consider the generated accounting (financial) statements as not meeting the requirements of either international financial reporting standards, or national standards, or other regulations established for these purposes.

In conducting a review, the auditor does not evaluate the accounting and internal control systems, examine accounting records, gather supporting evidence, or obtain other procedures that would normally be used in an audit.

Agreed-upon procedures mean that the auditor carries out procedures that have been previously agreed upon with the economic entity and any third parties interested in them. In this case, the auditor submits a report on the factual conclusions he has made; recipients of the report are required to independently formulate final conclusions based on the data reflected in it.

Finally, compilation refers to the collection, classification and synthesis of accounting (financial) information in a convenient and understandable form, carried out by a professional practicing accountant, without confirming its accuracy.

The proposed conceptual framework does not include audit-related services related to:

with taxation;
consulting;
accounting recommendations;
recommendations on financial issues;
other similar economic and legal aspects.

It should be noted that the provision of related services in the form of agreed procedures and preparation of financial information does not imply an expression of confidence by the auditor. Assurance in this case means the auditor's expression of an opinion on the reliability of statements made by one economic entity and intended for use by another economic entity. To achieve this assurance, the auditor carefully evaluates the evidence he has collected and issues an audit report. At the same time, the degree of confidence, i.e. its level is determined on the basis of the entire set of audit procedures performed.

If an audit is carried out, the auditor is required to provide a high, but not absolute, level of confidence that the audited information flows will be free from material misstatements that could have a significant impact on various economic decisions.

1.3 Purpose and basic principles of international auditing standards

International Standards on Auditing (ISAs) are common core requirements that define regulatory requirements for audit quality and reliability and provide a certain level of assurance of audit results when they are met. As economic conditions change, auditing standards are subject to periodic revision to best meet the needs of users of financial statements.

On the basis of auditing standards, educational programs for the training of auditors are formed, as well as uniform requirements for conducting exams for the right to engage in auditing activities.

Thus, the significance of the standards is that they:

Ø ensure high quality of audit;

Ø help users understand the audit process;

Ø create a public image of the profession;

Ø eliminate government control;

Ø help the auditor negotiate with the client;

The development, implementation and promotion of these standards is directly handled by the International Federation of Accountants (IFAC) - the International Association of Accountants.

The International Federation of Accountants as an international organization has its own charter and constitution. Under the IFAC Council there is a Committee on International Auditing Practices Committee (IAPC), which is responsible for issuing audit standards and related services and works. The main goals pursued by this committee in developing ISAs:

Ø harmonize national rules and other regulatory documents in the field of auditing in order to provide high-quality services to the entire global community;

Ø raise the level of professionalism of auditors in countries where it is below the global level.

Thus, ISAs contain:

basic principles;

introduction, which reflects the purpose of the standard and the tasks facing the auditor;

sections outlining the essence of the standard;

applications.

Today, standards are divided into 5 groups:

Table 1. Structure of international auditing standards

CodeName of group of standards 1 group100-199Introductory aspects200-299Basic principles and responsibilities300-499Risk assessment and related activities500-599Audit evidence600-699Use of work of third parties700-799Audit findings and preparation of opinions800-899Special areas of audit2 group1000-1100Provisions on international auditing practice3 Group2000-2699 Review Standards4 group 3000-3399 Standards for assurance engagements 3400-3699 Special standards group 5 4000-4699 Standards for related services The first group, called “Introduction”, is intended to define the general terms of ISAs or the fundamentals of auditing and consolidate the standards on introductory provisions (ISAs 100-199). Currently, this subgroup of standards is not in effect.

The standards of the second subgroup, “General principles and responsibilities” (ISA200-299), define the objectives and principles of auditing and financial information.

The third group of standards is the International Standards for Review Engagements (2000-2699). This group of standards is intended for use when reviewing reporting and interim financial information.

The fourth group of standards - International Standards for Assurance Engagements (3000-3699) - includes two subgroups of standards: “Standards applicable to all assurance engagements”, “Standards for special engagements”. This group of standards discloses the procedure for performing assurance engagements, as well as engagements to verify prospective financial information.

The fourth group of standards - International Standards on Related Services (4000-4699) - discloses the objectives, principles, procedures and reporting procedures that should be followed when the auditor performs assignments to carry out agreed procedures and assignments for the preparation of financial information.

The Regulations on International Practice of Providing Related Services (IPSPR) are included in a separate group, the purpose of which is to provide auditors with additional recommendations and clarifications on the application of the provisions of ISA.

The significance of international auditing standards is as follows:

they provide certain guarantees of the quality of auditor training, audit performance and a certain level of reliability of audit results;

standards contribute to the introduction of new scientific achievements into the practice of auditors and create a worthy public image of the auditing profession;

with their help, the connection between individual elements of the audit process is ensured and the possibility of monitoring the quality of the auditor’s work is created;

their consistent application is decisive evidence and an argument in favor of the auditor in the event of claims cases or legal proceedings based on client claims.

Basic principles of International Standards on Auditing

General audit principles can be divided into two groups:

) the basic principles governing auditing;

) basic principles of auditing.

The basic principles governing auditing are ethical and professional standards that define the relationship between the auditor (audit firm) and the client. These principles must be observed by auditors and audit firms in the provision of all audit services and taken into account when developing regulations governing auditing.

Basic principles of auditing, i.e. rules defining the stages and elements of the audit.

The basic principles governing auditing are set out in the IFAC Code of Ethics for Professional Accountants. When performing his professional duties, the auditor must be guided by the following ethical and professional principles:

independence, honesty and objectivity;

professional competence and due integrity;

confidentiality of information;

professional conduct;

adherence to technical standards.

Independence, honesty and objectivity of the auditor. Auditor independence is the absence of any financial or other property interest of the auditor in the company being audited. For example, an auditor cannot audit a company of which he is one of the owners, and also cannot participate in the audit if he is related to senior officials of the client company. The auditor should not give any reason to doubt his independence and the objectivity of his conclusion.

The auditor must be honest and objective, his opinion and conclusion must be unbiased and impartial.

Professional competence and due diligence of the auditor. The auditor must have the necessary professional qualifications, take care of maintaining them at the proper level, and comply with the requirements of regulatory documents. The auditor should not pretend to have experience or expertise that he does not actually possess. The acquisition of professional competence in auditing can be divided into two phases:

a) achieving a level of professional competence;

b) maintaining the level of professional competence.

The first phase requires a high level of general education, which must be followed by special education, advanced training and passing exams in the relevant disciplines of the profession - certification, as well as a certain period of work in the specialty.

In the second phase, changes in laws and regulations and the development of the accounting and auditing professions should be constantly monitored.

Confidentiality of information. Information obtained by the auditor during an audit or provision of other audit services is confidential and can be used or transferred to third parties only with the client’s consent (given in writing) or by court decision. The principle of confidentiality must be observed unconditionally, even if the disclosure or dissemination of information about the client does not cause him material or other damage.

The main principles of the audit are the following.

Determining the scope of the audit. The term audit scope refers to the audit procedures considered necessary to achieve the audit objective. The procedures required to conduct an audit in accordance with ISAs should be determined by the auditor, taking into account the requirements of ISAs, relevant professional bodies, laws, regulations and, where appropriate, the terms of the engagement with the client. The auditor must obtain a sufficient understanding of all aspects of the financial and economic activities of the subject of the audit, the organization of its accounting and internal control in order to adequately plan the audit and obtain data sufficient to draw up an objective audit report.

Audit planning. The audit should be planned on the basis of a preliminary analysis of the activities of the audited organization, an assessment of the scale of the upcoming work and the internal control system.

Using the work of other specialists does not relieve the auditor of responsibility for the audit report.

The auditor needs to evaluate the auditee's accounting and internal control systems to determine the likelihood of errors affecting the reliability of the financial statements. Based on this assessment, the content, scope and number of audit procedures are determined.

2. Registration of audit results in accordance with international standards

1 Auditor's report on financial statements

The procedure for execution and content of the auditor's report issued as a result of an audit of the financial statements of the entity is regulated by International Standard on Auditing No. 700 "Audit's Report on Financial Statements."

The auditor should examine and evaluate the conclusions drawn from the audit evidence obtained as a basis for expressing an opinion on the financial statements.

The auditor's report must contain a clear, written opinion on the financial statements as a whole.

Mandatory elements of the auditor's report are:

) Name;

) the addressee in accordance with the circumstances of the audit engagement and local regulations. The opinion is typically addressed to the shareholders or board of directors of the entity whose financial statements are being audited;

) an introductory paragraph or introduction consisting of:

a list of audited financial statements of the entity indicating the date and reporting period;

provisions on the responsibility of the management of the entity and the responsibility of the auditor. Responsibility for financial reporting lies with the management of the entity. The auditor's responsibility is only to express his opinion on the financial statements based on his audit;

) a paragraph describing the scope (nature of the audit), which includes references to ISAs or relevant national standards or practices, a description of the work performed by the auditor

The auditor's report must contain:

a statement that the audit was planned and performed to obtain reasonable assurance that the financial statements are free from material misstatement;

an indication that the audit included:

a) a test analysis of evidence supporting the amounts in the financial statements and the disclosures therein;

b) determination of the accounting principles applied in the preparation of financial statements;

d) assessing the overall presentation of the financial statements;

the auditor's confirmation that the audit provides a reasonable basis for the opinion;

) a paragraph that expresses the auditor's opinion on the financial statements. It must clearly state the auditor's opinion on the reliability and fairness of the financial statements in accordance with the financial reporting framework, and on the compliance of the financial statements with legal requirements;

) date of issue of the auditor's report, i.e. The auditor should date the report to the date on which the audit was completed. The auditor should not date the report prior to the date management signed or approved the financial statements;

) address of the auditor (specific location);

) signature of the auditor - the audit report must be signed by the audit firm, the auditor, or, if necessary, contain both signatures.

There are the following types of auditor's report.

An audit report containing an unconditional positive opinion. An unqualified opinion should be expressed when the auditor concludes that the financial statements present a true and fair view in accordance with the established financial reporting framework.

Modified conclusions.

The auditor's report is considered modified in the following situations:

) if there are factors that do not influence the auditor’s opinion.

The auditor should modify the auditor's report by including a paragraph that identifies a material factor relevant to the going concern assumption.

The auditor should consider modifying the auditor's report by including a paragraph in the event of a significant uncertainty, the resolution of which depends on future events and which could have an effect on the financial statements. Uncertainty is a factor whose consequences depend on future events that are not within the entity's direct control, but which may have an effect on the financial statements.

The inclusion of an explanatory paragraph does not affect the auditor's opinion. This paragraph is usually included after the paragraph containing the auditor's opinion; it makes reference to the fact that a factor affecting the financial statements is not a basis for expressing a qualified opinion;

) if there are factors influencing the auditor's opinion. These include:

a) limiting the scope of the auditor’s work;

b) disagreement with management regarding the appropriateness of the selected accounting policy, the method of its application, or the sufficiency of information disclosed in the financial statements.

The circumstances described in paragraph (a) may lead to the expression of a qualified opinion or a disclaimer of opinion. The circumstances described in paragraph (b) may lead to the expression of a qualified opinion or an unfavorable opinion.

A qualified opinion is expressed when the auditor concludes that it is not possible to express a qualified opinion, but the degree of disagreement with management or limitations in scope are not sufficiently significant or profound to warrant an adverse opinion or disclaimer of opinion.

A disclaimer of opinion occurs when the limitation in scope is so significant and profound that the auditor is unable to obtain sufficient and relevant audit evidence and, therefore, express an opinion on the financial statements.

An adverse opinion is expressed when the effect of any disagreement with management is so material and profound on the financial statements that, in the auditor's opinion, it is not sufficient to modify the opinion to disclose that the financial statements are misleading or incomplete.

If the auditor expresses an opinion other than an unqualified opinion, the auditor should clearly describe all significant reasons for this in the report and, if possible, provide a quantitative description of the possible effect on the financial statements.

ISA No. 700 in the system of Russian auditing standards corresponds to Federal Rule (Standard) of Auditing No. 6 “Audit's Report on Financial (Accounting) Statements”, which is a complete analogue of the international standard.

It should be noted that ISA 700 “The auditor's report on financial statements” was in effect until December 31, 2006. After this date, the preparation of the auditor’s report is regulated by ISA 700R “The independent auditor’s report on a complete set of general purpose financial statements” and ISA 701 “Modifications of the independent auditor’s report ".

2 Independent auditor’s report

The procedure for execution and content of an independent auditor's report issued as a result of an audit of a complete set of general purpose financial statements of an entity in the case where the auditor is able to express an unconditionally positive opinion and there is no need to modify the auditor's report is regulated by International Standard on Auditing 700R "Independent Auditor's Report on the Complete Set general purpose financial statements."

The auditor's report must contain a clear opinion on the financial statements as a whole. When expressing an opinion on a complete set of general purpose financial statements prepared in accordance with applicable financial reporting principles that are intended to present them fairly, the auditor may use the phrases “gives a true and fair view” or “presents fairly in all material respects” in accordance with with the applicable financial reporting principles. The given phrases are equivalent.

The auditor's judgment about whether the financial statements are presented fairly and fairly, or are presented fairly in all material respects, is based on the entity's financial reporting framework. If acceptable financial reporting principles have not been used in preparing the financial statements, the auditor may be unable to evaluate the financial statements.

The auditor must evaluate the conclusions reached from gathering audit evidence as a sufficient basis for expressing an opinion on the financial statements. In forming the audit opinion, the auditor evaluates, based on the audit evidence obtained, whether there is reasonable assurance that the financial statements under review are free from material misstatement. Accordingly, the auditor should evaluate whether sufficient and appropriate evidence has been obtained to reduce to an acceptably low level the risks of material misstatement in the financial statements and evaluate the consequences of unadjusted misstatements in the financial statements.

When forming an opinion, the auditor should ensure that:

the accounting policies selected and applied are consistent with the principles of financial reporting and the circumstances of the arrangement;

Management's estimates are appropriate;

the information presented in the financial statements is relevant, reliable, comparable and understandable;

Financial statements provide sufficient disclosure in a form that allows users to understand the impact of significant transactions and events on the information reported in the financial statements.

The auditor's report issued based on the results of an audit conducted in accordance with ISAs includes the following elements:

) Name;

) addressee;

) introductory paragraph;

) provision on management's responsibility for financial statements;

) provision on the responsibility of the auditor;

) paragraph in which the auditor’s opinion is expressed;

) provision on other additional responsibilities in relation to the submitted conclusion;

) signature of the auditor;

) date of issue of the conclusion;

) auditor's address.

The auditor's report must have a title that clearly indicates that the report was written by an independent auditor.

The auditor's report should be addressed in accordance with the circumstances of the engagement.

The introductory paragraph should describe the entity's audited financial statements and state that the financial statements have been audited. The introductory paragraph should also contain:

the title of each statement included in the complete set of financial statements;

indication of the date and reporting period.

The report should also state that management of the client firm is responsible for the preparation and fair presentation of the financial statements in accordance with applicable financial reporting principles.

The auditor's report should state that the auditor's responsibility is only to express an opinion on the financial statements based on his audit. The conclusion should contain:

an indication that the audit was conducted in accordance with International Standards:

An explanation that the auditor complied with ethical requirements in accordance with ISAs and that the audit was planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement.

The auditor's report must contain the auditor's assurance that the audit evidence obtained is sufficient and appropriate to provide a basis for the expression of the auditor's opinion.

An unqualified opinion is expressed when the auditor concludes that the financial statements give a true and fair view (or are presented fairly in all material respects) in accordance with the applicable financial reporting principles.

If the financial statements have been prepared in accordance with financial reporting principles other than IFRS or International Public Sector Accounting Standards, the auditor's opinion should include a reference to the regulation or country of origin of the applicable financial reporting framework.

If the auditor has additional responsibilities in preparing the auditor's report, these should be identified in a separate paragraph following the paragraph expressing an opinion on the financial statements.

The audit report must be signed on behalf of the audit firm, personally on behalf of the auditor, or, if necessary, contain both signatures. In addition to the auditor's signature, it may be indicated that the auditor is a professional auditor or the audit firm has the appropriate license to practice professional activities.

The auditor should date the report on the financial statements no earlier than the date on which the auditor obtained sufficient and appropriate audit evidence to express an opinion on the financial statements.

The auditor's report must indicate the location (country or regulation) of the auditing standards.

The auditor's report must be presented in writing - both in the form of a hard copy and in electronic form.

When conducting an audit, the auditor may be guided by both International Standards on Auditing and special regulatory requirements or national auditing standards.

If the auditor's report is prepared taking into account the requirements of both ISAs and specific regulatory requirements of law or regulation or national auditing standards, the auditor should refer in the report to the specific jurisdiction or country of origin of the auditing standards. In this case, the audit report must contain the following main elements:

) Name;

) addressee, if agreed upon by the terms of the agreement;

) an introductory paragraph describing the audited financial statements;

) a description of management's responsibilities for the preparation and fair presentation of the financial statements;

) a description of the auditor’s responsibilities for the opinion expressed on the financial statements and the scope of the audit, including:

) description of the work performed by the auditor;

c) a paragraph that contains the auditor's opinion on the financial statements and a reference to the applicable financial reporting framework used in the preparation of the financial statements (including a statement of the country of origin of the financial reporting framework if the financial statements have been prepared in accordance with principles other than IFRS or international public sector accounting standards);

b) signature of the auditor;

) date of issue of the auditor's report;

) auditor's address.

The auditor must ensure that any additional information presented with the financial statements is clearly separated from the financial statements being audited.

If the auditor concludes that the additional information provided by the enterprise is not sufficiently distinguished from the financial statements being audited, he has the right to indicate in the auditor's report that this information has not been verified.

3 Comparisons

The auditor's responsibilities regarding comparisons and conclusions thereon are governed by International Standard on Auditing No. 710, Comparisons.

Reconciliations are the corresponding amounts and other disclosures for the preceding financial reporting period or periods presented for comparison purposes.

The auditor must determine whether the comparisons are consistent, in all material respects, with the financial reporting principles applicable to the financial statements being audited.

Indicators for comparison may be as follows.

Corresponding Figures are included as part of the financial statements for the current period and are intended to be read in context in relation to the amounts and other disclosures relating to the current period. Such measures are an integral part of the financial statements for the current period and should be considered only in relation to the results for the current period; they are not complete financial statements that can be viewed in isolation.

Comparative financial statements are financial statements for a prior period that are presented for the purpose of comparison with the financial statements of the current period and are not part of the financial statements for the current period.

Reconciliations are presented in accordance with applicable financial reporting principles. The main differences, from the point of view of audit reporting, are as follows:

for relevant indicators: the auditor's report relates only to the financial statements for the current period;

For comparable financial statements: the auditor's report relates to the financial statements for each period.

The auditor must obtain sufficient and appropriate audit evidence that the relevant amounts comply with the applicable financial reporting principles. The scope of audit procedures for relevant measures is usually limited to ensuring that the auditor is satisfied that the relevant measures are presented and classified correctly. In doing so, he defines:

whether the accounting policies for certain items are consistent with the accounting policies of the current period and whether appropriate adjustments have been made and/or appropriate disclosures have been made;

whether the relevant amounts are consistent with the amounts and other disclosures presented for the prior period, and whether appropriate adjustments have been made and/or disclosures have been made.

If the prior period's financial statements have not been audited or have been audited by another auditor, the new auditor evaluates whether the relevant amounts meet the above conditions and follows the guidance provided in ISA No. 510, First Audit - Opening Balances.

In addition, if the auditor becomes aware that there may be a material misstatement of relevant amounts when performing the audit for the current period, the auditor performs additional audit procedures as appropriate in the circumstances.

Comparisons are not separately identified in the auditor's report because the auditor expresses an opinion on the financial statements for the current period as a whole.

If, during the audit of the current period, in any unusual circumstances, the auditor became aware of a material misstatement affecting the financial statements for the previous period, on which an unqualified opinion was expressed, then the recommendations of ISA No. 560, Events After the End of the Reporting Period, should be considered. " And:

If the prior period's financial statements have been restated and issued with a new auditor's report, the auditor must ensure that the relevant amounts are consistent with the restated financial statements;

If the prior period's financial statements have not been restated and reissued and the relevant amounts have not been properly restated and/or adequate disclosures have not been made, the auditor shall issue a modified opinion on the current period's financial statements with a qualified qualification on the relevant amounts. ;

If the prior period's financial statements and the auditor's report thereon have not been restated and the relevant amounts are presented appropriately and/or appropriate disclosures are made in the current period's financial statements, the auditor may include an explanatory paragraph describing the circumstances by reference to the relevant disclosures.

In some cases, the auditor may refer in his audit report for the current period to the predecessor auditor's audit report on relevant items. In this case, the new auditor’s report must contain an indication of:

that the financial statements for the previous period were audited by another auditor;

the type of report issued by the predecessor auditor. If the report has been modified, the reason for the modification must be stated;

date of issue of the conclusion.

If the financial statements for the previous period have not been audited, the report for the current period must contain an indication that the relevant indicators have not been audited. If the relevant amounts are materially misstated, the new auditor should request management to revise them and, if management refuses to do so, modify the auditor's report as appropriate.

Comparable financial statements. The auditor must obtain sufficient and appropriate audit evidence that the comparable financial statements comply with the requirements of the financial reporting framework. It is necessary to determine:

whether the accounting policies of the prior period are consistent with those of the current period and whether appropriate adjustments have been made and/or appropriate disclosures have been made;

do the figures for the previous period correspond to the amounts and disclosures provided in the prior period, or appropriate adjustments have been made and/or appropriate disclosures have been made.

If the prior period's financial statements have not been audited or have been audited by another auditor, the new auditor determines whether the comparable financial statements meet the above conditions and follow the guidance provided in ISA No. 510, First Audit - Opening Balances.

Comparisons in the form of comparable financial statements must be specifically stated in the financial statements because the auditor's opinion is expressed separately on the financial statements presented for each individual period.

When reviewing the current period's financial statements, the new auditor may discover a material misstatement that affects the prior period's financial statements on which the predecessor auditor previously issued an unmodified opinion.

If the new auditor discovers that the unaudited prior period figures are materially misstated, the new auditor should request management to restate the prior period figures. If management waives this requirement, the auditor should modify the auditor's report as appropriate.

ISA No. 710 in the system of Russian auditing standards corresponds to the draft Federal Rule (Standard) No. 27 “Comparable data in financial (accounting) statements”, which was prepared in full accordance with ISA No. 701.

Conclusion

International Standards on Auditing, or a summary of rules for conducting auditing and related services, help improve the level of uniformity in auditing practices throughout the world. They apply in any case of an independent audit and can be used as necessary in other related activities of auditors. However, the rules do not override local regulations governing the audit of financial statements in a particular country.

Existing international standards in Austria, Brazil, Holland, India and Russia are used as a basis for developing their own similar document. In Cyprus, Malaysia, Nigeria and other countries - as national ones. In the UK, Ireland, Canada, USA, Sweden and other countries that have their own national auditing standards, which are very close to international ones, they are simply taken into account by professional organizations.

Most of the Russian Rules (standards), in terms of the principles on which they are based and content, are close to ISA, and the existing differences are not associated with a deliberate desire to refuse to comply with ISA, but with the peculiarities of the current Russian legislation, the level of development of domestic audit, and other objective and subjective reasons. Such discrepancies can be resolved over time. The main problem of conducting an audit in Russia in accordance with ISAs is not the absence of relevant national auditing standards or their unsatisfactory content, but the need to create a reliable mechanism that would ensure compliance with these standards by those Russian audit organizations that issue audit reports to economic entities based on the results of mandatory annual audits .

Bibliography

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1. ISA requirements for drawing up an auditor’s report on general purpose financial statements

2. The auditor's conclusions about the comparisons included in the audited statements

3. Reflection in the auditor's report of the results of verification of other information relevant to the financial statements

4. Drawing up a report on the implementation of a special audit assignment

ISA requirements for drawing up an auditor's report on general purpose financial statements

There are three standards in ISA for preparing the auditor's report;

· ISA 700, Independent Auditor's Report on General Purpose Financial Statements, describes how to prepare an auditor's report when the auditor expresses an unqualified opinion and does not modify the report;

· ISA 701, Modifications of the Independent Auditor's Report, provides guidance on the drafting of modified reports due to the inclusion of a red flag paragraph, as well as for the expression of a qualified opinion, an adverse opinion or a disclaimer of opinion;

· ISA 800 “Audit Report on Audit Engagements for Special Purposes” is intended for special cases, which will be described in question. 2.

The auditor's report must contain the auditor's express opinion on the financial statements, using the phrases "gives a true and fair view" or "is presented fairly in all material respects" as equivalents in an unqualified opinion. In some cases, national legislation may require the auditor to use phrases other than those given above to express an opinion; the auditor must then decide whether interested users can adequately perceive his opinion. In any case, it must satisfy the responsibilities to form an opinion as set out in ISA 700. The test for the correctness and fairness of the presentation of the audited information is the applicable financial reporting framework, as set out in ISA 200.

· compliance of the selection and application of accounting policies with the requirements of the financial reporting framework;

· validity of the estimated values determined by the client’s management;

· the relevance, reliability, comparability and understandability of the information in the financial statements, including accounting policies;

· sufficiency of disclosure in financial statements (for example, prepared in accordance with IFRS) so that interested users can obtain an understanding of the impact of significant transactions and events on the financial statements (financial position, results of operations, cash flows).

In some exceptional cases, the application of specific requirements in the financial reporting framework may result in statements that are misleading to interested users. Therefore, some financial reporting frameworks provide room for derogation from certain provisions in rare cases in order to achieve a fair presentation of the information in the financial statements. If the applicable financial reporting framework does not provide for such a departure and the statements prepared in accordance with its provisions are misleading to users, then, faced with such a situation, the auditor should consider modifying the auditor's report.

According to ISA 700, the main elements of the auditor's report are:

Name;

introductory paragraph or introduction;

a paragraph establishing the responsibility of the management of the audited entity for the preparation and presentation of financial statements;

a paragraph describing the auditor's responsibilities in connection with the audit of the financial statements;

a paragraph describing the auditor's other responsibilities;

auditor's signature;

date of issue of the auditor's report;

auditor's address.

The addressee is determined in accordance with the terms of the audit engagement and national regulations. Typically, the report is addressed to shareholders or those charged with managing the entity whose financial statements have been audited by the auditor.

The introduction contains the name of the audited organization, an indication that its financial statements were audited, a listing of each form of audited statements, links to significant accounting policies and other explanations, and an indication of the date and period for which the statements were prepared.

If the statements are prepared in accordance with IFRS, then the introduction lists the forms: balance sheet, income statement (profit and loss), statement of changes in equity, statement of cash flows, a list of significant accounting policies and other explanations.

The auditor's report should include management's responsibilities for the preparation and presentation of the financial statements in accordance with the applicable financial reporting framework, and for:

· development, implementation and operation of an internal control system that ensures the preparation of financial statements free from distortions arising from errors and fraud;

· selection and application of appropriate accounting policies;

· determination of reasonable estimated values.

The responsibilities of an organization's management with respect to financial reporting depend on the specifics of national legislation. In some cases, the responsibilities of management may be supplemented; in other situations, responsibility is assigned not to managers, but to representatives of owners, boards of directors and other persons.

The auditor's responsibility is primarily to express an opinion on the financial statements based on the audit performed. In addition, this paragraph must state that the audit was conducted in accordance with ISAs and ethical requirements, and that the audit was planned and performed to provide reasonable assurance that the financial statements are free of material misstatement. In addition, it is indicated that the check included:

· analysis of evidence supporting amounts and information,

The report must also contain the auditor's confirmation that the audit provides a reasonable basis for the opinion.

The auditor's unqualified opinion paragraph states whether the financial statements give a true and fair view, in all material respects, of the financial position and results of operations of the auditee in accordance with the established financial reporting framework (reference is made to IFRS, national standards, or both). depending on the applicable jurisdiction).

Standards, laws, or generally accepted financial reporting frameworks in various jurisdictions may require or permit the auditor to specify other responsibilities, which are reflected in a separate paragraph of the auditor's report following the auditor's opinion paragraph.

The audit report is usually signed on behalf of the audit firm and personally on behalf of the auditor or otherwise in accordance with the applicable jurisdiction. The conclusion is dated by the date corresponding to the date of completion of the audit, i.e. the date on which sufficient appropriate audit evidence is obtained to provide a basis for the auditor's opinion, and not earlier than the date on which the financial statements are signed or authorized, which is the point at which those authorized to accept responsibility for their contents.

The address indicates the state, city and place where the office of the auditor responsible for conducting the audit is located.

The auditor's report must be in writing.

Example. Unconditionally positive audit opinion.

Independent auditor's report

To the shareholders of the LAN company

We audited the following financial statements of ABC Company:

· income statement for 2Охх;

· statement of changes in capital for 20xx;

· cash flow statement for 2Охх;

· explanatory note revealing the content of the accounting policy,

· and notes.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to provide reasonable assurance about whether the financial statements are free from material misstatement. The check included:

· selection of audit procedures based on professional judgment, including assessment of the risk of material misstatement of the financial statements due to errors and fraud;

· reviewing internal controls in order to develop adequate audit procedures.

We believe that our audit provides sufficient information to enable us to express our opinion.

In our opinion, the financial statements present fairly the financial position of LAN as at 31 December 20xx, its results of operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

On behalf of the auditing firm XYZ

Head of the company (signature)

Auditor (signature)

The auditor's report is considered modified if it contains an explanatory paragraph or an opinion other than an unqualified positive one.

ISA 701 defines two types of aspects that lead to modification of the conclusion:

· not influencing the auditor’s opinion (the modification is expressed in the form of an additional paragraph);

· influencing the auditor’s opinion (in this case, a qualified opinion, a negative opinion or a disclaimer of opinion is expressed).

The auditor should modify the report by including an additional paragraph if there are factors indicating:

· problems of compliance with the going concern assumption;

· significant uncertainty that may affect the financial statements in the future;

· inconsistency of other information contained in the audited statements with the indicators given in these financial statements.

The factors mentioned do not influence the auditor's opinion, which should be reflected in the report, and these paragraphs are given in the report after the opinion expressed by the auditor.

The auditor is unable to express an unqualified positive opinion if one of the following circumstances exists:

limiting the scope of the audit;

disagreement with management regarding the appropriateness of the chosen accounting policy, the methods of its application, or the sufficiency of financial disclosure in the statements.

If the impact of these circumstances is significant and profound on the financial statements, then the auditor expresses an adverse opinion.

If the influence of these factors is not so significant and deep, but an unconditionally positive opinion cannot be expressed, then the auditor expresses a qualified opinion.

If the report differs from an unqualified opinion, the auditor should describe all significant reasons for this and, if possible, quantify the possible effect on the financial statements.

Information about the reasons why the auditor considers it necessary to express an opinion other than unconditionally favorable is given in the auditor's report before expressing the opinion.

Example. A fragment of a modified auditor's report containing an additional paragraph.

In our opinion, the financial statements present fairly the financial position of ABC as at 31 December 20xx, its results of operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Without changing our opinion on the reliability of the financial statements, we draw attention to the information set out in the notes to the financial statements (paragraph X), namely, to the fact that the legal proceedings between ABC Company (defendant) and XXX Company on the issue of correctness have not yet been completed. determination of penalties for failure to comply with the terms of the contract. The amount of the claim is xxx thousand dollars. The financial statements of the ABC company do not provide for any reserves for the fulfillment of obligations that may arise as a result of a court decision not in its favor.

Example. A portion of a modified auditor's report containing a qualified opinion due to limitations on the scope of the audit.

· analysis of evidence supporting the amounts and information contained in the statements;

· selection of audit procedures based on professional judgment, including assessment of the risk of material misstatement of the financial statements due to errors and fraud;

· reviewing internal controls in order to develop adequate audit procedures.

During the audit, we were unable to obtain confirmation from the debtor company regarding its outstanding debt in the amount of $xxx thousand. We were also unable to obtain sufficiently reliable evidence of the existence of this debt using alternative procedures.

In our opinion, other than adjustments (if any) that might be required if we could obtain confirmation of the accounts receivable, the financial statements present fairly the financial position of ABC as at 31 December 20xx, the results of its operations and cash flows for the year ended on the specified date in accordance with International Financial Reporting Standards.

Example. A portion of a modified auditor's report containing a disclaimer of opinion due to limitations on the scope of the audit.

ABC management is responsible for the preparation and fair presentation of financial statements in accordance with International Financial Reporting Standards. This responsibility extends to the development, implementation and maintenance of internal control to ensure the preparation and fair presentation of financial statements that are free from material misstatement due to error and fraud; selecting and applying appropriate accounting policies; determination of reasonable estimated values.

We were unable to obtain sufficient appropriate audit evidence regarding the volume of revenue, accounts receivable, and obligations to third parties.

Due to the materiality of the circumstances listed in the previous paragraph, we cannot express an opinion on the financial statements of ABC Company.

Example. A fragment of a modified auditor's report containing an adverse opinion.

Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to provide reasonable assurance about whether the financial statements are free from material misstatement. The check included:

· analysis of evidence supporting the amounts and information contained in the statements;

· selection of audit procedures based on professional judgment, including assessment of the risk of material misstatement of the financial statements due to errors and fraud;

· reviewing internal controls in order to develop adequate audit procedures.

During the review process, disagreements arose between us and the management of ABC Company regarding the application of accounting policies relating to the recognition of income received. We believe that, due to incorrect application of accounting policies, the volume of sales revenue for the audited period was underestimated by the amount of xxx thousand dollars, as a result of which the amount of tax liabilities and the amount of profit received were distorted.

In our opinion, due to the materiality of the influence of the circumstances listed in the previous paragraph, the financial statements do not reliably reflect the financial position of ABC Company as of December 31, 20xx, the results of its financial and economic activities and cash flows for the year ended on that date, in in accordance with International Financial Reporting Standards.

Guidance for auditors regarding the form and content of the auditor's report is contained in SFAS 700, The Auditor's Report on Financial Statements. The standard includes the following sections: introduction, main elements of the auditor's report, types of audit reports, circumstances that may lead to the expression of an opinion other than an unconditional positive one.

The audit report is provided based on the results of an audit of the entity’s financial statements conducted by an independent auditor. The requirements of the standard may be used in preparing auditors' reports on financial information other than financial statements.

The auditor expresses an opinion on the financial statements based on examination and evaluation of the conclusions drawn from the audit evidence obtained during the audit process. In this case, the auditor must determine the conformity of the financial statements:

*requirements of international financial reporting standards, national standards or regulations;
*legal requirements.

The standard indicates the need to maintain uniformity in the form and content of the auditor's report, which facilitates its understanding by users.

In accordance with international practice in the title It is customary to use the words “independent auditor” in the auditor’s report. This allows the auditor's report to be distinguished from other reports, such as those written by the entity's officers or the board of directors.

According to the requirements of ISA, the management of an economic entity is responsible for financial reporting. The preparation of financial statements requires the management of an enterprise to determine significant estimates, principles and accounting methods that are used in preparing these statements. The auditor's responsibility is only to express an opinion on the client's financial statements based on the audit performed.

ISA 800, The Auditor's Report on a Special Engagement, specifies the requirements and guidelines for preparing the auditor's reports on special audit engagements. The standard includes the following paragraphs: introduction, general requirements, rules for reporting financial statements prepared in accordance with accounting frameworks other than international financial reporting standards or national standards, requirements for reports on components of financial statements, compliance reports and reports on summarized financial statements, as well as appendices.

Special audit assignments include inspections of:

1) financial statements prepared in accordance with accounting principles other than international financial reporting standards or national standards;
2) certain accounts, elements of accounts or details of financial statements (referred to in the standard as components of financial statements);
3) compliance with the terms of the contract;
4) summary financial statements.

This standard does not apply to engagements involving the provision of audit-related services:

*conducting a review;
*carrying out agreed procedures;
*preparation of financial information.

The report on a special audit engagement is prepared in writing and must contain a clearly expressed opinion of the auditor. As a basis for expressing an opinion, the auditor should consider and evaluate the conclusions drawn from the audit evidence obtained during the performance of the specific audit engagement.

ISA 800 establishes the structure of the report on a special audit engagement (except for the report on summary financial statements, which has its own format). The standard recommends consistency in the form and content of the audit report as this will enhance the user's understanding of it.

After the general provisions, ISA 800 sets out the requirements for the preparation of reports for each type of special audit engagement.

Rules for reporting financial statements prepared in accordance with accounting frameworks other than international financial reporting standards or national standards.

The purpose of ISA 500 is to establish standards and provide guidance regarding the quantity and quality of audit evidence required in an audit of financial statements.

The audit evidence must be sufficient to permit the formulation of reasonable conclusions on which the auditor's opinion is based. Evidence is collected for each statement; often one piece of evidence can support several statements.

In obtaining audit evidence, tests of controls may be used, as well as substantive audits.

Tests of controls are tests conducted to obtain audit evidence characterizing the effectiveness of the accounting systems and internal control systems.

Substantive procedures are procedures that are performed to obtain sufficient audit evidence to detect material misstatements in the financial statements. These procedures may take the form of detailed tests of business transactions and analytical procedures (ISA 520).

ISA 500 Audit Evidence establishes the following procedures for obtaining evidence:

1. Inspection - examination of records, documents or tangible assets. During the inspection, audit documentary evidence of varying degrees of reliability can be obtained:
- *created by and held by third parties;
- *created by third parties, but located in the entity;
- *created by the subject and held by him.
2. Observation - studying the processes or procedures performed by others.
3. Inquiry and confirmation - searching and obtaining information from knowledgeable persons within or outside the subject. Requests may be written or oral.
4. Counting - checking the accuracy of arithmetic calculations or performing independent calculations.
5. Analytical procedures - analysis of significant indicators and trends.

ISA 540 requires the auditor to make a final assessment of the reasonableness of an estimate based on knowledge of the client's business and the consistency of the estimate with other audit evidence obtained during the audit.

If there are differences between the estimated value determined by the audit organization on the basis of available audit evidence and a similar indicator reflected in the financial statements, then the audit organization decides on the need to make corrections to the statements.

If the difference is not material, for example when the amount shown in the financial statements is within the tolerance limits, correction may not be required.

If the audit organization considers the difference to be significant, it may invite the management of the economic entity to reconsider the estimated value. If the entity's management refuses such a revision, the difference will be considered an error and will be considered along with all other misstatements in assessing the materiality of the impact on the financial statements.

The audit organization also determines to what extent differences in the assessments of individual indicators recognized as significant are of a similar nature, as a result of which they, when accumulated, can have a significant impact on the financial statements.

The auditor should also evaluate trends toward overstatement or understatement of individual differences that could materially affect the reliability of the financial statements. In such cases, the auditor must evaluate the accounting estimates in aggregate.