Audit services: testing financial statements and assessing company risks

Audits and related services (Articles 31–33 of ZRU-677)

• audit services are audits and related services provided under a contract (Article 31 of Law No. ZRU-677 “On Auditing Activity”);
• audits: mandatory (Article 35) and voluntary, at the company’s initiative (Article 36);
• related services: setting up, restoring and maintaining accounting records, preparing financial statements, including under IFRS; tax advisory; analysis and financial planning; valuation of bank assets (Article 33);
• restriction: a firm may not keep a client’s books and audit the same period (Article 34).

What types of audit services exist

The first line is statutory (mandatory) audit. The Law on Auditing Activity defines the list of organisations for which an audit is mandatory; the exact composition of this list is revised from time to time, so it should be checked against the current version.

The second is a voluntary audit that the company orders by its own decision: before a transaction, on a change of management, at an investor’s request or simply for control. The third is related services: tax analysis, review of specific areas, assessment of internal control.

• statutory audit of financial statements
• voluntary audit by decision of the owner
• tax analysis and risk assessment
• review of specific accounting areas
• assessment of the internal control system
• advice on accounting methodology

Why a company needs an audit beyond the legal requirement

The main value is an independent assessment of the reliability of the data on which decisions are based. The owner sees not what the accounting department shows, but what has been confirmed by testing.

The second effect is prevention. The auditor goes through the same areas that interest the tax authority, but with a different purpose: not to penalise, but to show a problem while it can still be fixed.

How the audit is carried out

Work starts with planning: we study the company’s operations and accounting structure and identify the areas of highest risk. The main procedures are concentrated on them.

Then comes evidence gathering: testing primary documents, ledgers and calculations, confirming balances, sending requests to counterparties. It all ends with drawing conclusions, discussing them with management and issuing the report.

• preliminary understanding of the business
• planning and risk assessment
• testing documents and accounting ledgers
• confirming material balances
• discussing identified issues with management
• preparing the report and recommendations

What the company receives

The formal result is the auditor’s report on the reliability of the financial statements. Users need it: owners, banks, investors, counterparties.

In practice the second document often proves more valuable — the list of findings and recommendations. It shows the specific places where the books or documents need correcting and what to do first.

What determines the cost of audit services

The price is based on the workload: scale of operations, number of transactions, number of accounting areas, branches and foreign trade operations. The state of the books matters too: a neglected database takes more time.

We do not publish a price list, because an honest figure appears only after getting to know the company. After a short preliminary conversation we state the scope of work and the fee, which do not change during the project.

• scale and type of business
• number of transactions and accounting areas
• branches and foreign trade operations
• state of the books and documents
• audit timeline

How to choose an audit firm

The first thing to check is whether the organisation is in the Register of Audit Organisations: auditing activity may be carried out only from the date of inclusion in the Register (Article 27 of ZRU-677), and an audit by an organisation outside the Register entails liability (Article 30).

Next, look at experience in your industry, the team and willingness to explain the conclusions rather than just hand over a document. An audit after which management has no understanding of the weak spots has not done its job.

It also helps to understand how cooperation works during the audit. The auditor requests documents and explanations, and the speed of responses directly affects the timeline. Companies that appoint a contact person in advance and prepare a standard set of documents get through the audit noticeably faster. We always hand over the list of requested materials at the start of the work, so that the accounting team can prepare and spread the workload instead of collecting documents in a rush alongside its day-to-day tasks.

Why Leader Audit

We are an audit organisation with 13 years of work and more than 220 audits completed. A particular strength is tax work: we have helped clients recover more than UZS 200 billion of value added tax.

Our office is in Chilanzar district (4th quarter, 1). We work with companies of different sizes — from trading companies to manufacturing groups — and always explain our conclusions in plain language.

• 13 years of practice and more than 220 audits
• statutory and voluntary audit
• tax advisory and VAT refunds
• accounting outsourcing
• office: Chilanzar, 4th quarter, 1