Who is an auditor and what does an auditor do

What an auditor does

The main work is the audit itself: examining financial statements and related financial information to establish their reliability and compliance with accounting legislation (Article 32 of ZRU-677). An audit can be mandatory — when the law requires it — or voluntary, at the decision of the company itself, its owner or participants holding at least 5% (Articles 32, 36).

Besides audits, audit firms provide related services (Article 33): setting up, restoring and maintaining accounting records, preparing financial statements, including under IFRS; acting as the audit commission (internal reviser); advising on accounting and, if a tax consultant is on staff, on taxes. Audit firms are prohibited from any other business activity (Article 27).

What an auditor examines in practice

An auditor does not go through every document but works from risks. First, the auditor studies the company's business, major transactions and weak points in its accounting, then selects areas where the likelihood of material misstatement is higher.

For each such area, evidence is gathered: primary documents, confirmations from counterparties and banks, recalculations, inventory count results and explanations from staff.

• revenue and recognition of income under contracts
• inventories, their existence and measurement
• fixed assets and depreciation
• settlements with customers, suppliers and lenders
• settlements with the budget and VAT accounting
• payroll and related charges

Auditor, accountant, internal reviser and tax consultant

• The accountant keeps the company's books and prepares its financial statements — they work on the company's side.
• The auditor independently examines those statements and signs the report: every page is signed by the auditor(s) who performed the audit and by the head of the audit firm (Article 39).
• The reviser (audit commission) is an internal control body of the company; its functions may also be performed by an audit firm as a related service (Article 33).
• A tax consultant advises on taxes; an audit firm may provide tax advice only if such a specialist is on its staff or engaged under a contract (Article 33).

Independence: when an auditor cannot perform an audit

The law prohibits an audit firm from auditing, in particular (Article 34):

• its own creditor or insurer, or a company in which the firm or its auditors are founders, participants or shareholders;
• a company where an employee of the audit firm is also a founder, head or accountant of the audited company;
• a company whose books it kept or whose financial statements it prepared during the audited period, or for which it acted as the audit commission;
• a company where its employees are close relatives of the founder, head or accountant of the audited company;
• in the case of a conflict of interest that could affect the opinion on the financial statements.

How to become an auditor

• Higher education and at least three years of experience out of the last ten in accounting and auditing after graduation; for holders of a master's degree in «accounting» and «auditing» — at least one year at an audit firm; candidates with an academic degree in economics need no experience (Article 21).
• A qualification exam; after a failed attempt it may be retaken no earlier than one month later (Article 20).
• The certificate is issued by the national public association of auditors: first for five years, then renewed for ten years and thereafter without time limit (Article 19). Holders of an international accountancy certificate receive it without an exam, provided the requirements of Articles 21 and 22 are met.
• Annual professional development starting from the year following receipt of the certificate (Article 18).

Where an auditor works

An auditor may work at only one audit firm at a time — under an employment or civil-law contract — and may be a founder only of the firm where they work (Article 17). An employee without a certificate works as an assistant auditor: they take part in the audit as instructed by the auditor but do not sign the auditor's report.

How an auditor's work proceeds, stage by stage

The audit begins long before the first document request. The auditor studies the industry, reads the founding documents and looks at the ownership structure and major contracts in order to understand where the company's revenue comes from and where it could be misstated.

Then a plan is drawn up: which areas are tested in full, which on a sample basis, and what sample size will be sufficient. The plan is not set in stone — if a systematic error surfaces in the very first documents, the scope is widened.

Fieldwork is the part most visible to the accounting team. The auditor requests ledgers and primary documents, reconciles balances, sends requests to counterparties and banks and asks staff questions. Speed of response matters here: a drawn-out document exchange stretches out the whole audit.

At the final stage, identified misstatements are aggregated and assessed for materiality. A minor inaccuracy in one document and a systematic error in revenue recognition affect the final opinion differently, and it is this assessment that determines the type of report.

• preliminary study of the business and risks
• planning the scope and depth of procedures
• gathering audit evidence
• assessing identified misstatements for materiality
• discussing the results with management
• issuing the report and written communication

How to choose an auditor for your company

• Check the firm in the Register of Audit Organisations — without an entry there, audit activity cannot be carried out (Article 27).
• Make sure there are no restrictions under Article 34: for example, if the same firm kept your books during the audited period, it cannot audit them.
• Agree the scope, timing and format of deliverables in advance — for a voluntary audit they are set by the contract (Article 36).