What is an audit
The legal definition, purpose, types, who may perform it and what the company receives
Go to the «Mandatory audit» serviceChecked against the official source:
Under the Law «On Auditing Activities», an audit is an examination of financial statements and related financial information carried out by an audit firm to establish their reliability and compliance with accounting legislation (Article 32 of ZRU-677). Reliability means a degree of accuracy of data that allows objective conclusions to be drawn about the company's financial position and results.
Put simply: an independent professional checks whether the figures in the financial statements can be trusted and expresses an opinion in writing.
Who may perform an audit
- an audit firm entered in the Register of Audit Organisations (Article 27);
- the audit is performed by auditors — persons holding a qualification certificate (Articles 3, 19);
- audit firms are independent and may not be established by government bodies (Article 27).
Mandatory and voluntary audit
- Mandatory — annually for joint-stock companies, banks, insurers, funds, exchanges, companies with a state share and large commercial organisations meeting the criteria of Article 35.
- Voluntary — at the decision of the company, its owner, a participant holding at least 5%, or supervisory bodies, on contractual terms (Article 36).
Principles
- independence, objectivity and integrity, professional competence, confidentiality (Articles 4–8);
- work in accordance with International Standards on Auditing (Article 9).
Outcome
The outcome is the auditor's report: a written opinion on the reliability of the financial statements, numbered and signed on every page by the auditors and the head of the audit firm, with the financial statements attached (Article 39). In addition, the auditor informs management in writing of any breaches identified (Article 29).
What an audit is not
- not a tax inspection: those are carried out by the tax authorities under the Tax Code;
- not bookkeeping: an audit firm may not audit financial statements it prepared itself (Article 34);
- not a guarantee that there are no errors of any kind: the audit is based on sampling and materiality.
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Go to the «Mandatory audit» serviceFrequently asked questions
What is an audit, in simple terms?
An independent examination of financial statements, after which the auditor expresses a written opinion on their reliability (Articles 32, 39 of ZRU-677).
Who can perform an audit?
Only an audit firm included in the Register of Audit Organisations (Article 27).
What types of audit are there?
Mandatory (Article 35) and voluntary (Article 36).
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