of September 23, 2002 No. 696
About approval of federal rules (standards) of auditor activities
According to the Federal Law "About Auditor Activities" Government of the Russian Federation decides:
Approve the enclosed federal rules (standards) of auditor activities.
Prime Minister
Russian Federation M. Kasyanov
Approved by the Order of the Government of the Russian Federation of September 23, 2002 No. 696
Introduction
1. This federal rule (standard) of auditor activities developed taking into account international standards of audit establishes the single purposes and the basic principles of carrying out audit of the financial (accounting) reporting (further hereinafter is referred to as - audit) which the auditing organization and the individual auditor (further hereinafter are referred to as - the auditor) shall observe.
Audit purpose
2. The purpose of audit is expression of opinion on reliability of the financial (accounting) reporting of the audited faces and compliance of procedure for conducting financial accounting to the legislation of the Russian Federation. The auditor expresses the opinion on reliability of the financial (accounting) reporting in all essential relations.
In spite of the fact that the opinion of the auditor can promote growth of trust to the financial (accounting) reporting, the user shall not accept this opinion as expression of confidence in going concern of the audited face in the future as confirmation of efficiency of business management by management of this person.
General auditing principles
3. In case of accomplishment of the professional obligations the auditor shall be guided by the regulations established by professional auditor associations which member he is (professional standards), and also the following ethical principles:
independence;
honesty;
objectivity;
professional competence and conscientiousness;
confidentiality;
professional behavior.
4. The auditor during planning and carrying out audit shall show professional scepticism and understand that there can be circumstances involving essential misstatement of the financial (accounting) reporting.
Manifestation of professional scepticism means that the auditor critically estimates ponderability of the obtained auditor evidence and attentively studies auditor proofs which contradict any documents or statements of the management or call into question reliability of such documents or statements. Professional scepticism should be shown during audit, in particular, not to lose sight of suspicious circumstances, not to draw unjustified generalization by preparation conclusions, not to use wrong assumptions in case of determination of nature, time frames and amount of audit procedures, and also in case of assessment of their results.
When planning and carrying out audit the auditor shall not recognize that the management of the audited face is disgraceful, but shall not assume also unconditional honesty of management. Oral and written applications of management are not for the auditor replacement of need to obtain sufficient competent auditor evidences for preparation of reasonable conclusions on which it would be possible to base auditor opinion.
Audit scope
5. The term "audit scope" belongs to audit procedures which are considered necessary for audit goal achievement under these circumstances. The procedures necessary for carrying out audit shall be determined by the auditor taking into account federal rules (standards) of auditor activities, internal regulations (standards) of auditor activities applied in professional auditor associations which member he is, and also rules (standards) of auditor activities of the auditor. In addition to rules (standards) the auditor when scoping audit shall take into account the Federal Laws, other regulatory legal acts and if it is necessary, conditions of the audit engagement and the requirement for preparation of the conclusion.
Reasonable confidence
6. Audit is intended to provide reasonable confidence that the financial (accounting) reporting considered in general does not contain essential misstatements. The concept of reasonable confidence is the general approach relating to process of accumulating of the auditor proofs necessary and sufficient in order that the auditor drew conclusion on lack of essential misstatements in the financial (accounting) reporting considered as a unit. The concept of reasonable confidence is applied to all process of audit.
7. The restrictions inherent in audit and detection by the auditor of essential misstatements of the financial (accounting) reporting influencing opportunity, take place owing to the following reasons:
during audit sample methods and testing are applied;
any systems of financial accounting and internal control are imperfect (for example, cannot guarantee lack of collusion);
the prevailing part of auditor proofs only provides arguments in confirmation of certain conclusion, but has no exhaustive character.
8. The additional factor limiting reliability of audit is that the work performed by the auditor for forming of the opinion is based on its professional judgment, in particular in the relation:
collection of auditor proofs, including in case of determination of nature, time frames and amount of audit procedures;
preparation of the conclusions drawn on the basis of auditor proofs, for example, in case of determination of justification of the estimative values received by management of the audited face during preparation of the financial (accounting) reporting.
9. Besides, there are other restrictions which can affect persuasiveness of the proofs used for preparation of conclusions concerning certain premises of preparation of the financial (accounting) reporting (for example, concerning transactions between affiliates). For such cases in some rules (standards) of auditor activities special procedures which owing to content of separate premises provide sufficient competent auditor evidences in case of absence are determined:
the unusual circumstances increasing risk of essential misstatement of the financial (accounting) reporting moreover which would be expected in case of usual conditions;
the sign specifying availability of any essential misstatement of the financial (accounting) reporting.
Responsibility for the financial (accounting) reporting
10. While the auditor bears responsibility for formulation and expression of opinion on reliability of the financial (accounting) reporting, responsibility for preparation and submission of the financial (accounting) reporting bears management of the audited face. Audit of the financial (accounting) reporting does not exempt management of the audited face from such liability.
Introduction
1. This federal rule (standard) of auditor activities developed taking into account international standards of audit establishes single requirements to creation of documentation in the course of audit of the financial (accounting) reporting.
2. The auditing organization and the individual auditor (further hereinafter are referred to as - the auditor) shall draw up documentary all data which are important from the point of view of provision of the proofs confirming auditor opinion and also proofs that audit inspection was carried out according to federal rules (standards) of auditor activities.
3. The term "documentation" is understood as the working documents and materials prepared by the auditor and for the auditor or received and stored by the auditor in connection with carrying out audit. Working documents can be presented in type of data, fixed on paper, film, in electronic form or in other form.
4. Working documents are used:
when planning and carrying out audit;
when implementing the current control and check of the work performed by the auditor;
for fixation of the auditor evidence obtained for the purpose of confirmation of opinion of the auditor.
Form and content of working documents
5. The auditor shall constitute working documents in rather complete and detailed form necessary for ensuring general understanding of audit.
6. The auditor shall reflect in working documents information on planning of auditor work, nature, time frames and amount of the performed audit procedures, their results, and also on the conclusions drawn on the basis of the obtained auditor evidence. Working documents shall contain reasons for all important points by the auditor on which it is necessary to express the professional judgment, together with the auditor's conclusions on them. When the auditor carried out consideration of difficult matters of principle or stated professional judgment on any questions, important for audit, it is necessary to include the facts which were known to the auditor at the time of formulation of conclusions, and the necessary argumentation in working documents.
7. The auditor has the right to determine amount of documentation on each specific audit inspection, being guided by the professional opinion. Reflection as a part of documentation of each document considered by the auditor during check or question is not necessary. At the same time the amount of documentation of audit inspection shall be such is that if there will be need to transfer work to other auditor who does not have work experience on this task, the new auditor could only on the basis of this documentation (without resorting to additional conversations or correspondence with the former auditor) to understand the done work and justification of decisions and conclusions of the former auditor.
8. Form and content of working documents are determined by such factors as:
nature of the audit engagement;
requirements imposed to audit opinion;
nature and complexity of activities of the audited face;
nature and condition of systems of financial accounting and internal control of the audited face;
need to instruct the auditor's workers, to exercise behind them the current control and to check the work performed by them;
the specific methods and methods used in auditing process.
9. Working documents shall be constituted and systematized so that to answer circumstances of each specific audit inspection and needs of the auditor during its carrying out. For the purpose of increase in efficiency of preparation and verification of working documents it is recommended to develop in auditing organization standard forms of documentation (for example, standard structure of the auditor file (folder) of working documents, forms, questionnaires, standard letters and addresses, etc.). Such standardization of documentation facilitates the order of work as the subordinate and at the same time allows to control results of the work performed by them reliably.
10. For increase in efficiency of audit it is allowed to use during check of graphics, analytical and other documentation, prepared by the audited face. In these cases the auditor shall be convinced that such materials are prepared properly.
11. Working documents usually contain:
information concerning form of business and organizational structure of the audited face;
excerpts or copies of necessary legal documents, agreements and protocols;
information on industry, economic and legal environment in which the audited face performs the activities;
information reflecting planning process including programs of audit and any changes to them;
proofs of understanding auditor of systems of financial accounting and internal control;
the proofs confirming assessment of inherent risk, risk level of control facilities and any adjustments of these estimates;
the proofs confirming the analysis fact the auditor of work of the audited face on internal audit and the conclusions drawn by the auditor;
analysis of financial and economic activities and account balances of financial accounting;
analysis of the most important economic indicators and tendencies of their change;
data on nature, time frames, amount of audit procedures and results of their accomplishment;
proofs, confirmatory that the work performed by the auditor's workers was performed under control of qualified specialists and it was checked;
information about the one who performed audit procedures, with indication of time of their accomplishment;
the detailed information about the procedures applied concerning the financial (accounting) reporting of the divisions and/or affiliated enterprises checked by other auditor;
copies of the messages sent to other auditors, experts and the third parties and received from them;
copies of letters and telegrams concerning audit, brought to the attention of heads of the audited face or discussed with them, including terms of the contract about carrying out audit or the revealed essential shortcomings of internal control system;
the written applications received from the audited face;
the conclusions drawn by the auditor on the most important issues of audit including mistakes and unusual circumstances which were revealed by the auditor during the course of performance of procedures of audit, and data on actions taken with respect thereto by the auditor;
copies of the financial (accounting) reporting and audit opinion.
12. In case of carrying out audit inspections for a number of years some files of working documents (folder) can be referred to category of the constants updated in process of receipt of new information, but remaining still significant unlike the current auditor files (folders) which contain information relating generally to audit of the separate period.
Confidentiality, ensuring safety of working documents and property right to them
13. The auditor needs to establish proper procedures for ensuring confidentiality, safety of working documents, and also for their storage during the sufficient period of time, proceeding from features of activities of the auditor, and also legislative and professional requirements, but at least 5 years.
14. Working documents are property of the auditor. Though part of documents or endurance of them can be presented to the audited face at the discretion of the auditor, they cannot serve as substitute of accounting entries of the audited face.
Introduction
1. This federal rule (standard) of auditor activities developed taking into account international standards of audit establishes single requirements for planning of audit of the financial (accounting) reporting (further hereinafter is referred to as - audit), is applied first of all to checks which the auditor spends not the first year concerning this audited person. For carrying out audit inspection within the first year the auditor needs to expand planning process, having included in it questions in addition to those which are specified in this rule (standard).
2. The auditing organization and the individual auditor (further hereinafter are referred to as - the auditor) shall plan the work so that it was performed effectively.
3. Planning of audit assumes development of general strategy and detailed approach to the expected nature, to terms of carrying out and amount of audit procedures.
Work planning
4. Planning by the auditor of the work promotes that the necessary attention that potential problems were revealed was paid to important audit areas and work was performed with optimum costs, qualitatively and timely. Planning allows to distribute effectively work between members of group of the specialists participating in audit inspection and also to coordinate such work.
5. Costs of time for work planning depend on scales of activities of the audited face, complexity of audit, work experience of the auditor with this person, and also knowledge of features of its activities.
6. Receipt of information on activities of the audited face is important part of work planning, helps the auditor to reveal events, transactions and other features which can have significant effect on the financial (accounting) reporting.
7. The auditor has the right to discuss separate Sections of the general plan of audit and certain audit procedures with workers, and also with board members and members of audit committee of the audited face for increase in efficiency of audit and coordination of audit procedures with work of personnel of the audited face. At the same time the auditor bears responsibility for the correct and complete development of the general plan and program of audit.
General plan of audit
8. The auditor needs to constitute and to documentary draw up the general plan of audit, having described in it expected amount and procedure for carrying out audit inspection. The general plan of audit shall be rather detailed to serve as management in case of development of the program of audit. At the same time form and content of the general plan of audit difficulties of check and the specific techniques applied by the auditor can change depending on scales and specifics of activities of the audited face.
9. In case of development of the general plan of audit the auditor needs to take into account:
a) activities of the audited face, including:
general economic factors and conditions in the industries influencing activities of the audited face;
features of the audited face, its activities, financial condition, requirements to its financial (accounting) or other reporting, including the changes which happened from the date of prior audit;
general level of competence of management;
b) systems of financial accounting and internal control, including:
the accounting policy accepted by the audited face and its changes;
influence of new regulatory legal acts in the field of financial accounting on reflection in the financial (accounting) reporting of results of financial and economic activities of the audited face;
plans of use during audit inspection of tests of control facilities and procedures of check in essence;
c) risk and importance, including:
the expected estimates of inherent risk and risk of control facilities, determination of the most important areas for audit;
establishment of levels of materiality for audit;
opportunity (including on the basis of audit of last years) essential misstatements or unfair actions;
identification of difficult fields of accounting, including such where the result depends on subjective judgment of the accountant, for example, by preparation of estimative indicators;
d) nature, time frames and amount of procedures, including:
relative importance of different Sections of accounting for carrying out audit;
influence on audit of availability of computer system of accounting and its specific features;
existence of division of internal audit of the audited face and its possible influence on procedures of external audit;
e) coordination and the area of work, the current control and check of the performed work, including:
involvement of other auditing organizations to check of branches, divisions, subsidiary companies of the audited face;
involvement of experts;
the number of territorially separate divisions of one audited face and their space remoteness from each other;
quantity and qualification of the specialists necessary for work with this audited person;
e) other aspects, including:
opportunity that the going concern assumption of the audited face can appear questionable;
the circumstances requiring special attention, for example, existence of affiliates;
features of the agreement on rendering auditor services and requirement of the legislation;
the term of work of employees of the auditor and their participation in rendering the accompanying services to the audited face;
form and terms of preparation and representation to the audited face of the conclusions and other reports according to the legislation, rules (standards) of auditor activities and conditions of the specific audit engagement.
Program of audit
10. The auditor needs to constitute and to documentary draw up the program of audit determining nature, time frames and amount of the planned audit procedures necessary for implementation of the general plan of audit. The program of audit is set of instructions for the auditor who is carrying out check and also control facility and checks of proper performance of work. The program of audit can also include the checked premises of preparation of the financial (accounting) reporting on each of audit areas and time planned for the different fields or procedures of audit.
11. In the course of preparation of the program of audit the auditor shall take into account the estimates of inherent risk and risk of control facilities received by it, and also required level of confidence which shall be provided in case of procedures of check in essence, time frames of tests of control facilities and procedures of check in essence, coordination of any help which is supposed to be received from the audited face, and also involvement of other auditors or experts. In the course of development of the program of audit it is necessary to consider the questions specified in Item 9 of this rule (standard).
Changes in the general plan and program of audit
12. The general plan of audit and the program of audit shall be specified and reviewed as required during audit. Planning by the auditor of the work is performed continuously throughout all time of accomplishment of the audit engagement in connection with the changing circumstances or unexpected results received during the course of performance audit procedures. The reasons of entering of considerable changes into the general plan and program of audit shall be documentary fixed.
Introduction
1. This federal rule (standard) of auditor activities developed taking into account international standards of audit establishes the single requirements concerning the concept of materiality and its interrelation with audit risk.
2. The auditing organization and the individual auditor (further hereinafter are referred to as - the auditor) in auditing process shall estimate importance and its interrelation with audit risk.
3. Information on separate assets, obligations, the income, expenses and economic activities, and also components of the capital is considered essential if its omission or misstatement can influence the economic decisions of users made on the basis of the financial (accounting) reporting. Materiality depends on the size of indicator of the financial (accounting) reporting and/or mistake estimated in case of their absence or misstatement.
Materiality
4. The auditor estimates that he is essential, on the professional judgment.
In case of audit plan development the auditor establishes the acceptable level of materiality for the purpose of identification essential (from the quantitative point of view) misstatements. Nevertheless both value (quantity), and nature (quality) of misstatements shall be taken into account. Examples of high-quality misstatements are:
the insufficient or inadequate description of accounting policy when there is probability that the user of the financial (accounting) reporting will be misled by such description;
lack of disclosure of information on violation of normative requirements in case there is probability that the subsequent application of sanctions will be able to exert considerable impact on results of activities of the audited face.
5. The auditor needs to consider the possibility of misstatements concerning rather small sizes which in total can have significant effect on the financial (accounting) reporting. For example, the mistake in the procedure which is carried out at the end of the month can specify possible essential misstatement which will arise if such mistake will repeat every month.
6. The auditor considers materiality both at the level of the financial (accounting) reporting in general, and concerning remaining balance on separate accounts of financial accounting, groups of the same transactions and cases of disclosure of information. Regulatory legal acts of the Russian Federation, and also the factors concerning separate accounts of financial accounting of the financial (accounting) reporting and interrelations between them can exert impact on materiality. Depending on the considered aspect of the financial (accounting) reporting different levels of materiality are possible.
7. The auditor should take into account materiality in case of:
determination of nature, terms of carrying out and amount of audit procedures;
to assessment of effects of misstatements.
Interrelation between materiality and audit risk
8. When planning audit inspection the auditor considers question of what could entail essential misstatement of the financial (accounting) reporting. The auditor assessment of materiality relating to separate accounts of financial accounting and groups of the same transactions helps the auditor to resolve such issues as, for example, question of what indicators of the financial (accounting) reporting to check, and also question of use of selective check and analytical procedures. It allows the auditor to choose audit procedures which as it is supposed, in total will reduce audit risk to is acceptable low level.
9. Between materiality and audit risk there is inverse relation, that is the materiality level is higher, the level of audit risk and vice versa is lower. Inverse relation between materiality and audit risk is taken into account the auditor in case of determination of nature, terms of carrying out and amount of audit procedures. For example, if upon completion of planning of specific audit procedures the auditor determines that the acceptable level of materiality is lower, then the audit risk raises. The auditor compensates it or having reduced previously estimated risk level of control facilities where it is possible, and supporting the lowered level by means of carrying out expanded or additional tests of control facilities, or having reduced risk of nondetection of misstatements by change of nature, terms of carrying out and amount of the planned procedures of check in essence.
Materiality and audit risk in case of assessment of auditor proofs
10. Assessment of materiality and audit risk on initial stage of planning can differ from such assessment after summing up audit procedures. It can be caused by change of circumstances or change of knowledge of the auditor by results of audit. For example, if audit inspection is planned until the end of the accounting period, the auditor can only predict results of economic activity and financial position of the audited face. If the actual results of activities and financial position are substantially excellent from predicted, assessment of materiality and audit risk can change. Besides, the auditor when planning the work can determine intentionally the acceptable level of materiality at the level lower, than that which is supposed to be used for assessment of results of audit. It can be made for the purpose of reduction of probability of nondetection of misstatements, and also for the purpose of provision to the auditor of some degree of safety in case of assessment of effects of the misstatements found in the course of audit.
Assessment of effects of misstatements
11. In case of assessment of reliability of the financial (accounting) reporting the auditor should determine whether set of the uncorrected misstatements revealed during audit, essential is.
12. Set of uncorrected misstatements includes:
the specific misstatements revealed by the auditor including results of the uncorrected misstatements revealed during the previous audit;
the best auditor assessment of other misstatements which cannot be specifically determined (that is the predicted mistakes).
13. If the auditor comes to conclusion that misstatements can be essential, it needs to reduce audit risk by means of carrying out supplementary audit procedures or to demand from management of the audited face of amending the financial (accounting) reporting. The management has the right to make amendments to the financial (accounting) reporting taking into account the revealed misstatements.
14. If the management of the audited face refuses to make amendments to the financial (accounting) reporting, and results of expanded (additional) audit procedures do not allow the auditor to conclude that set of uncorrected misstatements is not essential, the auditor should consider question of proper modification of audit opinion according to the federal rule (standard) of auditor activities "Audit opinion according to the financial (accounting) reporting".
15. If set of the uncorrected misstatements revealed by the auditor approaches materiality level, the auditor needs to determine whether there is probability that the undetected misstatements considered together with cumulative found, but uncorrected misstatements, can exceed the materiality level determined by the auditor. Therefore, as cumulative uncorrected misstatements approach materiality level, the auditor considers question of decrease in risk by means of carrying out supplementary audit procedures or demands from management of the audited face of amending the financial (accounting) reporting taking into account the revealed misstatements.
Voided according to the Order of the Government of the Russian Federation of 22.12.2011 No. 1095
Voided
Introduction
1. This federal rule (standard) of auditor activities developed taking into account international standards of audit establishes single requirements for quality control of task performance for audit.
2. Participants of auditor group:
a) the qualities applied to specific task on audit shall perform control procedures;
b) shall provide to auditing organization the relevant information to provide effective functioning of quality control system regarding respect for the principle of independence;
c) can rely on the principles and control procedures of quality established in auditing organization (for example, concerning skills and professional competence of workers - on the principles and procedures of hiring of workers and continuous professional training, concerning independence - on the principles and procedures of collection and the message of the relevant information on independence, concerning maintenance of customer relations - on the principles and procedures regulating procedure for the solution of question of acceptance on servicing of the new client or continuation of cooperation with already existing clients concerning observance of regulatory legal acts of the Russian Federation and professional standards - on monitoring).
Determinations
3. The concepts used in this rule (standard) mean the following:
a) "lead auditor" - the authorized person of auditing organization bearing responsibility for task performance on audit and preparation of audit opinion;
b) "survey quality check of task performance" - the process designed to estimate objectively before issue of audit opinion the significant judgments and withdrawals of auditor group created by results of audit;
c) "person performing survey quality check of task performance" - the leading employee of auditing organization or other authorized person of auditing organization, the third competent person or group of such third parties which have sufficient proper experience and powers that before issue of audit opinion objectively to estimate the significant judgments and withdrawals of auditor group created by results of audit;
d) "auditor group" - the workers performing task on audit including all experts involved with auditing organization to accomplishment of this task;
e) "socially significant business entity" - open joint stock company, other organization which securities are allowed to the address at the biddings of stock exchanges and (or) organizers of trade in the security market (for example, credit or insurance company, investment fund, etc.);
e) "monitoring" - the process of the analysis and assessment of quality control system of audit of auditing organization including periodic selective inspectorate of complete tasks for audit, performed for the purpose of achievement of reasonable confidence that the quality control system functions effectively;
g) "the network organization" - business entity who has general control, owners or management with other organization and who can be acknowledged on reasonable basis as any third party having the relevant information, part of national or international network;
h) "the leading employee of auditing organization" - person having powers to sign agreements of rendering the auditor and accompanying audit services on behalf of auditing organization;
i) "workers" - the leading employees of auditing organization and other specialists participating in auditor activities of auditing organization and rendering the services accompanying audit;
j) "professional standards" - federal rules (standards) of auditor activities, internal regulations (standards) of auditor activities existing in professional auditor associations edited (standards) of auditor activities of auditing organizations, and also the Code of ethics of auditors of Russia;
k) "specialists" are employees of auditing organization, except for leading employees;
l) "the third competent person" - person who is not the employee of auditing organization and has the professional competence sufficient for management of audit inspection (for example the leading employee of other auditing organization or the representative (with the corresponding experience) professional auditor association whose members can perform tasks on audit).
Obligations of the lead auditor on quality assurance of carrying out audit
4. The lead auditor bears responsibility for quality of accomplishment of each task on audit which he directs.
5. The lead auditor shall show at all stages of audit to participants of auditor group high quality of work on the example of own actions or by the corresponding instructions to participants of auditor group. Such actions and instructions shall emphasize:
a) importance of observance of regulatory legal acts of the Russian Federation and professional standards, the applied principles and control procedures of quality of auditing organization, and also issue of the audit opinion corresponding to conditions of specific task;
b) quality assurance which is paramount task.
Ethical requirements
6. The lead auditor shall control observance of ethical requirements by participants of auditor group.
7. The ethical requirements applied to audit inspections are established by the Code of ethics of auditors of Russia and include:
a) honesty;
b) objectivity;
c) professional competence and due care;
d) confidentiality;
e) professional behavior;
e) independence.
8. The lead auditor shall pay special attention on observance of ethical requirements by all participants of auditor group during all audit. If the lead auditor learns about non-compliance with ethical requirements by participants of auditor group, then he shall consult with the corresponding persons from the list of employees of auditing organization and provide application of adequate measures of disciplinary impact on persons who are not observing ethical requirements.
9. The lead auditor and other participants of auditor group shall draw up documentary revealed problems and methods of their permission.
10. The lead auditor shall formulate conclusion about observance of the requirements of independence applied to specific task on audit, at the same time it is necessary for it:
a) obtain information from auditing organization and if it is pertinent, from the network organizations for the purpose of identification and assessment of circumstances and relations which create independence threats;
b) estimate information on the revealed violations of procedures of independence if those took place, and to determine whether they pose threat to independence for specific task on audit;
c) take adequate measures for elimination of threats of independence or reducing them to it is acceptable low level, and also to timely report to auditing organization about any such cases that the auditing organization could take adequate measures;
d) to documentary draw up the conclusions concerning independence and also concerning this question all reasonings, reasoning for these conclusions.
11. The lead auditor can find threat of independence concerning specific task on audit which precautionary measures could not eliminate or reduce to is acceptable low level. In that case the lead auditor shall consult with the corresponding persons from the list of employees of auditing organization to provide acceptance of adequate measures of safety which guarantee elimination of threats of independence or reducing them to is acceptable low level, up to refusal of task performance. All reasonings and conclusions concerning this question shall be drawn documentary up.
The decision on acceptance on servicing of the new client or continuation of cooperation with the client according to the specific audit engagement
12. The lead auditor shall be convinced that all necessary procedures concerning the decision on acceptance on servicing of the new client or continuation of cooperation with the client according to the specific audit engagement were observed and that proper conclusions which were drawn documentary up were drawn.
13. The decision on acceptance on servicing of the new client or continuation of cooperation with the client can be initiated by the lead auditor or the other person.
14. The decision on acceptance on servicing of the new client or continuation of cooperation with the client according to the specific audit engagement provides:
assessment of honesty of the main owners of the potential audited face, its managements and representatives of the owner;
assessment of professional competence of participants of the auditor group necessary for accomplishment of specific task on audit, and also availability at them necessary time and resources, capability of auditing organization and participants of auditor group to observe ethical requirements.
If in case of assessment of one of these conditions there are questions, then participants of auditor group shall address for consultation management of auditing organization or lawyers, having documentary drawn up methods of the solution of these questions.
15. The decision on continuation of cooperation with the client is preceded by assessment of the significant questions which arose during the current or previous task on audit and also influences of their effects on continuation of cooperation. For example, the client could begin expansion of the activities in area in which employees of auditing organization have no the necessary experience and knowledge.
16. The lead auditor in case of receipt of information by him which, being known earlier, would lead to refusal of task performance on audit shall give timely this information to auditing organization to provide acceptance of joint decision.
Forming of auditor group
17. The lead auditor shall be convinced that participants of auditor group have the corresponding skills, professional competence, powers and time necessary for task performance on audit according to regulatory legal acts of the Russian Federation and professional standards.
18. It is meant the corresponding skills and professional competence:
a) understanding of task on audit and practical experience of accomplishment similar on nature and complexity of tasks, acquired by means of training and the previous work;
b) knowledge and understanding of regulatory legal acts of the Russian Federation and professional standards;
c) knowledge in the field of information technologies;
d) knowledge of industries in which the client functions;
e) capability create professional judgment;
e) understanding of the principles and control procedures of quality established in auditing organization.
Task performance
19. The lead auditor bears responsibility for job sharing, supervision and task performance on audit according to regulatory legal acts of the Russian Federation and professional standards, and also for issue of the audit opinion corresponding to task conditions.
20. The lead auditor directs task performance on audit, informing participants of auditor group on their obligations and responsibility, on nature of activities of the client, questions connected with risks, problems which can arise, and also detailed approach to task performance.
Respect for objectivity and following to due professional scepticism, and also accomplishment of the charged work in case of strict observance of ethical requirements belongs to duties of participants of auditor group. Participants of auditor group can address for explanations more experienced participants, maintaining proper style of professional communication in auditor group.
21. Participants of auditor group shall understand the purposes and tasks of the task performed by them on audit.
22. The supervision of task performance exercised by the lead auditor includes:
a) observation of the task performance course on audit;
b) assessment of skills and professional competence of each participant of auditor group, availability at it of time sufficient for task performance on audit, understanding of the instructions this to it, and also compliance of its work to the planned approach;
c) the solution of the significant questions arising during the course of performance tasks on audit, assessment of their importance and in case of need corresponding change of the planned approach;
d) identification of questions concerning which the explanation or carrying out is necessary during audit of consultations with more experienced participants of auditor group.
23. Supervising functions imply check of work of less experienced participants of auditor group by more experienced, including the lead auditor. Persons exercising supervision estimate:
a) whether there corresponds the performed work to regulatory legal acts of the Russian Federation and professional standards;
b) whether there were significant questions requiring further review;
c) whether consultations and whether conclusions of consultations on condition of their carrying out were held were drawn documentary up and put into practice;
d) whether there is need for review of nature, time frames and amount of the performed work;
e) how performed work confirms the received conclusions and is drawn documentary up;
e) sufficiency and proper nature of the obtained auditor evidence on which the audit opinion is based;
g) whether the goals in case of accomplishment of audit procedures are achieved.
24. Before issue of audit opinion the lead auditor shall check working documents of the auditor and discuss work with participants of auditor group to be convinced of sufficiency and proper nature of the obtained auditor evidence confirming the drawn conclusions.
25. The lead auditor shall exercise timely supervision of the course of accomplishment of each stage of audit. It allows to resolve timely significant issues before issue of audit opinion. Such supervision exercised by the lead auditor shall cover the most significant judgments, especially those which belong to difficult or to the matters of argument revealed during audit and also significant risks and other areas which the lead auditor will consider important. The lead auditor shall not check all working documents of the auditor, however he shall draw up documentary information on when and what working documents were checked by it. Answers to the questions of the lead auditor arising when implementing by it of the specified supervision shall be reasoned.
26. If again appointed lead auditor starts management of audit during its accomplishment, this lead auditor shall check what work was already performed as of date of its appointment. Supervising procedures shall be such enough in order that to the specified lead auditor to be convinced that the work performed as of date of these procedures was planned and executed according to regulatory legal acts of the Russian Federation and professional standards.
27. If several lead auditors participate in task on audit, participants of auditor group shall have fair idea of functions and of responsibility of each lead auditor.
28. The lead auditor shall:
a) be responsible for the organization of receipt of consultations by participants of auditor group on difficult and to matters of argument;
b) be convinced that participants of auditor group have possibility during the course of performance of task on audit to receive the corresponding explanations and consultations as from other, more experienced participants of auditor group or persons having the corresponding knowledge, powers and experience, working in auditing organization and from third competent persons;
c) be convinced that nature and amount of consultations, and also conclusions drawn based on such consultations are drawn documentary up and approved with persons performing consultation;
d) be convinced that the conclusions drawn by results of consultations were put into practice.
29. In order that carrying out consultations with competent persons was productive, it is necessary that all initial information based on which they could make the corresponding recommendations about methodological, ethical and other issues was provided to these persons. In case of need participants of auditor group can address for consultation the persons having the corresponding knowledge, powers and experience, working in auditing organization and beyond its limits. The conclusions drawn as a result of such consultations shall be drawn documentary up and put into practice.
30. The auditing organization can address for consultation third competent persons, in particular other auditing organizations and professional auditor associations, and also other organizations which render the corresponding services in the field of quality control of audit and services accompanying audit.
31. Documentation concerning carrying out consultations with the competent person on difficult or to matters of argument, shall be approved by person who addressed for consultation, and person which provided consultation. Documentation shall be rather complete and detailed clear to open subject of consultation and results of consultation, including everything the made decisions, the bases for their acceptance and methods of their practical application.
32. If between participants of auditor group and person providing consultations or between the lead auditor and person performing survey quality check of task performance there is discrepancy of opinions, participants of auditor group shall follow the principles and procedures concerning procedure for permission of disagreements established in auditing organization.
33. The lead auditor informs participants of auditor group that they can report about discrepancy of opinions to him or other leading employees of auditing organization.
34. When carrying out audit of the financial (accounting) reporting of socially significant business entities the lead auditor shall:
a) be convinced of appointment of person performing survey quality check of task performance;
b) discuss the significant questions arising during the course of performance tasks on audit including the questions arising during survey quality check of task performance with person performing survey quality check of task performance;
c) not issue audit opinion until survey quality check of task performance is complete.
35. Concerning other audit engagements for which survey quality check of task performance is carried out the lead auditor shall follow the provisions provided by subitems "an" - "in" Item 34 of this rule (standard).
36. If survey quality check of task performance before its accomplishment was not acknowledged necessary, the lead auditor shall estimate systematically changing circumstances which can demand conducting such check.
37. Survey quality check of task performance includes objective assessment of the significant judgments created by participants of auditor group and conclusions, creating basis of audit opinion.
38. Survey quality check of task performance, as a rule, includes discussion of the course of task performance with the lead auditor, the analysis of the financial (accounting) reporting and audit opinion, in particular its compliance to conditions of specific task. Also such survey check provides sampling analysis of the working documents of the auditor connected with significant judgments and the conclusions drawn by auditor group. The amount of the specified survey check depends on complexity of task and risk that the audit opinion can not correspond to task conditions. Survey quality check of task performance does not reduce responsibility of the lead auditor.
39. Survey quality check of task performance on audit of the financial (accounting) reporting of socially significant business entities includes:
a) assessment by auditor group of independence of auditing organization in the context of specific task on audit;
b) assessment of the significant risks revealed during the course of performance tasks (according to the rule (standard) N 8), and the procedures performed in response to the risks estimated by the auditor, including assessment by auditor risk group of mistakes and unfair actions and accomplishment by auditor group of procedures in response to this risk;
c) judgments concerning the level of materiality and significant risks;
d) receipt of the corresponding consultations on difficult or to matters of argument or in case of discrepancy of opinions, and also the conclusions drawn by results of these consultations;
e) the importance of the corrected and uncorrected misstatements revealed during audit;
e) circumstances, information on which shall be brought to the attention management of the audited face, representatives of the owner or other persons;
g) compliance to the performed work which formed basis for forming of the significant judgments and the drawn conclusions chosen for the analysis of working documents of the auditor;
h) proper nature of the issued audit opinion.
40. Survey quality checks of task performance, socially significant business entities, other than audit of the financial (accounting) reporting, can cover depending on circumstances in full or all provisions which are partially specified in Item 39 of this rule (standard).
Monitoring
41. The lead auditor shall estimate the results of monitoring reflected in the last information distributed by auditing organization and, when applicable, other auditing organizations which are members of network auditing organizations.
The lead auditor estimates as far as the shortcomings reflected in this information can affect task on audit and as far as the measures accepted by auditing organization for correction of situation are sufficient in the context of this task on audit.
42. The shortcomings of quality control system of task performance revealed in the course of monitoring do not mean that the specific task on audit was performed not according to regulatory legal acts in audit area and federal rules (standards) of auditor activities.
Introduction
1. This federal rule (standard) of auditor activities developed taking into account international standards of audit establishes single requirements to understanding of activities of the audited face and environment in which it is performed, including internal control system and risks assessment of essential misstatement of the audited financial (accounting) reporting.
2. The auditor shall study activities of the audited face and environment in which it is performed, including internal control system, in the amount sufficient for identification and risks assessment of the essential misstatement of the financial (accounting) reporting which was consequence of mistakes or unfair actions of management and (or) workers of the audited face, and also sufficient for planning and accomplishment of further audit procedures.
3. The understanding of activities of the audited face and environment in which it is performed is of great importance when carrying out audit. In particular, such understanding gives basis for planning of audit and expression of professional judgment of the auditor of risks assessment of essential misstatement of the financial (accounting) reporting and response actions in connection with these risks in the course of audit, such as:
a) establishment of level of materiality and assessment of whether there is judgment of materiality invariable in auditing process;
b) consideration of relevance of the choice and procedure for application of accounting policy and adequacy of disclosure of information in the financial (accounting) reporting;
c) identification of the areas of the audited face requiring special attention of the auditor in particular of transaction with the related parties, relevance of assumptions of management about going concerns of the organization or studying is more whole than economic activities;
d) determination of the expected economic indicators of the audited face for their use in case of accomplishment of analytical procedures;
e) planning and accomplishment of further audit procedures for the purpose of reducing audit risk to is acceptable low level;
e) assessment of sufficiency and proper nature of the obtained auditor evidence, such as relevance of assumptions, and also oral and written applications and explanations of management of the audited face.
4. The auditor uses professional judgment for determination of required amount of knowledge of activities of the audited face and its circle, including internal control system. Priority of the auditor is clarification of, whether rather reached understanding of activities for risks assessment of essential misstatement of the financial (accounting) reporting, and also for planning and accomplishment of further audit procedures. The amount of knowledge of activities of the audited face necessary for the auditor, as a rule, is lower than an amount of knowledge to which the management of the audited face has.
Assessment procedures of risks and sources of information on activities of the audited face and environment in which it is performed, including internal control system
5. Acquisition of knowledge of activities of the audited face and environment in which it is performed, including internal control system is continuous dynamic process of collection, updating and information analysis at all stages of audit. The audit procedures performed for the purpose of acquisition of knowledge of activities of the audited face belong to assessment procedures of risks because the certain information obtained by accomplishment of such procedures can be used by the auditor as auditor proofs in case of risks assessment of essential misstatement of the financial (accounting) reporting. Besides, performing assessment procedures of risks, the auditor can obtain the auditor evidence concerning groups of the same economic activities, account balances of financial accounting and disclosure of information and the related premises of preparation of the financial (accounting) reporting, and also about operating efficiency of control facilities even if such audit procedures were not specially planned as procedures of check in essence or tests of control facilities. The auditor has the right also to plan check performing procedures in essence or tests of control facilities in parallel with assessment procedures of risks if counts such approach effective.
6. The auditor shall perform the following procedures of risks assessment for the purpose of acquaintance with activities of the audited face and with environment in which it is performed, including internal control system:
requests to management or other employees of the audited face;
analytical procedures;
observation and inspection.
The auditor shall not perform all specified assessment procedures of risks concerning each problem specified in Item 19 of this rule (standard). However all assessment procedures of risks are performed by the auditor during achievement of necessary amount of knowledge of activities of the audited face.
7. Except assessment procedures of risks, stipulated in Item the 6th this rule (standard), the auditor performs the other audit procedures allowing to obtain information which can be useful in case of identification of risks of essential misstatement. For example, the auditor can consider feasibility of the direction of requests to the organizations rendering to the audited face legal services or services in estimative activities. Viewing of information obtained from external sources, in particular analytical reports, the reports prepared by banks or bodies of statistics, economic and professional newspapers and magazines or official legal and financial publications can be useful in case of acquaintance with activities of the audited face.
8. In spite of the fact that the most part of information which the auditor obtains by requests can be received from management of the audited face and those who are responsible for creation of the financial (accounting) reporting, the inquiries sent to employees of the audited face, in particular production personnel, internal auditors and other employees different administrative functions can be useful in providing the auditor with the different points of view in case of identification of risks of essential misstatement of information.
Determining employees of the audited face by which inquiries, and also amount of such requests can be sent, the auditor considers what sort information can be obtained to help the auditor to reveal risks of essential misstatement of information.
The replies to the requests directed to representatives of the owner can help the auditor to understand situation in which the financial (accounting) reporting prepares.
The replies to the requests directed to internal auditors can be related to their activities concerning the organization and functioning of internal control system of the audited face and to give idea of that, the management of the audited face how well reacted to results of these activities.
Replies to the requests to the employees participating in initiation, accomplishment or reflection in financial accounting of difficult or unusual transactions can help the auditor with assessment of relevance of the choice and application by the audited face of certain rules of accounting.
The replies to the requests directed to the staff of legal service of the audited face can be related to such questions as legal cases and claim disputes in which the audited face, observance by the audited face of regulatory legal acts, knowledge of the facts of the unfair actions or circumstances specifying possibility of unfair actions, guarantees, obligations, agreements (in particular about joint activities) with partners and content of contractual conditions participates.
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The document ceased to be valid since January 1, 2018 according to the Order of the Government of the Russian Federation of October 23, 2017 No. 1289