Auditing is an external financial control of business entities by specialized authorized bodies representing the state or independent non-state firms. The Law “On Auditing” does not give a clear statement of this concept, but this does not reduce the significance of audit for entrepreneurial activity. Very often, government audits of financial statements are closely related to audits conducted by auditors. But they in no way replace each other.
The Federal Law "On Auditing" regulates the list of those objects that must undergo mandatory audits. These include OJSCs, organizations involved in the circulation of securities, organizations providing loans, insurance companies and state corporations, non-state pension funds (Article 5 of the Federal Law). If these facilities use budget funds, fulfill government orders or work with state property, they are subject to mandatory verification by the Accounts Chamber.
The structure and functions of the bodies regulating audit activity in Russia:
- The Ministry of Finance is the supreme body that is called upon to coordinate audit activities in the state, giving audit organizations and auditors the right to engage in this type of commercial activity. The main functions of this body include:
- development of a policy in relation to audit activity, creation and improvement of the regulatory framework;
- maintaining a register of organizations and individuals authorized to conduct an independent audit;
- analysis of the state of the audit services sector in Russia, etc. To perform these functions, the authorized body can freely request various documents.
2. Self-regulatory organizations of auditors are non-profit organizations included in the state register and uniting a certain number of individuals and legal entities. Members of the organization of auditors determine the standards for the activities of auditors, their professional ethics, reporting, take part in training auditors, providing them with opportunities for further training, etc.
3. An audit organization is a commercial structure that is part of the members of one of the self-regulatory organizations of auditors. The Law on Auditing gives it the right to audit and issue an audit opinion. State regulation of audit activity does not prevent the observance of audit secrecy, if it does not re-read the norms of the current legislation.
And finally, a private auditor is a person who can engage in audit activities in compliance with all the rules and norms that are prescribed by the law on audit activities, as well as internal rules of the self-regulatory organization of auditors in which it is a member.