An audit is an examination of an organisation’s financial activity carried out at the client’s request. Its purpose is to assess the organisation’s financial position and develop recommendations for improvement.
An audit may take several forms:
- statutory audit performed by a sworn auditor;
- tax audit;
- financial audit;
- audit of financial statements; and
- audit of receivables and payables.
Statutory audit
A statutory audit can be performed properly only by experienced, highly qualified auditors. As a business develops, an audit should no longer be viewed merely as an obligation. If a company meets the criteria requiring a statutory audit, it has reached a level of public significance and business development at which reliable reporting matters to a wider group of stakeholders.
A successfully completed audit acts as a sign of quality for suppliers, customers, investors, lenders and other interested parties. It demonstrates that the accounting system is organised, key performance indicators can be trusted, settlements with the state budget are handled correctly and the risk of conflict is controlled.
The work results in an auditor’s report and written information for management containing detailed observations and recommendations.
A statutory audit includes:
- review of the company’s document workflow and accounting records;
- confirmation of the lawfulness and reliability of the financial statements; and
- preparation of the sworn auditor’s opinion.
The audit types described below are voluntary and are initiated by the company to identify problem areas in its financial and reporting activity.
Tax audit
A tax audit is the first step towards improving and optimising the company’s tax system.
It is particularly relevant to organisations with a high volume of cash transactions and is also recommended when a company changes its chief accountant. A tax audit normally includes:
- assessment of the company’s current taxation system;
- confirmation that taxes have been paid correctly;
- presentation of the audit results;
- preparation of a detailed report identifying and analysing errors; and
- recommendations for lawful tax optimisation.
Financial audit
The main purpose of a financial-statement audit is to obtain reliable information about cash flows during the reporting period and the organisation’s financial position for the year. The review is intended to reveal the company’s actual financial situation.
Following the audit, MG Alliance specialists provide an opinion on the organisation’s solvency, profitability and capital turnover, together with recommendations for correcting the errors identified.
Audit of receivables and payables
The purpose of this audit is to confirm the completeness, rights, existence and valuation of balances in accounts with suppliers and customers at the end of the reporting period.
The variety of legally permitted settlement arrangements means that such an audit requires knowledge of civil law, European Union rules, accounting and tax requirements and the ability to assess the client’s relationships with counterparties.
The review helps identify time-barred, doubtful and uncollectible debts. Our specialists examine these areas, identify weaknesses in accounting and internal controls and explain the corrective action required.
An audit generally has two stages:
- Preliminary examination of the organisation’s accounting and tax reports to determine the timing and cost of the review.
- The audit itself, followed by an opinion setting out the errors found and methods for correcting them.
By choosing MG Alliance SIA, the client receives prompt access to reliable information about the organisation and qualified assistance with accounting and taxation, allowing management to concentrate on running the business.