Law on Auditing Activity No. 307-FZ with amendments and additions

Audit activity is considered control and supervisory, and therefore should be strictly regulated by the state. To this end, Federal Law No. 307 "On Auditing Activities" was established, which fixes the main provisions that relate to the functions and rights of auditors. The law will be discussed in detail in the article.

On auditing activities

What is audit? According to the law, this is an independent verification of accounting data for compliance with established norms. The reliability of financial statements is checked, violations and possible frauds are identified.

An auditor is a person who performs audit services. All supervision and supervision activities of the specialist in question must strictly comply with the law. Otherwise, all ongoing work will not be considered an audit.

FZ No. 307 "On Auditing" states that audit can not replace the control functions of state bodies. These are additional, independent types of work not related to state law enforcement.

Auditors and Audits

What is an audit organization? Law No. 307-FZ "On Auditing" gives the following definition:

• It is an organization created on a commercial basis, which is an association of auditors who independently audit the accounting (financial) statements of the audited entity in order to express an opinion on its reliability.

Each auditing organization must be included in a special state register. Individuals (auditors) working in it should have a qualification certificate, authorizing the implementation of professional audit activities.

Mandatory audit is conducted in the following cases:

• Securities of the organization are admitted to trading;
• The organization has the organizational and legal form of a joint-stock company;
• The volume of proceeds from the sale of products is more than 400 million rubles for the previous reporting year;
• The organization presents and discloses the annual consolidated consolidated statements;
• In other cases established by the Federal Law.

Mandatory audit is conducted every year.

Rights and duties of auditors

FZ No. 307 "On Auditing" secures the main powers and functions of these associations. So, the auditor has the right:

• On the independent determination of methods and forms of rendering professional services;
• To study in full the documentation related to the financial and economic activities of the entity being audited;
• To verify any property specified in the documentation;
• To receive confirmation from the officials and explanations on issues that arose during the audit;
• To refuse to perform their duties, if the audited person does not provide all the necessary documentation;
• To exercise other rights specified in the contract.

Secures the law and the main duties of auditors. So, here it is worth noting:

• The provision by the auditor of the auditee of information on membership in the audit firm;
• Timely transmission of audit reports;
• Compilation of documents in Russian;
• Maintenance of safety of the documentation;
• Informing audited persons about corruption offenses and much more.

Another duty of auditors is strict adherence to professional standards. They will be discussed further on.

Standards of audit activity

The seventh article of the Federal Law No. 307 "On Auditing" establishes the need to use standards and codes of professional ethics for auditors. What it is? The law characterizes standards as a special kind of documents that contain requirements for audit procedures. Standards should not:

• To contradict international standards;
• Create obstacles to the implementation of audit activities.

And what is the code of professional ethics of auditors? According to the law, this is a collection of rules of conduct, mandatory for compliance by auditors and associations of auditors. The code is compiled and adopted by each self-regulating organization separately.

On the independence of auditors

FZ No. 307 "On Auditing" in Article 8 establishes standards that state the independence of auditors and their associations. At first, it is said about who can not perform the audit. The list includes auditors:

• Being the founders of the audited entity, its chief accountant or manager;
• Who are close relatives of the entity being audited;
• Individual auditors who rendered services to the audited person for three years to restore accounting, manage it, prepare financial statements;
• And others, according to Federal Law No. 307.

It's easy to guess that all these norms have been introduced to prevent corruption and "covert" of their colleagues. The procedure for remuneration for audit activity and its payment is determined by the parties to the contract.

Verifiers have no right to carry out actions that violate the interests and rights of audited persons. Thus, a special concept of audit secrecy is introduced, which will be discussed later.

On the audit secret

The federal law "On Auditing Activity" (No. 307-FZ) fixes the notion of audit secrecy. What it is? The ninth article of the law prohibits the disclosure of any information and documents (except for information disclosed by the audited person), information on the conclusion of a contract for the provision of services, as well as the prices for these services.

All employees of the audit organization are required to ensure the confidentiality of information that constitutes an audit secret. You can not transfer documents and information that constitute this secret to third parties that are not related to the audit agreement.

According to Federal Law No. 307 "On Auditing", the disclosure of audit secrets entails the imposition of liability. According to the federal law, a person who violated the confidentiality of information is obliged to compensate losses in the manner established by the legislation of the Russian Federation.

Control over auditors

Accepted Federal Law No. 307 "on auditing" refers to auditors and their associations by independent persons. However, the principle of independence does not exempt from control by the state.

Article 10 deals with self-control. Thus, representatives of audit companies are required to:

• Establish and follow the rules of internal control of professional activities;
• To pass external control of activity, to present to state bodies all necessary documentation;
• Participate in the work of a self-regulatory organization of auditors, if they are its members.

Article 11, on the contrary, deals with the external control of audit organizations and its members. In particular, the subject of external control is specified. This compliance with the requirements of the federal law, as well as the timely execution of legitimate orders from the government. A little bit more about the state regulation of auditing activity will be told further.

State regulation

№ 307 FZ "On Auditing" (30.12.2008) fixes the basic norms of state regulation of the activities of auditors. So, the state is obliged:

• To develop state policy in the field of audit activity;
• To adopt normative acts that regulate it;
• Maintain a state register of self-regulating organizations;
• To exercise some other powers reflected in Article 15 of the federal law under consideration.