Ex. 16. Talk to professional auditors to find out what they think about their professional organizations in Russia. Consider different aspects of their activities

B) Describe the two main functions of auditing. Discuss how public accountants (auditors) and government auditors perform these functions. Explain the importance of internal auditing.

Ex. 12. a) Read the texts and do the tasks that follow.

DISCUSSION

Ex. 11. Fill each gap with a suitable word from the box. Sum up the text in 5-7 sentences and present your summary in class.

free proper standards audit (2) opinion (2) preparing performed management statements responsibilities accordance view

Independent Auditors' Report to the Board of Directors and Stockholders of_______Company

We have audited the consolidated balance sheets of ______ Company and Subsidiaries at December 31,... and... (years) and the related consolidated statements of income, stockholders' equity and cash flows for each of the years in the period ended December 31,... (year).

Respective_______of directors and auditors are as follows: the company directors are responsible for the preparation of financial _______; our responsibility is to form an independent______based on our audit of these statements and to report our opinion to you.

Basis of opinion. We conducted our________in accordance with generally accepted auditing ________. Our audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the________in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed:

We planned and ________ our audit so as to obtain all the information and explanations which we considered________in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are_________from material misstatements, whether caused by fraud or other irregularity or error. In_______ our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our ________provides a reasonable basis for our opinion.

Opinion. In our _______ the financial statements referred to above give a true and fair_______ _ of the consolidated financial position of________Company and Subsidiaries at December 31,... (year) and have been properly prepared in________with generally accepted accounting principles and the Company Act 1985.

Words you may need:

disclosure n отражение (информации в финансовой отчетности)

fraud n обман, мошенничество

a) Audit is an examination of the records and reports of an enterprise by accounting specialists other than those responsible for their preparation. Public auditing by independent accountants has acquired professional status and become increasingly common with the rise of large business units and the separation of ownership from control. The public accountant performs tests to determine whether the management's statements were prepared in accordance with acceptable accounting principles and fairly present the firm's financial position and operating results. Such independent evaluations of management reports are of interest to actual and prospective shareholders, bankers, suppliers, lessors, and government agencies. Generally speaking, auditing has two functions: to reveal undesirable practices and, as far as possible, to prevent their recurring in the future. A relatively new type of auditing is internal auditing. It is designed to evaluate the effectiveness of a business's accounting system. Perhaps the most familiar type of auditing is the administrative audit, or pre-audit, in which individual vouchers, invoices or other documents are investigated for accuracy and proper authorization before they are paid or entered in the books.

In English-speaking countries, public auditors are usually certified, and high standards of professional qualification are encouraged.

Most countries have specific agencies or departments charged with the auditing of their public accounts.

Taxpayers in all countries are interested in the sound management of the collected revenue, they also want to know whether or not the executive branch of government is complying with the law, especially in the area of public finance.

Government auditors are working for sound, economical and efficient financial management, addressing the key problems in the field of public sector auditing, like strengthening the institutions that oversee financial management, changes in the scope and methodology of government auditing, ability to conduct performance audits in public enterprises, strengthening internal auditing in spending units, ex-post external audits of government activities, budget efficiency problems, performance of expenditure programmes.

The advantages accruing from an audit are obvious, taking into account the complexity of present-day commerce and business.

c) Read the document below and discuss the results of the audit:

Independent Auditor's Report   Dear Sirs, We have audited the accompanying general purpose financial statements of Cobb County, Georgia, and the combining, individual fund and account group financial statements of Cobb County, Georgia as of and for the year ended September 30,... These financial statements are the responsibility of Cobb County, Georgia's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of Cobb County, Georgia at September 30.....and the results of its operations and the cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. Also, in our opinion, the combining, individual fund and account group financial statements referred to above present fairly, in all material respects, the financial position of each of the individual funds and account groups of Cobb County, Georgia, at September 30,..., and the results of operations of such funds and the cash flows of individual proprietary funds for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole and on the combining, individual fund and account group financial statements. The accompanying financial information is presented for purposes of additional analysis and is not a required part of the financial statements of Cobb County, Georgia. The information has been subjected to the auditing procedures applied in the audit of the general purpose, combining, individual fund and account group financial statements and, in our opinion is fairly stated in all material respects in relation to the financial statements of each of the respective individual funds and account groups, taken as a whole. Atlanta, Georgia, January 12,...  

Ex. 13. Read the dialogue, sum up its content and act it out:

Foreigner. As far as I know, when you started your economic reforms some people believed that under market conditions the controlling function of the state would be losing its importance. Has this idea proved to be true?

Russian: It's clear now that the idea was erroneous. Results of audits and inspections reveal lots of breaches of the tax law, misuses of public money, misappropriations and numerous cases of budget funds squandering.

F.: How can you account for so numerous financial infringements in Russia now?

R.: The situation we are having now is a consequence of a weak legal base, shortcomings in running the country's finances, absence of a legal base for an active financial control.

F.: What infringements are most frequent?

R.: Well, first of all, I would single out diverting of money away from the stated purposes into lucrative deals for personal gain. I mean funds allocated as returnable resources and budget resources allocated as the state support for different branches of economy. Then I would mention transfer of state funds to commercial units, embezzlements, defalcations, and misappropriation of funds.

F.: We have heard about scandals in your country when managers illegally placed so-called "free money" in commercial banks and used the profit made to satisfy their own needs, like buying cars and real estate, going abroad on holiday and so on.

R.: That's true. In some cases, managers underreport their taxable profit, do not disclose income in accounting documents, start business operations without licenses, avoid paying excise duties, etc. There is no legally established responsibility for the misuse of budget funds, which causes irresponsibility, wastefulness, and criminal actions on the part of senior officials and managers. Do you have similar problems?

F.: Well, yes, we have, but on a smaller scale. There is an efficient system of government auditing in our country. We examine accounting and performance of all government agencies and public corporations. What are the functions of government auditing in Russia?

R.: Generally, we focus on compliance of government agencies, juridical persons with financial legislation of the Russian Federation, we audit execution of the federal budget and extra-budget funds, control money circulation, use of credit resources, external and internal state debt, state reserves, safe keeping and use of state property. We are also responsible for many other things.

F.: What measures do you take when you detect financial misdeeds? Do you hand your reports to investigating authorities?

R.: Yes, we do. Investigating authorities institute proceedings on the basis of our reports. We must work to improve the system of financial control in Russia because it does not fully meet the present-day requirements.

F.: You mean the vigorous emergence of the private sector?

R.: Yes, the development of market relations and public and private finances.

Words you may need:

squandering n проматывание (средств)

infringement n нарушение (законов)

wastefulness n расточительность

investigating authorities следственные органы

to institute proceedings начинать судебное разбирательство

Ex. 14. Give extensive answers to these discussion questions:

1. What is auditing?

2. When did auditing appear?

3. Do auditors perform a useful service to the community?

4. How do auditors conduct audits?

5. What is the aim of audits?

6. Is it difficult to become a practising auditor? Are professional qualifications high?

7. What is government auditing?

8. Are there any international professional organisations of auditors?

9. What bodies in Russia perform government auditing?

10. Do many young people want to make a career in auditing? Why?

In order to get prepared for participation in the class discussion of the questions, write several paragraphs on the following:

a) Types of audit mentioned in this unit.

b) What are government auditors responsible for?

c) What do professional audit organizations do for auditors?

Ex. 15. Prepare a short talk on the following:

a) If you have a job with an auditing firm (or want to be an auditor), what sort of personal characteristics do you think are most important for auditors? Compare them with the personal features necessary for other financial professions.

b) If you have a job with an auditing firm, say how the Chamber of Auditors provides you with information about possibilities to upgrade professional skills (courses being offered by different organizations). Is the information, if any, accurate, timely, complete and relevant?

c) How is the work of auditors monitored?

Дата добавления: 2014-11-29