Audit of financial statements

Audit of financial statements is an independent examination of financial statements that results in preparation of an audit report (opinion). The final aim of the audit is to increase confidence in the statements on the part of the concerned users.

Mandatory audit (for a wide range of users) is performed in regard with the statements of the companies (organizations) of public interest. The list of economic entities being subject to mandatory audit is established by law, first of all by the Law “On Accounting and Financial Statements in Ukraine”.

Starting from 2018 the audit of financial statements is mandatory for the companies of all forms of ownership if they reached the operational performance of a middle size company (clause 3 art.14 of the Law “On Accounting and Financial Statements in Ukraine”).

Assets of the company: EUR 4-20 million. Net operating income: EUR 8-40 million. Number of people employed: 50-250 persons. If any two of the three factors correspond to the level established by law, the company must perform the audit of its financial statements.

Voluntary audit (for a closed user group) is performed in regard with the statements of the companies not being subject to mandatory audit.

The audit can be initiated by:

  • the owner of the company who will receive, as a result of the audit, not only the independent auditors’ report regarding the reliability of financial statements but also the timely information about the significant shortcomings in the internal control system of the company;
  • the management of the company (organization) – in the case when it is necessary to provide the audited financial statements to users such as banks, potential partners or investors or in other cases when it is necessary to take an important managerial decision related to the further development of business.
  • the management of the parent company (for the companies belonging to some group) responsible for preparation of consolidated financial statements. The audit of financial statements of daughter companies facilitates preparation of qualitative statements at the group level. We perform the audit of consolidated packages of financial statements according to the IFRS and explain the results of our work to the auditor of the parent company.

We usually perform the assessment review in regard with the interim financial statements or during preparation of consolidated financial statements for daughter companies whose scope of activity is insignificant (review of financial statements).

During the performance of such review the auditor does not use all the procedures that would be necessary for the audit. Therefore, the time spent on the review of financial statements and its cost is lower than the cost of the audit.

A successful outcome of audit is imperative for further cooperation between a donor and a non-profit organization and provision of grants for future projects. According to the donors’ requests, the audit company should have enough experience in the sphere of audit of grants and be a member of an international audit organization. Our company meets those requirements as it is a member of a worldwide Association of Independent Advisors AGN International.

We provide services according to which our auditor can confirm:

  • the grant contract performance (Agreed procedures related to the verification of the grant contract performance);
  • the financial report on project provided to the donor (Audit of statements related to the application of funds under the contract);
  • the financial statements of the organization(Audit of financial statements according to the Accounting Provisions (Standards));
  • the availability of good internal control system in the organization.

Why is it important?

  • An independent auditors’ report enhances the credibility of financial statements among the users (shareholders, financial institutions, potential investors, contractors).
  • The owner of the company will receive, as a result of the audit, not only the independent auditors’ report regarding the reliability of financial statements but also the timely information about the significant shortcomings in the internal control system of the company.
  • Taking into consideration the auditors’ conclusions and recommendations, the company management can improve the accounting system and eliminate the detected accounting shortcomings and errors in a timely manner.
  • An independent auditors’ report is the best evidence of future benefits of the economic transaction related to the purchase/sale of company or investments, and it is an ideal confirmation of integrity of the organization.

THE PROCEDURE

The audit of financial statements is performed in complete compliance with the International Standards on Auditing (IAS) recognized in Ukraine as national standards. In Ukraine the auditors should also meet the requirements of the International Code of Ethics for Professional Accountants (Auditors).

In the course of our audit we take into consideration the scope and specific character of the company (organization) activity. We use the checked audit methodology and combine our long-term expertise with modern audit instruments.