Standards of auditing activities detection of fraud and error
Standards of auditing activityprovide that in the course of the audit verification the auditor should come to reliable knowledge about the facts revealed. National auditing standards state that reliability is the full proof of the fact.
All final conclusions of the auditor must be verified by a system of credentials. According to some experts, the quality of evidence is determined:
1) Approximation to the real event;
2) establishing the causal correspondence between the fact and the evidence;
3) reliability of sources. This is the basis for internal standards of auditing.
In accordance with the first paragraph, threethe main class of evidence: natural, artificial and rational argumentation. Standards of auditing activity provide that the basis of division is the facts on which the statement is based. Unfortunately, the existing legal norms and established traditional standards of auditing do not fully regulate the question of how the auditor should act if, under an agreement concluded with the board of directors, he has established the appropriation of a certain amount of money by the manager or chief accountant of the firm. It seems that, first of all, he is obliged to inform the directors about this, who in turn must bring the facts to the notice, depending on the amount of theft, the shareholders' meeting, since the auditor must inform the founders about the violation of the law in accordance with the law.
If the auditor at check found out that the partboards or the executive director are responsible for actions or omissions, which usually entail obligations to compensate for harm, or that part of the board or the executive director acted in violation of the law, he should note this in the report. The auditor also faces the problem of reporting abuse of the investigative authorities. It is important to keep in mind who owns the enterprise or firm.
If the enterprise is a state enterprise, thenAccording to the article of the Criminal Code, this is "a failure to report on ... a serious crime." Modern auditing standards establish the principle that if in the course of checking all the circumstances of settlements with the budget, the auditor has established an understatement of payments to the budget, then he should help the enterprise accountant to properly compute tax calculations and recommend making appropriate changes to the balance sheet. It is not necessary to inform the tax service, because this contradicts the status of audit activity as a system of independence of financial control. The activity of the auditor does not imply insurance of the client's liability, as this is the business of insurance organizations. For all the significance reflected in the normative acts of the indicators, they were clearly insufficient for an objective, reliable assessment of economic insolvency in the course of an audit.
The solvency of a modern marketan enterprise can not be characterized only by the current liquidity of its assets and can not serve as a basis for suspicion of fraud. Therefore, such violations can only be an intermediate characteristic of the state of the enterprise's finances or other audited resources. Through the implementation of effective measures by the company, its reputation can be restored without a particularly tangible impact on its solvency and financial stability in general.
Thus, the audit should not serve as an instrument for establishing and specifying illegal actions, it is not its function and it is simply not justified to do this through financial audit.