Audit Concept:
Represents the examination of the financial statements of an entity, in order for the independent public accountant to issue a professional opinion regarding whether these statements present the financial situation, the results of operations, changes in stockholders' equity and changes in the financial situation of a company, in accordance with generally accepted accounting principles.
The audit is a professional activity, it implies the exercise of a specialized technique and the acceptance of a responsibility.
What is contability?
Technique that is used to systematically and structured produce quantitative information expressed in monetary units of the transactions carried out by an economic entity and of certain identifiable and quantifiable economic events in order to facilitate the various stakeholders making decisions regarding said economic entity.
Historical background.
Below we will see a synthesis of the most important dates in which the guidelines of the Financial Statements opinion have been given.
| April 1959 | The presidential decree that creates the Federal Fiscal Audit Directorate is disclosed in the DOF. |
| January 1962 | Official Gazette 102-119 is published in the DOF, in which it is indicated that the deceased who had been ruled by a CP will no longer be reviewed by the Federal Fiscal Audit Directorate, regarding ISR for the ruled exercises. |
| January 1967 | The new Fiscal Code of the Federation comes into force and its article 85 contains the guidelines related to the Fiscal Opinion, repealing the decree of April 21, 1959 (DOF.30-XII-1966) |
Classification of the Accounting Audit or Financial Statements.
Criterion:
From the point of view of the mental independence of the people who practice it:
1. Internal.
2. External.
Internal Audit: it is generally practiced by officials or employees of the same company in which it is performed and is used to correct and improve internal control, setting a course of action to be taken.
External Audit: is the review carried out by an independent public accountant who meets the technical requirements and necessary moral qualities.
From the point of view of the periodicity in which they are practiced.
1. Periodic.
2. Continuous.
3. Sporadic.
Periodic Audit: they are carried out on a certain date.
Continuous Audit: they are those that are systematically carried out, that is, as operations are carried out, or short or irregular intervals.
Sporadic Audit: These are not influenced by the term or continuity, but the need to examine at any given time.
From the point of view of the extent of the audit evidence.
1. Of Financial statements.
2. Complete or detailed.
Audit of Financial Statements: refers to the verification, verification and estimation of the accounts of the Statement of financial position and that of results.
It is so named because within the Statement of Financial Position are the income accounts that are grouped in the income statement for the year.
Complete or detailed audit: it is the review of all the operations carried out in the company, generally when they lack a good accounting system.
In this audit the movements are reviewed and the balances are determined at the same time, in case it is not accepted in practice due to its high cost.
From the point of view of the area covered by the Audit.
1. Special.
Special Audit: It is the review that is carried out on an account or a group of accounts, a state or any other accounting element, as it is the intervention for a specific purpose of an independent part of the accounting.
Purposes and use of the Audit of Financial Statements.
The purposes of the Audit are:
1. Determine if the financial situation and the results of a company, reflected in the accounting are reasonably correct.
2. Discover fraud or embezzlement.
3. Discover mistakes.
Use of the Audit of Financial Statements.
a) It allows business owners to receive an opinion about the financial situation of the business from a totally impartial person outside the company.
b) When the sale of the business is projected, the buyer and the seller will have reasonable information regarding the financial situation.
c) Provide Credit Institutions with the necessary information to grant their credits.
d) In case of suspension of payments or bankruptcies, to know that the financial situation that is determined is reasonably correct.
e) For the implementation of internal inspection and control systems or the improvement of those already in place.
f) To establish cost systems that are in accordance with the needs of the company.
g) So that losses can be determined after accidents or thefts.
h) So that the causes of the variations between the results of one exercise and another can be determined.
i) To determine if the tax obligations to which the company is subject have been fulfilled.
j) That responsibilities can be determined and the necessary measures be taken in the event of fraud or embezzlement.
k) In order to determine if the efficiency of the personnel and to be able to take measures of encouragement or reprimand.
l) In case of merger of companies, to determine the conditions under which the merger must be carried out.
m) So that people interested in making an investment in the company have the necessary data to study the advantages and disadvantages of said operation.
n) So that in the event of the death of a partner, their heirs can easily determine the amount of their rights and obligations in relation to the company.
Who is interested in the results of the Financial Statements Audit?
Owners.
People or institutions directly
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