Notions about the General Auditing Standards.
Audit Standards.
Companies required to submit the audited financial statement.
During the globalization process, companies compete mainly for capital, markets and technology; The demands of national and international users of audited financial statements are growing and more sophisticated, so the requirement that auditors comply with international auditing standards is now a reality.
Some essential concepts in the audit do not change; they cannot and should not change and the auditing standards remain the minimum quality requirements, the guidelines of conduct that the auditor must observe.
In this context, the audit is carried out, as an activity par excellence of the public accountant that identifies it with its most essential characteristics, such as responsibility and
Thus, the auditor, to carry out his functions, requires in-depth knowledge of international accounting principles and standards, international auditing standards, auditing procedures, principles of professional ethics, information systems, and taxes.
General features
The FINANCIAL AUDIT IS THE EXAMINATION OF THE FINANCIAL INFORMATION BY A THIRD PARTY, independent from the one that prepared it, with the intention of establishing its reasonableness and presenting the results of the examination through its opinion or opinion.
Independent auditors and audit companies are the ones that carry out this type of work, relying on the International Auditing Standards (ISAs). Clients require the Financial Audit mainly because they want to know if their financial statements are reasonably presented and can rely on them to make decisions; some others, happily less and less, require it only for compliance with provisions of the control bodies.
General features
In our country the ISAs are in force; however, it is commonly used to cite Generally Accepted Auditing Standards (NAGAs).
Currently there are few differences between the two, the former; ISAs are issued by IFAC (International Federation of Accountants) and NAGAs by the American Institute of Accountants - AICPA.
II. Audit Standards
Introduction
The Auditing Standards are the fundamental auditing principles, the auditors should frame in their performance to these standards during the audit process. Compliance with these standards guarantees the quality of the auditor's professional work.
The Auditing standards constitute a formal requirement that the independent auditor must comply with and these have been adapting to the changes resulting from the opening of markets and globalization.
Origin
The NAGAs, has its origin in the Bulletins issued by the Audit Committee of the American Institute of Public Accountants of the United States of North America in 1948
The ISAs have been issued by the International Federation of Accountants, an entity that was created in 1977 to standardize the regulations of the different countries that comprise it (of which Peru is a member country), they were codified in 1995 and include
36 sections on standards and 10 sections on practices. The International Federation of Accountants has made a significant effort, but it must be even greater for the global harmonization of auditing.
Audit Standards
It is necessary to specify that for many years in Peru the so-called "Generally Accepted Auditing Standards" (NAGAs) have been used as the basis for work and report writing, these have been and are issued by the AICPA; The ISAs, due to their wide application in various countries, constitute the logical consequence of the evolution process of the NAGAs. In general, NIAs share many similarities and few differences with NAGAs.
NAGAs
Classification of the NAGAs
Currently the NAGAS, in force in our country are 10, the same that constitute the (10) ten commandments for the auditor and are:
These rules, due to their general nature, apply to the entire examination process and are basically related to the auditor's functional conduct as a human person and regulates the requirements and skills that must be met to act as Auditor.
Most of this group of norms is also contemplated in the Codes of Ethics of other professions. The Standards detailed above are defined as follows:
1. Training and professional capacity
"The audit must be carried out by personnel who have the technical training and expertise as an auditor."
As can be seen from this standard, it is not only enough to be a Public Accountant to exercise the role of Auditor, but it is also required to have adequate technical training and expertise as an auditor. That is, in addition to the technical knowledge obtained in university studies, practical application in the field is required with good management and supervision.
This constant training, training and practice shapes the maturity of the auditor's judgment, based on the experience accumulated in its different interventions, finding itself in a position to exercise auditing as a specialty. Otherwise, it would be to deny their own existence because it will not guarantee professional quality to the users, this despite the fact that the rules are multiplied to regulate their performance.
2. Independence
"In all matters related to Auditing, the auditor must maintain independent judgment."
Independence can be conceived as the professional freedom that assists the auditor to express his opinion free of pressures (political, religious, family, etc.) and subjectivities (personal feelings and group interests).
Therefore, impartial objectivity is required in their professional performance. Although it is true, independence of judgment is an attitude of mind, the auditor must not only "be", but also "appear", that is, take care of his image before the users of his report, which is not only the client who hired him but also the other interested parties (banks, suppliers, workers, state, people, etc.).
In our country, a diversity of regulations are in force that try to guarantee the independence of the auditor, thus we have:
- Regulations for audited financial information (Article
5º), approved by Resolution CONASEV (Nº 014-82efc / 94.10).
- Law on the professionalization of the Public Accountant (Decree Law No. 13253). Code of Professional Ethics of the Public Accountant Law of the National Control System (Decree Law 26162). Regulations for the Designation of Auditing Companies, approved by Comptroller Resolution No. 162-93-CG. Government Auditing Standards - NAGU, approved by Comptroller Resolution No. 162-95-CG. General guidelines to ensure the adequate strengthening and independence of the Internal Audit Bodies, approved by Comptroller Resolution No. 189-93-CG, etc.
The last four regulations specifically regulate the performance of the government auditor and the Audit Companies when they audit state entities.
3. Professional Care Or Dedication
"Professional care must be exercised in the execution of the audit and in the preparation of the opinion."
Professional care is applicable for all professions, since any service that is provided to the public must be done with all the diligence of the case, the opposite is negligence, which is punishable.
The auditor's professional dedication is not only applied in the field work and preparation of the report, but in all phases of the audit process, that is, also in strategic planning or planning, taking care of materiality and risk.
These standards are more specific and regulate the form of the auditor's work during the development of the audit in its different phases (planning field work and preparing the report). Perhaps the main purpose of this group of standards is for the auditor to obtain sufficient evidence in their working papers to support their opinion on the reliability of the financial statements, for which, adequate strategic planning and evaluation are previously required. of internal controls. Currently the new opinion emphasizes these aspects in the scope paragraph.
4. Planning and Supervision
"The audit must be properly planned and the work of the auditor's assistants, if any, must be duly supervised"
5. Study and Evaluation of Internal Control
«The internal control structure (of the company whose financial statements are subject to audit should be properly studied and evaluated as a basis to establish the degree of confidence it deserves, and consequently, to determine the nature, scope and timeliness of the procedures audit".
6. Sufficient and Competent Evidence
"Competent and sufficient evidence must be obtained, through inspection, observation, inquiry and confirmation to provide a reasonable basis that allows the expression of an opinion on the financial statements subject to the audit."
As can be seen from the statement of this standard, the auditor, by applying the audit techniques, will obtain sufficient and competent evidence.
Evidence is a set of proven, sufficient, competent and pertinent facts to support a conclusion.
These standards regulate the last phase of the audit process, that is, the preparation of the report, for which the auditor will have accumulated sufficient evidence, duly supported in his working papers.
For this reason, this group of standards requires the report to set out how the financial statements are presented and the degree of responsibility assumed by the auditor.
7. Application of Generally Accepted Accounting Principles (GAAP)
"The opinion must express whether the financial statements are presented in accordance with generally accepted accounting principles."
The generally accepted accounting principles are general rules, adopted as guides and as a basis for accounting, approved as good and prevailing, or we could also conceptualize them as laws or fundamental truths approved by the accounting profession.
However, it is worth clarifying that GAAP are not principles of nature but rules of professional behavior, so they are immutable and need to be adapted to meet the changing circumstances of the entity where the accounting is kept.
GAAP guarantees the reasonableness of the information expressed through the Financial Statements and its observance is the responsibility of the company examined.
8. Author's opinion
"The opinion must contain the expression of an opinion on the financial statements taken in their entirety, or the assertion that an opinion cannot be expressed. In the latter case, the reasons that prevent it must be indicated. In all cases, where the name of an auditor is associated with financial statements, the opinion must contain a clear indication of the nature of the audit, and the degree of responsibility it is taking.
Let us remember that the main purpose of auditing financial statements is to express an opinion on whether or not they reasonably present the financial situation and results of operations.
The case may arise that despite all the efforts made by the auditor, he has been unable to form an opinion, then he will be forced to refrain from giving an opinion.
Therefore, the auditor has the following alternatives of opinion for his opinion.
- Clean or unqualified opinion Qualified or qualified opinion Adverse or negative opinion Refraining from opinion
NIAs
They are international standards regulated by each country according to its laws, which must be applied.
In a mandatory manner, in the audit of financial statements, with the necessary adaptation, it must also be applied to the audit of other information and related services.
In exceptional circumstances, an auditor may deem it necessary to depart from an ISA to more effectively achieve the objective of an audit. When such a situation arises, the auditor should be prepared to justify the deviation.
ISA Subject Number and Title
- 100 - 199 Introductory Information 200 - 299 General Issues 300 - 399 Planning 400 - 499 Internal Control 500 - 599 Audit Evidence 600 - 699 Use of Others' Work v 700 - 799 The Audit Report. v 800 - 899 Specialized Areas. 900 - 999 Related Services 1000 - 1100 Audit Statements
III. Companies required to submit the audited financial statement
Standards that regulate the presentation of financial statements in Peru.
The regulation for presentation of financial statements. NIC 01, Res. CONASEV-103-99-EF, establishes:
CONASEV in Peru, qualifies the Companies with Legal Status, who must present Audited Financial Statements, and basically they are:
- Companies with legal status that are listed on the Stock Market or registered in the Public Registry of the Stock Market (RPMV), or SAA. Foreign Companies Companies that have subsidiaries (The parent is obliged to present audited financial statements including its subsidiaries). Stock brokers
Conclusions
- The auditor has the responsibility based on their experience, principles and standards to generate confidence when giving their opinion, which allows them to understand in a clear way the risks, relevant aspects, advantages, weaknesses and opportunities for improvement in the activity or audited area so that staff can feel satisfied with the result obtained. NAGAs These are general standards that apply throughout the examination process and are basically related to the fundamental conduct of the auditor as a human person and regulate the requirements and skills that must be met to act as an auditor. ISAs These are international standards regulated by each country according to its laws.
Bibliography
- WARRIORS MEZA, Jesus. (2015). Financial Audit I. "Theoretical and normative foundations of the Financial Audit". Editorial Universidad Peruana Los Andes. Huancayo, Peru. (pp. 24-31) ACUÑA JARA, Silvio Wilder. (2010). Financial Audit Course, NAGAs and NIAs. Alas Peruanas University. Lima Peru. (pp. 9-10) CAÑIBANCO, L. (2001). Audit Course. Ed Pyramid. Madrid Spain. MAYTA HUIZA, Dora. (2011). Financial Audit. Ed José Carlos Mariategui University. Moquegua, Peru. (pp. 22)
