NAGAS generally accepted auditing standards in Peru
1. Concept
The Generally Accepted Auditing Standards (NAGAS) are the fundamental auditing principles that auditors should follow in their performance during the audit process. Compliance with these standards guarantees the quality of the auditor's professional work.
Origin
The NAGAS, has its origin in the Bulletins (Statement on Auditing Standard - SAS) issued by the Audit Committee of the American Institute of Public Accountants of the United States of North America in 1948
2. The Nagas In Peru
In Peru, they were approved in October 1968 on the occasion of the II Congress of Public Accountants, held in the city of Lima. Subsequently, its application has been ratified in the III National Congress of Public Accountants, held in 1971, in the city of Arequipa.
Therefore, these standards are mandatory for the Public Accountants who carry out the audit in our country, since it will also serve as a measurement parameter of their professional performance and for the students as guide guides of conduct where they will have to walk when be professional.
Classification Of The Nagas
At present the NAGAS, in force in our country are 10, the same that constitute the (10) ten commandments for the auditor and are:
General or Personal Norms
1. Training and professional capacity
2. Independence
3. Professional care or dedication.
Work Execution Standards
4. Planning and Supervision
5. Study and Evaluation of Internal Control
6. Sufficient and Competent Evidence
Report Preparation Rules
7. Application of Generally Accepted Accounting Principles.
8. Consistency
9. Sufficient Disclosure
10. Auditor's opinion
3. Definition of Standards
These standards, due to their general nature, apply to the entire examination process and are basically related to the functional conduct of the auditor as a human person and regulate the requirements and skills that must be met to act as an Auditor.
Most of this group of norms are also contemplated in the Codes of Ethics of other professions. The Rules detailed above are defined as follows:
1st Training and Professional Capacity
As can be seen from this standard, it is not only enough to be a Public Accountant to perform the function 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 with good direction and supervision is required. 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. The opposite would be to deny its own existence because it will not guarantee professional quality to users, this despite the fact that the rules to regulate their performance are multiplied.
Independence
"In all matters related to the Audit, the auditor must maintain independence of judgment."
Independence can be conceived as the professional freedom that assists the auditor to express his opinion free from 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 5), approved by Resolution CONASEV (No. 014-82-efc / 94.10).
• Law for 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 Audit Companies, approved by Comptroller Resolution No. 162-93-CG.
• Government Auditing Standards - NAGU, approved by Accounting 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.
Care or Professional Care
Professional care is applicable to 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. A professional may be very capable, but he totally loses his value when he acts negligently.
The professional dedication of the auditor 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 planning or strategic planning, taking care of materiality and risk.
Therefore, the auditor will always have the purpose of doing things well, with all integrity and responsibility in their performance, establishing a timely and adequate supervision of the entire audit process.
Work Performance Standards
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 an adequate strategic planning and evaluation is previously required. of internal controls. Currently, the new opinion emphasizes these aspects in the scope paragraph.
Planning and Supervision
"The audit must be properly planned and the work of the auditor's assistants, if any, must be properly supervised."
Due to the great importance given to planning in recent years at the national and international level, today strategic planning is conceived as a whole work process to which much emphasis is placed, using the "top down" approach. In other words, it should not be started by reviewing individual transactions and balances, but by taking knowledge and analyzing the characteristics of the business, the organization, financing, production systems, functions of the basic areas and important problems, the economic effects of which could have a significant impact on the financial statements subject of our examination. Logically, the planning ends with the preparation of the audit program.
In the case of an audit commission, the supervision of the work must be carried out in a timely manner throughout all the phases of the process, that is, planning, field work and the preparation of the report, guaranteeing its professional quality. In the work papers, this supervision must be recorded.
Study And Evaluation Of Internal Control
«The internal control structure (of the company whose financial statements are subject to audit) must be studied and properly evaluated as a basis for establishing the degree of confidence it deserves, and consequently, for determining the nature, scope and timing of the procedures audit".
The study of internal control constitutes the basis for relying or not on accounting records and thus being able to determine the nature, scope and timeliness of the audit procedures or tests. Currently, much emphasis has been placed on internal controls and their study and evaluation leads to a whole process that begins with an understanding, continues with a preliminary evaluation, compliance tests, revaluation of controls, finally arriving - according to your evaluation results - to limit or expand substantive testing
In this sense, the internal control works as a thermometer to graduate the size of the supporting tests.
The modern conception of internal control includes the components of the control environment, risk assessment, control activities, information and communication, and those of supervision and monitoring.
The evaluation methods that are generally used are: descriptive, questionnaires and flow charts.
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 relevant facts to support a conclusion.
The evidence will be sufficient when the results of one or more tests ensure the moral certainty that the facts to be proved, or the criteria whose correctness is being judged have been reasonably proven. We auditors also obtain sufficient evidence through absolute certainty, but mostly with moral certainty.
It is important to remember that it will be the maturity of the auditor's judgment (obtained from experience), which will allow him to achieve sufficient moral certainty to determine that the fact has been reasonably proven, in such a way that as it decreases (decreases) across auditors' different levels of experience moral certainty will be poorer. That is why the supervision of the assistants by experienced auditors is required to achieve sufficient evidence.
Evidence is competent when it refers to facts, circumstances or criteria that are of real importance in relation to the matter examined.
Among the kinds of evidence that the auditor obtains we have:
• Evidence about internal control and the accounting system, because both influence the balances of the financial statements.
• Physical evidence
• Documentary evidence (originated inside and outside the entity)
• Journals and ledgers (includes computer-processed records)
• Global analysis
• Independent calculations (computation or calculation)
• Circumstantial evidence
• Subsequent events or events.
Report Preparation Standards
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 state how the financial statements are presented and the degree of responsibility assumed by the auditor.
Application of Generally Accepted Accounting Principles (GAAP)
Generally accepted accounting principles are general rules, adopted as guidelines and as a foundation in relation to 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.
In any case, it is up to the auditor to reveal in his report whether the company has been framed within the accounting principles.
4. Auditor's Opinion
“The report 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.
Recall that the main purpose of the audit of financial statements is to issue an opinion on whether or not they reasonably present the financial situation and results of operations, but the case may arise that despite all the efforts made by the auditor, If you have been unable to form an opinion, then you will be forced to refrain from giving an opinion.
Consequently, the auditor has the following alternative opinions for his report.
to. Clean or unqualified opinion
b. Qualified or Qualified Opinion
c. Adverse or negative opinion
d. Abstention from opinion
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