How does audit work?

Audit of final accounts and annual reports is dividing to 3 main period:

• Preparation of audit - which purpose is to know the way of business, control systems and accounting systems, based on which plan the auditor have, as will be doing audit of annual report auditor's team
• Participation in physical inventories held ? is very important to make sure about correction of stocking, which is doing to capture all the relevant facts (eg,  wear, older inventories, depreciation) and not only were, from the table
• actual implementation of the annual audit of accounts and annual report - which examines in detail the audit team, every indication is given in the financial statements, annual report or the report on relations between related parties (the obligation to prepare according to § 66a of the Commercial Code, if there are connected persons), that all the appropriate statements, annual report, the report on relations between related parties but also in the Annex, which further defines the different information in the statements

After mastering all the steps and after assembling all information and findings from them, the auditor will issue its own statement in which it  expressed its opinion on the actual annual financial statements and the report on relations between related parties, if you truly and fairly reflect reality, in which the entity is.

What is required from the client during the audit?

The preliminary audit team needs to acquire basic knowledge of the client and the most needed in the audit of annual financial statements:

• the latest published annual financial statements (for example, in negotiations to open the audit of annual financial statements for the year 2008, needs to complete annual financial statements for the year 2007, where the complete financial statements covered the balance sheet, profit and loss account, any other  financial information, such as cash flow or cash flow statement, statement of changes in equity if the entity is to draw up, and very important is itself an annex to the financial statements)
• basic documents establishing the company (in particular the latest current certificate of incorporation, statutes or memorandum or articles of incorporation, according to the type of company or entity that is subject to audit
• If there was an exchange of auditor and audit for our company is the first audit of the customer, also the last statement (or statements if there were more) of the previous audit

  So it is all about the published data (today is a duty for companies to publish all these documents in the collection of documents on  the commercial register). An updated list of requirements for the implementation of the various steps in different phases of the audit specifies our audit team on the basis of knowledge of the client, that  his way of business, control system and accounting system. During the various stages of the audit more detailed information specifying the analysis of our audit team in terms of performance of our services. Most frequently are:

  • Directive to business rules, particularly in the area of accounting, but also the internal controls - the stage preaudit (useful in electronic form is in Word or in pdf format)
  • item inventory indicating the numbers of in-house or description, name, quantity, unit of measure in which the quantity is expressed, the unit transfer cost, or even selling price, if this information is on file at the client is kept, and where the total transfer cost price data is multiplied by the number of in-house cost x unit price, date of last purchase in the entry, where such information is available - in the process of participation in physical inventory (good in electronic form, is preferably in Excel)
  • Background for item listened, item is a detailed inventory of what constitutes the sum of the individual balances of balance sheet accounts categorized according to specified criteria (eg  assets and liabilities according to their age, the work in progress, semi-finished goods, indicating a  calculation unit transfer prices) -- at the actual audit (appropriate in electronic form, is preferably in Excel or Word, by nature item list) annual financial statements, annual report and report on relations between related parties - at the actual audit (appropriate in electronic form, is preferably in Excel and Word)

  •  It is important to inform the company audit of all relevant information relating to management, changes in business, changes in-house organization, internal directives and competencies or-house circulation and functioning of the body.

For what is auditor responsible?

The auditor or audit firm to audit the annual financial statements, annual reports and reports on relations between related parties, is responsible for his opinion. If his statement misrepresenting significant factor which could or had to know, and did not alert to this fact in its operative part, responsible for the consequences that may arise such disinformation. Most often it is then the compensation of losses incurred due to such incorrect statement. In such a situation and think themselves the Law on Auditors and therefore requires that each every  auditor and audit company was compulsorily insured in such cases. Of course it?s on the every  auditor and audit company the extent to insure and at what amount of insurance that is directly related to the fact what extent the audits, both risky and safe access to the elected auditor or audit firm, in audit, therefore, if adapt their audit procedures expectable finding of no significant risk of error

Our company INTERAUDIT LUTO 21, Ltd. is working intensively on a  constant improvement of audit techniques, such events that preceded it. The established quality management system audit in our society constantly are checking whether all employees and partners shall comply with the established quality management system performance audit. At the same time continuously, according to the size of our turnover, which is connected with size of the risks to which they are working in our audits, updated annually and the insurance amount to which we are insured. The quality management system we enforce adherence to key principles, which as a system of ?two eyes?, so that the conclusions of the evaluation findings will never impact on the final statement did not decide just one person, but to always consulted with other members of the audit team, or .  other partners or colleagues in the network of companies, according to the seriousness of the problem

What is the usual price of audit?

Usually based on forecast prices audit the annual accounts, annual reports and reports on relations between related parties, the  following criteria:

• the value of assets (ie net worth)
• the value of equity (that different and own resources 
• the value of liabilities (in the broad sense, therefore, more foreign sources)
• the value of operating results
• reasonably foreseeable risk of fraud or error, in the body, based on preliminary assessment of inherent risk of errors based on the particular business and control risk, in particular based on the level of in-house control systems, system management and accounting system

Of the pre-known data, then calculates the price which had to take into account an acceptable level of risk of claims due to significant non-detection error auditor or audit firm

To illustrate (as it is already clear from the list of input data, the resulting price is calculated from the multi-criteria formula), if the value of the assets of the entity as objective at CZK 100 million, the estimated error by the auditor should be moved eg  Level 2 mil, and the price of insurance for the damages of this magnitude would be at the level of eg  30 thousand. CZK, then the price of the audit had to reckon with such item in the structure of prices. Other items are counted, of course, labor intensive performance audit is the estimated time span needed to implement quality x price audit work required by the individual team members, plus the necessary overhead costs (travel, use of administrative needs, such as telephone, internet, computers, software, etc. . ), and then sum calculated total cost for auditing the annual accounts. Usually the compulsory audited business companies from small business (according to global criteria of the Committee on International Auditing Standards), the price varies around the normal level of 100 thousand. CZK for auditing the annual accounts, annual reports and reports on relations between related persons during an accounting period.

How much time is needed to plan the audit?

Inherently very dependent  on the size of business, the level of the internal control system and the level of the accounting system. Therefore, it is very individual, but as an indication it may be noted that at least one full working day for every stage of the annual audit of financial statements, annual reports and reports on relations between related parties is needed to audit the client directly, that is the sum total of at least three working days. And here in this estimate is calculated  is actually a simple body that has a business just as the buying and selling of goods, and trades with only one commodity, has built sufficient internal control system, management system and accounting system. In addition, it is necessary to count with a certain time load for the preparation of documents that can be sent to the auditor or audit firm, by mail or electronically way. 

In terms of time of execution, negotiation and submission of final audit report is also needed to count a minimum of 10 days for processing of the conclusions from the findings in the audit, evaluation and preparation of the final audit report to the annual accounts, annual report and on relations between related parties

Accounting and economic consultancy, is part of the audit?

General advice is not part of the audit because the audit is to express the opinions of third parties independent of the fact whether the data are reported accurately and honestly expressed. And just to comply with the rules expressed the view that such person is independent, which is the most basic prerequisite for a credible audit opinion, not the same person perform both audit and accounting advice or economical, because it would threaten the INDEPENDENCE.

In general, however, can be ordered from the same audit firm at the same time accounting, or economic advice, where appropriate, tax advice, but it is necessary to ensure that persons who are in the audit team did not participate in themselves to advice, that is not of the same persons in the creation of advisory outputs, such as the audit.

What is the usual price of accounting and financial advice?

Usually based on the award of a consultancy in general, the hourly price. Of course, this price depends on the Hour  of expertise and complexity of the issue and in relation to the team is then deployed, according to the specialization and according to relevant experience.

Generally you can only say that the hourly rate can range from 600, - CZK per 1 hour of pure power (power required for the preparation and implementation guidance) for the usual wage issues, to over 2.500, - CZK / 1 hour of pure work, usually issues in international accounting, consolidation, transformations and international taxation. In terms of conversion, especially the border is necessary first to set targets, then the resulting choice of conversion, on the basis of individual steps, and after such plan is possible to estimate the total cost for the design oversight in transformations both domestic and cross border.