Frequently asked question to audit annual report
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)
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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
Frequently asked question to valuation companies, assets, liabilities and equity
In which case it is necessary to use the work of an expert?
The main impetus for the valuation of businesses are:
- law has required the Purchase and sale of the company (under § 2177 ZOK ) valuation, but it is important for owners and for managerial decision
- non-monetary contribution is the amalgamation,?Illiquid capital (§ 327 ZOK ) merger, or the company ceases, which is a new subject from 1.7.2008 for copies of expert reports by Act No. 125/2008 Coll. On the transformation of companies and cooperatives, or non-monetary contribution may be the company, or part of the transfer of know-how, or sole shareholder and as u, Ltd. and also a new limited partners in pieces,
- Valuation of assets and liabilities of the company (initially under § 69a, paragraph 6, § 69C, paragraph 5 and § 69d, paragraph 8 of the Commercial Code - Commercial Code and under the new Act No. 125/2
- 008 Coll. On the transformation of business companies and cooperatives, according to the applicable provisions of the new Act) , the transformations:
- mergence (A to B)
- fusion (A with B to C)
- change of the law form (for example. A, shareholder to A, Ltd.)
- fission (from A to B and C)
- combination of the above basic transformations (e.g., merge partition, that is from A to B only part of A)
- written report to members on the merger project (originally § 69a, paragraph 6, § 69C, paragraph 5, OBZ) and the new expert report on the conversion (pursuant to Act No. 125/2008 Coll. On the transformation of commercial companies and cooperatives or expert opinion (for change of legal form originally § 69d, odst. 8, ObZ)
- or valuation of certain parts of the company (such as receivables, such as raising capital for companies, often to strengthen their own resources to the value of equity is not reduced below 1 / 3 of the capital, or off minus the value of equity - the threat of insolvency) class company (for example for banks, or future creditor, ?)
- rendition loan
- deciding between revitalization or destruction
- as part of the management
- compensation for expropriation (and for purposes of privatization)
The studies produced for the needs:
- State authorities under Act No. 526/1990 Coll. On prices in the current version, the coverage as required by state authorities as defined in § 1, paragraph 2, point. b) Act on prices and if required by the Act No. 265/1991 Coll. on the scope of authorities of the Czech Republic in the prices in the current edition
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- For purposes of the Insolvency Act by Act No. 182/2006 Coll. Bankruptcy and ways to solve (Insolvency Law), in the current version, where it is determined that the valuation made by the bankrupt is included in the inventory of a bankruptcy, but if required creditor committee , perform a valuation expert of the Law on Property Valuation
- To determine the legal fees pursuant to § 6, paragraph 1, of Act No. 549/1991 Coll., The court fees, up to date by the end of 2000, setting the basis for a percentage fee according to the law of property valuation and 1.1.2001 is determined fixed amount
- For purposes of inheritance tax, gift tax and real estate transfer tax, in accordance with Act No. 340/2013. On inheritance tax, gift tax and real estate transfer in the current text as follows:
- according to § 4, paragraph 2, for inheritance tax
- For purposes of determining the administrative fees in accordance with § 5, paragraph 1, of Act No. 634/2004. On administrative fees, in the current version
- For income tax purposes, in accordance with Act No. 235/2004. On income taxes in the current text, namely:
- according to § 3, paragraph 3, for non-cash income
- according to § 10, paragraph. 5, pro case (right) obtained by exchange or win
- according to § 23, paragraph. 6, for expenditure on completed extensions and building modifications, reconstruction and modernization of individual assets, not the technical evaluation, which means if, if these costs outweigh the individual assets in the aggregate for the taxable year 1995 the amount of 10.000, - CZK for the tax the 1996 amount of 20.000, - CZK for the taxable year 1998 the amount of 40.000, - CZK, and that the taxpayer had not applied voluntarily at the threshold
- according to § 29, paragraph 1, for fixed assets in determining the replacement cost of immovable cultural monuments and the price according to Decree No. 279/1997 Coll., which implements certain provisions of Act No. 151/1997 Coll., the valuation of assets and change some laws, in the current version
- For the purposes of value added tax, in accordance with Act No. 235/2004 Coll., On value added tax, in the current text, namely:
- free of charge in the case of taxable transactions, the use of goods, services, construction, and unfinished buildings for purposes other than the business of the payer, the use of a private car and returnable bottles, leasehold improvements leased tangible assets, the disposal of assets from the assets of the payer, the use of personal car and issuing shares or share settlement upon liquidation
- in the case of higher prices for taxable transactions carried out by having a special relationship with the payer
What is the usual price of expertise for valuation?
Usually based on forecast prices of expert opinion on the value of the company, if a valuation of the company, but similarly affect the criteria that are taken into account when estimating the price of the audit. Usually the price range of exper t opinion about the limits 0.01% to 3.5% of the value of the enterprise or the part of the company, according to the size and complexity of the undertaking or part of the company, which is the subject of awards, building on the accounting for the price (Of course, so as not to affect the resulting value of the awards).
Frequently asked question to accounting and economic service
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.