Audit Services in Azerbaijan
An audit provides for an independent check of the annual financial statements of economic entities according to the law in order to establish correct, complete and accurate reflection of fixed assets, financial results, assets and liabilities. The basis of the audit is the mutual interest of the state, the management of the enterprise and its owners (investors, shareholders).
We would like to inform you that there are such types of Audit Services as statutory, voluntary, general, tax, express, etc. Nevertheless, Statutory Audit is the most popular and widely used type today.
We would like to note that the Civil Code, the Audit Service and Accounting Acts of the RA and other documents of a regulatory and legal nature contain information about the concept of statutory audit and its mandatory nature.
A statutory audit of financial statements is a review of company documents by an individual auditor or a group. Its purpose is to provide a correct conclusion on reliability of all calculations from the point of view of the materials presented. The result of this type of audit is called an audit report.
«SME» LLC provides this service to LLC’s, joint-stock companies and organizations with a different form of ownership which need a statutory audit. Company also organizes advisory reviews of certain institutions.
Who should undergo a statutory audit?
By law, statutory audit does not apply to all limited liability companies, but only to medium and large enterprises. In other words, micro and small business entities are exempted from the annual statutory hiring of an independent auditor (external audit) for the abovementioned purpose.
What subjects are related to micro and small business?
By Decision 556 dated December 21, 2018, the Cabinet of Ministers of the Republic of Azerbaijan approved the criteria for the breakdown of micro, small, medium and large enterprises in the following order:
|Categories of business entities by size||Average list number of employees (man)||Annual income (ig) (thousand manats)|
|Micro entrepreneur||1 – 10||ig ≤ 200|
|Small entrepreneur||11 – 50||200 < ig ≤ 3 000|
|Medium entrepreneur||51 – 250||3 000 < ig ≤ 30 000|
|Large entrepreneur||251 and more||30 000 < ig|
Stages of the Statutory Financial Audit
- Preparation for the Audit (Planning Stage)
Conventionally, this stage can be divided into two parts. First, the auditor develops an audit plan, determines the time necessary for this, the audit group and sends a request. In addition, when “joining the project” the following is drawn up:
- a work plan for accounting areas and members of the audit team
- an audit program
- Data Collection and Analysis (Holding Audit)
At this stage, the compilation and compliance of primary documents, financial accounting documents and transactions carried out in the registers with the requirements of the legislation, regulations, company accounting policies, reliability of settlements and other important standards are checked. Then, audit documents are collected to draw a conclusion on reliability of the financial statements.
- Formation and Submission of Audit Report
At the second stage, on the basis of the audit and the evidence gathered, all important facts of the case are analysed, a conclusion on the reliability of the organization’s financial statements is drawn, and an audit report is submitted.
Undoubtedly, obtaining an audit conclusion is the main objective of the audit. The check results can be divided into two parts:
- Unchanged audit report – this report is provided if the financial statements comprehensively and reliably reflect the facts of economic activity and the financial condition of the structure audited,
- Changed audit report – this report is presented to the client when serious mistakes are found in the financial statements, or when the auditor cannot approve the financial statements at all. It should be noted that the information obtained during the audit is a commercial secret and is not disclosed to third parties.
Cost of Statutory Audit Services
In general, it should be noted that the total cost of the Statutory Audit depends on the amount of current work. In addition, the following factors also influence the price:
- Organization’s activities
- Time spent for checking
- Financial performance
- The number of employees involved in the financial statements
This type of audit is a check organized at the request and initiative of a company or organization. Voluntary Audit is carried out according to the same methodology as the Statutory Audit. Its purpose is an independent expression of the opinion of the inspector (auditor) on reliability of the financial statements. The difference from the Statutory Audit is that the Voluntary Audit is carried out not at the mandatory requirement of compliance with the law, but directly at the request of the customer.
The Tax Audit is carried out by a special audit company which has the appropriate license and state-accredited auditors, according to the requirements of the law.
In general, an external audit involves obtaining the most objective assessment of the company’s accounting. Thus, involvement of third-party experts using proven tax audit methods helps to confirm the correct operation of the enterprise or, conversely, to identify deficiencies.
Express Audit is carried out at Customer’s request. Typically, Express Audit is organized to determine the current status of tax reporting on financial and economic activities of the enterprise and the possible results of a tax audit. Express Audit differs from other types of audits in that this type of audit, as a rule, less focuses on primary documents, and the main focus is on assessing the work of the enterprise as a whole with studying the aspects of the enterprise, the adopted tax and accounting algorithms. During this audit, deficiencies are identified that lead to distortions in the reporting data and the amount of tax liabilities. Based on the information received, the client is provided with a report that reflects the identified deficiencies and recommendations for their elimination.
«SME» LLC offer you highly professional services in all types of Audits. We would like to emphasize that we ensure the confidentiality and non-disclosure of all customer information.