Audit of financial statements
The purpose of financial audit is to increase the degree of confidence of potential users in financial statements. This purpose is achieved by expression by an auditor of opinion on whether the financial statements are prepared and presented faithfully and adequately in all material respects in accordance with the applicable basis and principles of financial statements presentation. Transparency and adequacy of financial statements of a company determine today long-term prospects for development of business and are considers as the cornerstone of investment attractiveness thereof.
In accordance with the legislation, the audit can be compulsory or voluntary.
The following entities are subject to compulsory audits:
- Joint-stock companies;
- Enterprises founded on the right of economic competence with supervisory bodies in the spheres of education and public health;
- Insurance (reinsurance) organizations, insurance holding companies where an insurance (reinsurance) organization and (or) an insurance holding company are major participants, insurance brokers;
- Pension Saving Funds and organizations exercising investment management of pension assets;
- Banks, bank holding companies and banking organizations where a bank and (or) a bank holding company are major participants;
- Natural monopoly entities, except for small ones;
- Civil aviation organizations, except for airline companies carrying our air operations according to the list as specified by the Government of the Republic of Kazakhstan;
- Cereal receiving stations;
- The Insurance Payment Guarantee Fund;
- Legal entities of the Republic of Kazakhstan, having concluded the investment contracts which provide for investment preferences;
- Cotton processing enterprises;
- Special financial companies in accordance with the Law of the Republic of Kazakhstan “On Project Financing and Securitisation”;
- Real estate developers and engineering companies in accordance with the Law of the Republic of Kazakhstan “On Participation in the Funding of Residential Construction”.
The organizations which are subject to compulsory audits and which in accordance with the legislation of the Republic of Kazakhstan should publish in printed periodicals their annual financial statements and must publish audit reports together with such annual financial statements.
Voluntary audits are most often carried out by resolution of the administration or founders of a company or otherwise.
Initiators of voluntary audits may include:
- Founders and shareholders, wishing to know whether in a previous period the company managed and administered its funds and resources efficiently, or how much the return on investments made by the shareholders is;
- Managers and directors, in the event of change of accountants or raising of a loan;
- Accountants before tax audits;
- Investors, when making an important decision on investing in one or another enterprise and venturing their money;
- Other persons concerned.
Purpose of voluntary audits:
- Check, verification and analysis of business and tax accounting records, elimination of any violations for avoidance of any fines or penalties by way of identification of irregularities in business accounting, taxation and document flow/management/control ;
- Taking inventory of assets and liabilities;
- Minimization of financial, business, accounting and tax risks of an owner;
- Check and verification of calculations and adequacy of presentation thereof in financial statements.
Audit of financial statements is carried out by us in compliance with the International Auditing Standards. During performance of an audit of financial statements, the auditor shall be provided with all the necessary information, which will require consumption of time by the management and personnel of an audited company. Therefore, we always do our best to carefully plan and schedule our audit, and the procedures developed by us allow us to minimize our clients’ time outlays connected with the audit of their financial statements.
The approach used by AKF Sapa-Audit LLP to performance of audits is oriented towards identification of risks and is based on comprehensive knowledge of our clients’ business, their inherent risks and effect thereof on the financial reporting.
Our approach includes also evaluation of internal controls efficiency. We will submit to a company’s management and supervisory bodies a Letter to the Management and Representatives of the Owner about Internal Control Weaknesses revealed in the course of the audit.
Opinion on adequacy of presentation of information in financial statements of a Company will be expressed in an Independent Auditor’s Report.
All and any irregularities found in accounting records and financials statements will be reported to the Management of an audited company in our Letter to the Management according to results of the audit.
It is clear that the services provided by an auditor must be paid for. For this reason some companies perform an audit of their financial statements on their own. However, it is important to note that an auditing company having a license for provision of audit services will perform an audit more professionally, which will increase confidence in financial statements.