Internal audit of the financial condition of the enterprise. Financial audit

Hobby

13.02.202127.05.2017

Ministry of Agrarian Policy of Ukraine

Lugansk National Agrarian University

Department accounting and audit

COURSE WORK

in the subject "AUDIT" on the topic:

"Audit financial condition enterprises"

Completed:
student
Faculty of Economics
groups

Checked:
Skorobogatova
Elena Valerievna

Lugansk
2004

Content:

Introduction
1. Theoretical foundations and legal framework for regulation
audit activities
2. General principles of audit organization
2.1. The essence, task and functions of audit in market conditions
economics;
2.2. Organization and planning of audit activities;
2.3. The sequence of the audit and its execution
results.
3. Methodology for auditing the financial condition of an enterprise
3.1. Objectives, sequence of the audit and its information
security;
3.2. Express balance audit;
3.3. Audit of financial and property status;
3.4. Solvency audit;
3.5. Analysis of balance sheet liquidity.
4. Assessment of the state of on-farm control and compliance
enterprise accounting policy
conclusions
List of used literature.
Application
Audit work program

Introduction

The formation of audit activity is associated with the formation of market relations, privatization of state property, reform and development different forms property, including private property, by granting independence in business activities to business entities. In this regard, there is an increasing need for the reliability of accounting and reporting data for a wide range of external and internal consumers of information about the business activities of enterprises in order to prevent risk when investing their capital and control their effective use.
Ukraine's transition to market relations predetermines the need to create economic institutions that regulate the relationships between different business entities. The leading place in this process can be taken by the auditing institute. This is especially important for agriculture, where fundamental changes have taken place.
The situation that has developed in agriculture requires an organization of independent control that would facilitate the validity of management decisions based on taking into account identified violations in accounting, financial and tax reporting.
In this regard, audits at enterprises should be organized and conducted according to such methodological approaches that would ensure the reliability of checks of compliance with the reflection in the accounting registers and reporting of the fixed assets available on the farm, fuel and lubricants, spare parts, raw materials and other materials for the audit period, as well as the reliability product costing and evaluation during processing and sales; determination of financial results; drawing up accurate, complete and timely reporting in the accounting and reporting of business facts, obtaining evidence to confirm it and conveying this truth through the audit conclusion to users of information.
In the situation that has developed in enterprises and the Ukrainian economy as a whole, the most pressing issue is the audit of the financial condition of the enterprise. Since carrying out this analysis can reveal the strengths and weaknesses of the enterprise and suggest the choice of making the most rational management decision. This will save the enterprise from bankruptcy, increase the independence, liquidity of the enterprise, etc. depending on the current situation on the farm.

1. Theoretical foundations and legal framework for regulating auditing activities

According to the Law of Ukraine “On Auditing Activities” dated April 22, 1993, an audit is an examination of public accounting statements, accounting, primary documents and other information regarding the financial and economic activities of business entities in order to determine the reliability of their reporting, accounting, its completeness and compliance with the current legislation and established standards.
The concept of auditing is broader and provides for the practical implementation of both audit and other audit services in the form of related examinations, consultations on accounting, reporting, taxation, analysis of financial and economic activities and other types of economic and legal support entrepreneurial activity individuals and legal entities.
Auditing activity began to develop in Ukraine with the transition to market relations, which were determined by the following circumstances:
- the division of accounting into tax and accounting, constant changes in legislation have created a demand for audit and such audit services as providing advice on accounting, law, taxation, direct implementation of accounting and reporting, etc.;
- foreign investors of general enterprises demanded confirmation of the reliability of financial reporting indicators by the auditor;
- creation and development of joint-stock companies, the owners of which are not confident in the reliability of financial reporting indicators and are not aware of the accounting system, the result of which these indicators are.
The subject of audit activity is the process of expanded reproduction of a socially necessary product and compliance with its economic and legal regulation in the conditions market economy.
The objects of the audit are accounting, reliability of reporting, financial stability, solvency, enterprise management system, quality of economic and technical services, taxation, planning, rationing, incentives, on-farm control, organization and technology of production, processes of economic activity, design and estimate documentation, executive discipline, etc.
Audit methodological techniques are a set of methods for studying the legality, feasibility and effectiveness of assessing the activities of an enterprise. Audit methodological techniques are divided into three groups:
1 Techniques of scientific thinking (analysis, synthesis, induction, deduction, observation, comparison).
2. Methods of actual audit (inventory, examination, observation, laboratory tests, examinations (expert assessments), control measurements of work performed, control launch of raw materials and supplies into production).
3. Documentary audit techniques (analogy, modeling, counter-checking of documents, logical understanding of operations, reverse counting method, coefficient method of indirect distribution of consumed materials, special calculations, examination (expert assessments) of documents, balance method, statistical methods (grouping, absolute, relative and average, values, dispersion, standard deviation, coefficient of variation, amplitude of fluctuations, index method, correlation), economic-mathematical method (mathematical model, network planning and management system), heuristic methods, assessment of the reality of the balance, logical verification of the reliability of machine data , techniques economic analysis, software control of information entered into the computer, duplication.
The techniques of actual and documentary audit are interrelated and interdependent. This is revealed in the fact that with any method of actual audit, the verification should end if it is supplemented with the necessary information from the relevant economic and technical documentation. The same situation applies to documentary audit techniques, in which additional data is required on the actual availability of valuables, the integrity of property, the reality of balance sheet items, etc.
The auditor evaluates financial information intended to be presented to users from the standpoint of objectivity and relevance, the sufficient level of which is determined by certain regulatory documents (standards and norms of professional organizations or current legislation).
The International Federation of Accountants, together with the International Committee on Auditing Practices, has developed auditing standards in the amount of 29 basic standards and 4 related works.
The Audit Chamber of Ukraine (AUC) is an independent independent body whose goal is to promote the development, improvement and unification of auditing in the country.
The powers of the Audit Chamber of Ukraine are determined by the Law of Ukraine “On Auditing Activities” and the Charter of the Audit Chamber adopted on October 28, 1993.
In order to regulate the rules and procedures for conducting audits and performing audit services, the APU has developed national audit standards (standards). They are based on the legislation of Ukraine on auditing activities and international auditing standards.
Auditing standards formulate uniform basic requirements that define regulatory requirements regarding the quality and reliability of the audit and provide a certain level of assurance of the audit results if they are met.
Auditing standards are the basis for proving the quality of the audit and determining the level of responsibility of auditors.
Auditing standards define: the general approach to conducting an audit; scope of the audit; types of auditors' reports; the issue of audit methodology, the basic principles that auditors must adhere to, and other issues.
The significance of the standards is that they:
- ensure high quality of audit;
- assist in the introduction of new scientific achievements into audit practice;
- help users understand the audit process;
- create a public image of the profession;
- provide connection between individual elements of the audit process.

2. General principles of audit organization

2.1. The essence, task and functions of audit in a market economy

According to the Law of Ukraine "On Auditing", the concept of "audit" includes organizational and methodological support for the audit, the practical implementation of audits (audit) and the provision of other audit services. Audit services can be provided in the form of audits (audits) and related examinations, consultations on accounting, reporting, taxation, financial analysis economic activity and other types of economic and legal support for entrepreneurial activities of individuals and legal entities.
Along with these types of services, audit firms in Ukraine carry out work on the privatization of property of state-owned enterprises, commercialization of trade, corporatization of enterprises, and prepare materials for the consideration of client cases in arbitration courts. Thanks to the audit, intermediary contacts are made.
The need for an audit is determined by the need of users of information about the real financial condition of a business entity. Users of this information may be:
- representatives of public authorities authorized on the basis of the laws of Ukraine;
- owners, founders of the business entity;
- other legal entities and individuals who have a material interest in the results of the economic and financial activities of a business entity (creditors, investors, suppliers and other persons).
It should also be noted that users of this information have the right in accordance with Art. 9 of the Law of Ukraine “On Auditing Activities” act as customers for audits and other audit services, determine the volumes and directions of audits within the boundaries of authority granted by law, constituent documents or individual agreements.
Objectivity of the auditor's conclusion is a prerequisite and. one of the main specific features. This condition is assumed to be independent to the audit and is dictated by the needs of the users.
Confidence in the reliability and completeness of the information provided by the auditor to users is not absolute. The audit provides only an approximate, although quite high, degree of this confidence.
The audit conclusion cannot be evidence of the absolute accuracy of other information and a guarantee of its correctness; it can only confirm the reliability of the information. An audit is the process of reducing the level of information risk for users of financial statements.
The auditor does not approve the reports of business entities and is not responsible for the reporting itself. He only expresses his thoughts regarding financial statements. Responsibility for financial reporting lies with the managers of the business entity that is being audited. The audit does not relieve the management of the entity from responsibility.
The purpose of an audit of financial statements is the auditor's conclusion as to whether the financial statements comply, in all material respects, with the instructions that govern the preparation and reporting of financial statements. Based on the audit results, an audit conclusion is drawn up about the real financial condition of the business entity. So, the purpose of the audit is to draw up an audit conclusion about the financial condition of the entity being audited. The main objectives of the audit are the collection and processing of reliable information about the economic and financial activities of a business entity and the formation of audit conclusions on this basis.
In addition, the audit must adequately reflect all aspects of the activities of the entity being audited. In order to draw a reliable audit conclusion, the auditor must obtain an unconditional guarantee that the information contained in the accounting documentation and primary documents, sufficient and reliable.

2.2. Organization and planning of audit activities

The organization and planning of the audit should be based on knowledge of the client's activities. Information is collected about clients regarding their business reputation, financial condition, relations with the previous audit firm, and, if possible, contacts are established with law enforcement agencies, banks and enterprises with which the client has business relations.
It is important to study the characteristics of the client’s area, legal status and form of business, since this is due to differences in the legislation that regulates production and financial activities. They collect data on the size of the enterprise, specialization, level of profitability, form of accounting, etc. Based on the order for the type of audit services and analysis of the collected information, specific performers are selected, groups of auditors are formed, taking into account their specialization and the most effective use at the relevant facilities. The plan provides for instructing auditors on the performance of their duties and provides all necessary information about the client.
Based on the analysis of data from the previous audit report, acts and certificates of inspections of control and audit bodies and other collected information, risk zones and trust zones are determined in order to direct work to the most important objects and areas. The plan contains a list of inspection objects. At the same time, they determine the development of audit procedures, tests, programs for specific audit objects, the use of computers, inventory items and timing. The plan includes the timing of the audit, the amount of the fee, and the form of settlement with the client.
To implement the plan, an audit program is drawn up (see Appendix). Programs can be typical and individual with varying degrees of detail according to objects and areas of audit.

2.3. The sequence of the audit and the presentation of its results

It is important to organize the audit process in a certain order of work. It is advisable to carry out the audit in stages, in the following sequence.
Stages (stages) of audit:
1. Previous examination of the client's activities.
2. Drawing up an audit plan.
3. Checking the accounting and internal control system.
4. Analytical verification of financial information.
5. Sample survey - obtaining audit evidence.
6. Final review of financial statements.
7. Preparation of the audit report.
After an auditor is appointed to conduct an audit of a particular enterprise, he carries out a preliminary examination of the client's activities. It is necessary to study the enterprise’s reporting for the previous year, analyze changes in the current year in comparison with the past year in terms of gross output, its cost and other indicators. At this stage, the state of accounting and internal control, changes in accounting policies in comparison with the past year are studied in general terms. It is also important to familiarize yourself with the inspection reports of the tax inspectorate, the Pension Fund and other control and audit bodies.
All this makes it possible to form a general imagination about the state of affairs of the client, accounting and control, determine the approximate amount of work and the main areas and objects of the audit, risk areas, and outline appropriate verification methods.
After this, an agreement for audit services is drawn up, and the auditor continues to collect and study additional information about the client company and draws up an Audit plan.
Audit planning is necessary to clearly define the areas of audit, objects and methods of verification.
After drawing up the plan, the auditor conducts an examination of the accounting and internal control system. He must learn the accounting system and the reflection of transactions in the accounting registers of the enterprise, evaluate their suitability for the preparation of financial statements, as well as to determine how to conduct an audit.
The auditor examines the process of reflecting individual transactions, starting with primary documents and ending with reporting; checks the presence of all necessary registers and the order of their maintenance, performs arithmetic checks of turnover and account balances and the results of reports and individual documents; establishes the correctness of execution of primary documents, the use of the chart of accounts, including new accounts entered.
Particular attention is paid to whether new provisions and changes in relation to existing regulations are taken into account when keeping records.
A survey of internal control must be carried out to determine the degree of confidence in the financial reporting information and the actual state of affairs at the enterprise.
The auditor must establish to what extent control ensures: effective operation of the enterprise, preservation of material resources, timely and complete reflection of transactions in accounting.
It is necessary to check the existence of a plan for conducting inventories and its implementation, carrying out control measurements of work, the effectiveness of organizing internal control, including the work of the audit commission of the enterprise, managers at all workplaces (foremen, technologists, etc.), and the competence of supervisory personnel.
The weakness of internal control is indicated by: the absence of separate registers, falsification of documents, unauthorized transactions, the presence of overdue debts, fines, penalties, large cash payments, significant payments to consultants and intermediaries for dubious services, the presence of hidden secrets in law enforcement agencies, etc.
Analytical verification of financial information is carried out to determine trends in production processes, the relationship of economic indicators and identify so-called unusual deviations, calculate economic ratios to assess financial condition and prepare a review of financial information. Analytical procedures include: analysis of indicators in dynamics, in comparison with the plan (estimate), with the same!! indicators of another enterprise that operates in similar conditions. It is important structural analysis(determining the share of individual items in the total amount), which makes it possible to identify the most significant objects of control.
When carrying out the analysis, a variety of techniques can be used, from simple comparison of indicators to economic and statistical methods.
In cases where, as a result of the analysis, unusual deviations are established, it is necessary to examine them in detail, interview the enterprise personnel about the reasons, consider the need for additional procedures (inventory, counter checks of documents, arithmetic recalculations, etc.).
Analytical procedures that are used in an overall financial review should help the auditor make a conclusion about the consistency of financial information with the actual state of affairs of the enterprise, as well as to confirm the conclusions made during the audit on individual elements of financial information.
A sample survey, that is, carrying out independent audit procedures, is carried out to obtain a sufficient amount of audit evidence (evidence), on the basis of which an audit conclusion on the reliability of financial statements is drawn up. This stage is the most responsible and significant. Therefore, here it is necessary to clearly define the objects of inspections, the size of the audit sample, the source of information, techniques and methods of audit procedures, which will be discussed further.
A review of financial information is carried out at the final stage of the audit based on all collected facts and audit materials. A comprehensive review makes it possible to determine, based on the principle of materiality, whether the financial statements are prepared in accordance with the current procedure, whether they correspond to the actual state of affairs at the enterprise, whether all issues in the statements are properly disclosed, whether the financial statements meet the requirements of the law and other regulations. Conclusions drawn from many tests related to the study of financial statements allow us to formulate an audit conclusion.
Preparing an audit report is the final goal of the auditor, which is an audit judgment about the reliability of financial information, as well as developing recommendations, providing advice on correcting errors and eliminating identified deficiencies. The procedure for preparing the audit report is described below.

3. Methodology for auditing the financial condition of an enterprise

3.1. Objectives, sequence of the audit and its information support

Assessment of financial condition is a consideration of each indicator obtained as a result financial analysis, from the point of view of compliance of its actual level with the normal level for a given enterprise, identification of factors that influenced the value of the indicator and determination of the required value of the indicator for the future and ways to achieve it.
The assessment of the financial condition of enterprises is carried out on the basis of an analysis of financial statements. The main source of information when analyzing the financial condition is the standard forms of the annual financial statements of the enterprise, in particular: Balance sheet of the enterprise (form No. 1), Statement of financial results (form No. 2), Cash flow statement (form No. 3), Statement of equity (form No. 4), Notes to the annual financial statements (form No. 5), sometimes (for example, when calculating indicators of market activity of an enterprise, to clarify some liquidity indicators) statistical reporting data, operational accounting information, General ledger, balance sheets, order journals, tax invoices and inventory materials.
Analysis of the financial condition of the enterprise is carried out in the following areas of assessment:
property status of the enterprise;
liquidity of assets and solvency of the enterprise;
indicators of financial independence and capital structure;
indicators of profitability and profitability of the enterprise;
business activity indicators;
market activity.
The methodology for checking the compliance of the presented financial statements with regulatory requirements includes the following stages.
1. Establishment of the reporting period.
2. Checking the composition of financial statements.
3. Evaluation of criteria for financial reporting items.
4. Assessing the qualitative characteristics of financial statements.
5. Assessment of reporting principles.
The auditor determines compliance with the general requirements for the content of the Notes.
During the audit process, the auditor should be guided by P(S)BU regarding the determination of changes in accounting policies.
Based on the procedures performed, the auditor concludes that the financial statements comply with the requirements to provide users with complete, truthful and unbiased information about the financial condition, results of operations and cash flow of the enterprise.

3.2. Express balance audit

According to P(s)BU 2, the “Balance Sheet” is a report on the financial condition of an enterprise, which reflects its assets and liabilities.
Express audit of the balance sheet - promptly received information on the financial condition of the enterprise and conclusions in quickly confirming the reliability of the reflection of data on financial and economic operations in the balance sheet.
Sources of verification: Balance sheet (Form No. 1), General Ledger, balance sheets, order journals, valuables inventory materials, tax returns, etc.
An audit of the correctness of the balance sheet begins with checking compliance:
1. Balance sheet data at the beginning of the year with balance sheet data at the end of last year. When clarifying discrepancies between the opening and closing balances, clarification is required from the chief accountant.
2. Final balance sheet data with the balance of the General Ledger accounts at the end of the year and order journals, the correctness of arithmetic calculations.
3. Comparability of balance sheet items at the beginning and end of the year.
4. Consistency and identity of the amounts of balance sheet items for settlements with financial authorities and the balance sheet at the enterprise and in financial institutions.
5. Interrelation of balance sheet indicators and other forms of reporting.
The correctness of the reflection of assets and liabilities is checked.
The main objects of audit of enterprise assets are intangible assets, construction in progress, fixed assets, long-term financial investments, long-term receivables, deferred tax assets, other irreversible assets, inventories, settlement transactions, current financial investments, cash and their equivalents.
The auditor can confirm that each item is reflected correctly in the balance sheet.
When checking the reliability of intangible assets displayed in the Balance Sheet, the auditor can establish: the correctness of the attribution of assets to them, the determination of the initial, residual value and depreciation, as well as the correspondence of the data on the Balance Sheet items to the balance in the General Ledger account.
Under the item “Depreciation”, the auditor can establish the correspondence of the Balance Sheet data to the credit balance of subaccount 133 “Depreciation of intangible assets” in the General Ledger.
Under the article “Construction in progress”, the auditor establishes the correctness of displaying the cost of unfinished capital investments in construction, creation, production, reconstruction, modernization, acquisition of irreversible assets (including irreversible tangible assets intended to replace existing ones, and equipment for installation), which are carried out by the enterprise, and also advance payments for financing capital construction.
The auditor’s task is to establish the correspondence of the data in the Balance Sheet with the debit balance of account 15 “Capital Investments” of the General Ledger.
Similar to intangible assets, fixed assets are checked in the following areas: the correctness of classifying assets as fixed assets, determining their initial, residual value and demolition, and compliance with the Balance Sheet and General Ledger data.
The auditor can establish the correspondence of the data on the initial cost of fixed assets given in the Balance Sheet with the debit balance of accounts 10 “Fixed assets” and 11 “Other non-current tangible assets” in the General Ledger.
When checking the depreciation of fixed assets displayed in the Balance Sheet, the auditor must find out the correctness of the depreciation object. The object of depreciation is the cost of fixed assets (except for the cost of land and unfinished capital investments).
Checking the correctness of long-term financial investments reflected in the Balance sheet comes down to establishing the correctness of the definition of financial investments and their valuation, compliance with the classification of long-term investments, which are accounted for by the method of participation in the capital of other enterprises, and other long-term financial investments, evaluation of financial investments as of the date of the Balance Sheet.
The correctness of attributing amounts to deferred tax assets and reflecting the calculation of the amount of income tax is checked by the accounting and tax accounting. Special attention The auditor must check the correctness of the display of the amount of deferred tax liabilities, which is subject to reimbursement in subsequent periods due to the difference between the tax base of the calculation for accounting and tax accounting.
Under the item "Other irreversible assets", the auditor checks the correctness of their reflection as those that were not included in the previous items of "Irreversible assets", except for goodwill, which arise upon acquisition.
The auditor must establish the correctness of classifying assets as current and their valuation.
When checking the correctness of the inventory valuation, the auditor can make sure that it was carried out using the lesser of two values: cost (original cost) or net realizable value, as well as their validity.
When checking inventories the auditor ascertains the correctness of classifying assets as inventories, their valuation and compliance with the Balance Sheet data on the General Ledger accounts.
The auditor must establish the correspondence of the Balance sheet data under the article “Animal for growing and fattening” with the debit balance on account 21 “Animal for growing and fattening” in the General Ledger.
When checking the correctness of the reflection in the Balance sheet of work in progress, the auditor must find out that this article reflects the costs of work in progress and unfinished work (services), as well as the cost of semi-finished products of own production and the gross debt of customers under construction contracts.
The auditor’s task is to establish the correspondence of the reflected cost of finished products in the Balance Sheet with the debit balance in the General Ledger for accounts 26 “Finished Products” and 27 “Agricultural Products”.
The auditor must establish the correspondence of the data on the cost of goods in the Balance Sheet with the data of the amount of the collapsed debit balance in the General Ledger for all subaccounts of account 28 “Goods”.
The auditor can establish the correspondence of the amount of bills received reflected in the Balance Sheet with the debit balance in the General Ledger of account 34 “Short-term bills received.”
When checking the accuracy of the display in the Balance Sheet of receivables for goods, works, services, the auditor determines the reflection in this article of the debt of buyers or customers for the products, goods, works or services provided to them (except for debt secured by bills of exchange).
Checking accounts receivable for settlements includes determining the correctness of its reflection in the Balance Sheet in the following areas: with the budget, for advances issued, from accrued income, from internal settlements.
In settlements with the budget, it is necessary to reflect receivables from financial and tax authorities, as well as prepayments of taxes, fees and other payments to the budget. The auditor must establish the correspondence of the Balance sheet data under the article “Accounts receivable for settlements with the budget” with the debit balance of account 64 “Settlements for taxes and payments” in the General Ledger.
Under the article “Accounts receivable for advances issued,” the auditor determines the correctness of the reflection of the amount of advances provided to other enterprises against future payments.
The auditor must establish that the receivables for accrued income reflected in the Balance Sheet correspond to the debit balance in subaccount 373 “Calculations for accrued income” in the General Ledger.
The line “Receivables for internal settlements” may reflect debt for intradepartmental and intra-business settlements and receivables from related parties.
Under the article “Other current receivables,” the auditor finds out that the reflected debt of debtors, which cannot be included in other items of receivables, is reflected in current assets.
When checking “Current financial investments”, the auditor establishes the correctness of the reflection of their composition in the Balance Sheet of investments, their assessments, and the correspondence of the data in the Balance Sheet of account balances in the General Ledger.
When checking the correctness of the reflection of cash and cash equivalents in the Balance Sheet, the auditor first ascertains the correctness of the attribution of assets to them, as well as the correspondence of the Balance Sheet data with the balances in the accounts in the General Ledger.
When checking the correctness of the reflection of other current assets in the Balance Sheet, the auditor must find out that this article reflects the amounts of current assets that cannot be classified as items in Section I of the Balance Sheet “Current Assets”.
When checking the correctness of the display of deferred costs in the Balance Sheet, the auditor must find out that this article reflects costs that occurred during the current or previous reporting periods, but relate to the following reporting periods, and also establish the consistency of the Balance Sheet data under the item “Deferred Costs” " and on account 39 "Deferred costs" in the General Ledger.
After checking the compliance of the asset items of the Balance Sheet, the auditor checks the correctness of the display of account balances in the Balance Sheet liabilities.
Checking the correctness of the reflection of data in Section I “Equity capital” concerns authorized, share, additionally invested and other additional capital.
When checking the data displayed in the articles of the authorized capital, the auditor confirms the correctness of the total value of assets recorded in the constituent documents, which are the contribution of the owners (participants) to this capital of the enterprise.
The test of share capital requires that the value of share capital reflected in the Balance Sheet must correspond to the data in the credit balance of account 41 “Share Capital” in the General Ledger.
The verification of additional invested capital consists of ascertaining the correctness of the reflection in this article by joint-stock companies of the amount of share premium received as a result of the sale of their own shares.
Checking reserve capital comes down to clarifying the reflection in this article of the amount of reserves created in accordance with current legislation or constituent documents at the expense of the retained earnings of the enterprise. The auditor's task is to establish the correspondence of the value of reserve capital reflected in the Balance Sheet with the credit balance on account 43 "Reserve Capital" in the General Ledger.
The auditor checks the correctness of the reflection of retained earnings (uncovered losses) in the Balance Sheet in accordance with P(S)BU 2 “Balance Sheet”.
Checking unpaid capital involves establishing the correspondence of the amount reflected in the Balance Sheet with the actual debt of the owners (participants) for contributions to the authorized capital, that is, the correspondence of the amount of unpaid capital displayed in the Balance Sheet with the credit balance on account 46 “Unpaid Capital” in the General Ledger.
Verification of withdrawn capital consists of establishing the correctness of the reflection by business companies of the actual cost of shares of their own issue or shares purchased by the company from its participants. The auditor must establish the correspondence of the amount of withdrawn capital displayed in the Balance Sheet with the credit balance on account 45 “Withdrawn capital” in the General Ledger.
etc.................

A financial audit is a comprehensive audit of the economic and financial condition of an organization, verification of the reliability of information in the financial statements of the organization, as well as analysis and assessment of the prospects for its development, which can be carried out both by specialists of the organization itself (internal audit) and by third-party audit companies commissioned by management ( independent audit).

In practice, financial audit is more often considered as a very narrow concept, usually including the classic statutory audit of financial statements.

The main purpose of an independent audit is to assess the correctness of accounting in the audited company, as well as to verify the reliability of the financial statements.

During the audit of the financial activities of the organization:

financial risks are identified (tax, legal, administrative, economic);
recommendations are given to reduce them.

The purpose of the audit is to analyze the profitability and efficiency of the company's core, financial and investment activities. To accomplish this task, a detailed study, analysis and evaluation of the information presented in the financial statements of the organization is required.

Internal financial audit of the organization

In our country, internal audit of financial statements is still receiving less attention than it deserves. Internal financial audit is a type of activity of an organization that, on the basis of internal documentation, controls management levels and various areas of the company’s financial activities.

Internal financial audit is carried out by a special department that works as part of the audited company. Such a check is necessary for management to be able to study and analyze the real state of affairs in their organization. Based on the information obtained during the financial audit, management develops ways to improve the organization's performance. The activities of internal auditors are advisory in nature.

To objectively analyze the financial and economic activities of an organization and obtain an impartial report, it is better to resort to the services of third-party audit firms.

The significance of the audit report for the company

The best confirmation of the reliability and honesty of the company in modern times business world serves as the opinion of an independent auditor on the reliability of financial and accounting statements. In addition, the audit report is necessary to confirm the image and business reputation of the company when concluding contracts and agreements with partners or various credit institutions.

Audit report is a document intended for users of the accounting (financial) statements of the audited entities, which contains the expressed opinion of the audit organization, individual auditor on the reliability of the accounting (financial) statements of the audited entity (Article 6 Federal Law“On auditing activities” dated December 30, 2008 No. 307-FZ).

Based on the results of the audit report, the head of the organization decides on the need for specific actions. As a rule, after taking measures, tax authorities do not impose fines when carrying out scheduled inspections. Thus, companies manage to avoid significant financial losses.

Who has the right to audit financial statements?

Audit services can be provided by:

audit organizations - commercial legal entities;
individual auditors are individual entrepreneurs with a qualification certificate of an auditor.

Moreover, in order to engage in auditing, such companies and individual entrepreneurs must be members of one of the self-regulatory organizations of auditors. Audit services can be provided from the date of entering information about the relevant legal entity or individual entrepreneur into the register of auditors and audit organizations of the self-regulatory organization of auditors.

Audit activities are carried out in accordance with International standards audit (ISA), which are mandatory for audit organizations, auditors, self-regulatory organizations of auditors and their employees.

Who has the right to order a financial audit of an organization?

The audit report is presented by an audit organization or an individual auditor only to the person who has entered into an agreement for the provision of audit services - the management (owners) of the company. Depending on the form of activity of the organization, these may be:

participants of the shareholders' meeting;
Board of Directors;
members of a production cooperative;
supervisory board;
executive bodies.

An independent financial audit is necessary for the heads of organizations to objectively assess the effectiveness of financial activities and business.

If a company is subject to a statutory audit of financial and accounting statements, it is its responsibility to obtain an auditor's report.

Criteria mandatory audit financial statements are contained in Art. 5 of the Federal Law of December 30, 2008 No. 307-FZ “On Auditing Activities”.

In particular, organizations that require periodic mandatory financial audits:

organizations that have the organizational and legal form of a joint stock company;
organizations that conduct credit or insurance activities;
mutual insurance companies;
commodity or stock exchanges;
investment state extra-budgetary funds;
organizations in respect of which periodic mandatory financial audits and reports to regulatory authorities are provided for by law;
organizations that issue securities.

The need for a financial audit

In addition to the mandatory audit of financial statements, in practice there are often situations in which conducting a financial audit of a company is desirable:

to evaluate the competence and work of staff accountants in the context of proper accounting;
in case of change of financial director, chief accountant or director of the organization;
to check economic financial statements before submitting them to government agencies and statistics departments;
in anticipation of a tax audit;
if desired, reduce legal risks;
when debts and high production costs arise;
if management plans to sell or acquire an operating business;
before attracting additional third-party investment.

Composition and results of the financial audit of the organization

A company that has undertaken to conduct a financial audit provides the audited organization with the following services:

a complete study of the structure of assets and liabilities of the audited company, income and expenses for each type and separately for each type of financial activity;
analysis of financial ratios, valuations and recognition of liabilities and assets;
examination of accounting policies, including provisional amounts and estimates;
identifying the elements underlying the company’s financial results for last years and having a significant impact on its financial results;
motion analysis financial resources recently, as well as factors that have a significant impact on it;
developing comments on the company’s management’s forecasts regarding the prospects for the development of its financial activities;
Correlating these forecasts with sales volume and the overall financial condition of the company.

Based on the results of the financial audit of the organization’s reporting, its management receives:

independent expert opinion on the solvency, profitability of the company, turnover of its capital;
a complete report on all factors of interest to him (the value of the company’s net assets, the state of receivables and payables, including loans and credits, long-term and short-term financial investments, transactions with related parties, unaccounted liabilities, sales volume and inventories and etc.).

Thus, an audit of a company’s financial activities allows you to objectively assess the overall financial efficiency of the business, determine where and in what volumes money goes cash flows company, optimize financial activities, as well as assess the competence of the internal financial service, and eliminate shortcomings.

The procedure for conducting an audit of a company’s financial activities

When conducting a financial audit of an organization, the main stages can be distinguished:

preliminary planning - getting to know the company being audited, determining the scope and types of work, developing audit tasks, determining the cost of audit services, signing an agreement;
drawing up an audit plan, including the sequence and nature of work, developing an audit program;
audit itself - analysis of accounting and financial statements, checking them for compliance with the norms and standards of legislation with the distribution of responsibilities between specialist auditors according to the approved program;
drawing up an audit report - a document containing complete data on all violations, deviations, omissions, errors and shortcomings, tax risks discovered during the financial audit, as well as conclusions and recommendations of auditors for their elimination and reduction;
issuance of an audit report - official assessment the reliability of the information presented in the company's financial statements.

The audit report is signed by the head of the audit organization or a person authorized by him who has a qualification certificate of an auditor; individual auditor.

3. Methodology for auditing the financial condition of an enterprise

3.1. Objectives, sequence of the audit and its information support

Assessment of financial condition is a consideration of each indicator obtained as a result of financial analysis, from the point of view of compliance of its actual level with the normal level for a given enterprise, identification of factors that influenced the value of the indicator and determination of the required value of the indicator for the future and ways to achieve it.

The assessment of the financial condition of enterprises is carried out on the basis of an analysis of financial statements. The main source of information when analyzing the financial condition is the standard forms of the annual financial statements of the enterprise, in particular: Balance sheet of the enterprise (form No. 1), Statement of financial results (form No. 2), Cash flow statement (form No. 3), Statement of equity (form No. 4), Notes to the annual financial statements (form No. 5), sometimes (for example, when calculating indicators of market activity of an enterprise, to clarify some liquidity indicators) statistical reporting data, operational accounting information, General ledger, balance sheets, order journals, tax invoices and inventory materials.

Analysis of the financial condition of the enterprise is carried out in the following areas of assessment:

Property status of the enterprise;

Liquidity of assets and solvency of the enterprise;

Indicators of financial independence and capital structure;

Indicators of profitability and profitability of the enterprise;

Business activity indicators;

Market activity.

The methodology for checking the compliance of the presented financial statements with regulatory requirements includes the following stages.

1. Establishment of the reporting period.

2. Checking the composition of financial statements.

3. Evaluation of criteria for financial reporting items.

4. Assessing the qualitative characteristics of financial statements.

5. Assessment of reporting principles.

The auditor determines compliance with the general requirements for the content of the Notes.

During the audit process, the auditor should be guided by P(S)BU regarding the determination of changes in accounting policies.

Based on the procedures performed, the auditor concludes that the financial statements comply with the requirements to provide users with complete, truthful and unbiased information about the financial condition, results of operations and cash flow of the enterprise.

3.2. Express balance audit

According to P(s)BU 2, the “Balance Sheet” is a report on the financial condition of an enterprise, which reflects its assets and liabilities.

Express audit of the balance sheet - promptly received information on the financial condition of the enterprise and conclusions in quickly confirming the reliability of the reflection of data on financial and economic operations in the balance sheet.

Sources of verification: Balance sheet (Form No. 1), General Ledger, balance sheets, order journals, valuables inventory materials, tax returns, etc.

An audit of the correctness of the balance sheet begins with checking compliance:

1. Balance sheet data at the beginning of the year with balance sheet data at the end of last year. When clarifying discrepancies between the opening and closing balances, clarification is required from the chief accountant.

2. Final balance sheet data with the balance of the General Ledger accounts at the end of the year and order journals, the correctness of arithmetic calculations.

3. Comparability of balance sheet items at the beginning and end of the year.

4. Consistency and identity of the amounts of balance sheet items for settlements with financial authorities and the balance sheet at the enterprise and in financial institutions.

5. Interrelation of balance sheet indicators and other forms of reporting.

The correctness of the reflection of assets and liabilities is checked.

The main objects of audit of enterprise assets are intangible assets, construction in progress, fixed assets, long-term financial investments, long-term receivables, deferred tax assets, other irreversible assets, inventories, settlement transactions, current financial investments, cash and cash equivalents.

The auditor can confirm that each item is reflected correctly in the balance sheet.

When checking the reliability of intangible assets displayed in the Balance Sheet, the auditor can establish: the correctness of the attribution of assets to them, the determination of the initial, residual value and depreciation, as well as the correspondence of the data on the Balance Sheet items to the balance in the General Ledger account.

Under the item “Depreciation”, the auditor can establish the correspondence of the Balance Sheet data to the credit balance of subaccount 133 “Depreciation of intangible assets” in the General Ledger.

Under the article “Construction in progress”, the auditor establishes the correctness of displaying the cost of unfinished capital investments in construction, creation, production, reconstruction, modernization, acquisition of irreversible assets (including irreversible tangible assets intended to replace existing ones, and equipment for installation), which are carried out by the enterprise, and also advance payments for financing capital construction.

The auditor’s task is to establish the correspondence of the data in the Balance Sheet with the debit balance of account 15 “Capital Investments” of the General Ledger.

Similar to intangible assets, fixed assets are checked in the following areas: the correctness of classifying assets as fixed assets, determining their initial, residual value and demolition, and compliance with the Balance Sheet and General Ledger data.

The auditor can establish the correspondence of the data on the initial cost of fixed assets given in the Balance Sheet with the debit balance of accounts 10 “Fixed assets” and 11 “Other non-current tangible assets” in the General Ledger.

When checking the depreciation of fixed assets displayed in the Balance Sheet, the auditor must find out the correctness of the depreciation object. The object of depreciation is the cost of fixed assets (except for the cost of land and unfinished capital investments).

Checking the correctness of long-term financial investments reflected in the Balance sheet comes down to establishing the correctness of the definition of financial investments and their valuation, compliance with the classification of long-term investments, which are accounted for by the method of participation in the capital of other enterprises, and other long-term financial investments, evaluation of financial investments as of the date of the Balance Sheet.

The correctness of attributing amounts to deferred tax assets and reflecting the calculation of the amount of income tax is checked by accounting and tax accounting. The auditor should pay special attention to the correct display of the amount of deferred tax liabilities, which is subject to reimbursement in subsequent periods due to the difference between the tax base of accounting and tax accounting.

Under the item "Other irreversible assets", the auditor checks the correctness of their reflection as those that were not included in the previous items of "Irreversible assets", except for goodwill, which arise upon acquisition.

The auditor must establish the correctness of classifying assets as current and their valuation.

When checking the correctness of the inventory valuation, the auditor can make sure that it was carried out using the lesser of two values: cost (original cost) or net realizable value, as well as their validity.

When checking industrial inventories, the auditor determines the correctness of assigning assets to industrial inventories, their assessment and compliance with the Balance Sheet data on the General Ledger accounts.

The auditor must establish the correspondence of the Balance sheet data under the article “Animal for growing and fattening” with the debit balance on account 21 “Animal for growing and fattening” in the General Ledger.

When checking the correctness of the reflection in the Balance sheet of work in progress, the auditor must find out that this article reflects the costs of work in progress and unfinished work (services), as well as the cost of semi-finished products of own production and the gross debt of customers under construction contracts.

The auditor’s task is to establish the correspondence of the reflected cost of finished products in the Balance Sheet with the debit balance in the General Ledger for accounts 26 “Finished Products” and 27 “Agricultural Products”.

The auditor must establish the correspondence of the data on the cost of goods in the Balance Sheet with the data of the amount of the collapsed debit balance in the General Ledger for all subaccounts of account 28 “Goods”.

The auditor can establish the correspondence of the amount of bills received reflected in the Balance Sheet with the debit balance in the General Ledger of account 34 “Short-term bills received.”

When checking the accuracy of the display in the Balance Sheet of receivables for goods, works, services, the auditor determines the reflection in this article of the debt of buyers or customers for the products, goods, works or services provided to them (except for debt secured by bills of exchange).

Checking accounts receivable for settlements includes determining the correctness of its reflection in the Balance Sheet in the following areas: with the budget, for advances issued, from accrued income, from internal settlements.

In settlements with the budget, it is necessary to reflect receivables from financial and tax authorities, as well as prepayments of taxes, fees and other payments to the budget. The auditor must establish the correspondence of the Balance sheet data under the article “Accounts receivable for settlements with the budget” with the debit balance of account 64 “Settlements for taxes and payments” in the General Ledger.

Under the article “Accounts receivable for advances issued,” the auditor determines the correctness of the reflection of the amount of advances provided to other enterprises against future payments.

The auditor must establish that the receivables for accrued income reflected in the Balance Sheet correspond to the debit balance in subaccount 373 “Calculations for accrued income” in the General Ledger.

The line “Receivables for internal settlements” may reflect debt for intradepartmental and intra-business settlements and receivables from related parties.

Under the article “Other current receivables,” the auditor finds out that the reflected debt of debtors, which cannot be included in other items of receivables, is reflected in current assets.

When checking “Current financial investments”, the auditor establishes the correctness of the reflection of their composition in the Balance Sheet of investments, their assessments, and the correspondence of the data in the Balance Sheet of account balances in the General Ledger.

When checking the correctness of the reflection of cash and cash equivalents in the Balance Sheet, the auditor first ascertains the correctness of the attribution of assets to them, as well as the correspondence of the Balance Sheet data with the balances in the accounts in the General Ledger.

When checking the correctness of the reflection of other current assets in the Balance Sheet, the auditor must find out that this article reflects the amounts of current assets that cannot be classified as items in Section I of the Balance Sheet “Current Assets”.

When checking the correctness of the display of deferred costs in the Balance Sheet, the auditor must find out that this article reflects costs that occurred during the current or previous reporting periods, but relate to the following reporting periods, and also establish the consistency of the Balance Sheet data under the item “Deferred Costs” " and on account 39 "Deferred costs" in the General Ledger.

After checking the compliance of the asset items of the Balance Sheet, the auditor checks the correctness of the display of account balances in the Balance Sheet liabilities.

Checking the correctness of the reflection of data in Section I “Equity capital” concerns authorized, share, additionally invested and other additional capital.

When checking the data displayed in the articles of the authorized capital, the auditor confirms the correctness of the total value of assets recorded in the constituent documents, which are the contribution of the owners (participants) to this capital of the enterprise.

The test of share capital requires that the value of share capital reflected in the Balance Sheet must correspond to the data in the credit balance of account 41 “Share Capital” in the General Ledger.

Checking additional invested capital consists of determining whether it is correctly reflected in this article joint stock companies the amount of share premium received as a result of the sale of own shares.

Checking reserve capital comes down to clarifying the reflection in this article of the amount of reserves created in accordance with current legislation or constituent documents at the expense of the retained earnings of the enterprise. The auditor's task is to establish the correspondence of the value of reserve capital reflected in the Balance Sheet with the credit balance on account 43 "Reserve Capital" in the General Ledger.

The auditor checks the correctness of the reflection of retained earnings (uncovered losses) in the Balance Sheet in accordance with P(S)BU 2 “Balance Sheet”.

Checking unpaid capital involves establishing the correspondence of the amount reflected in the Balance Sheet with the actual debt of the owners (participants) for contributions to the authorized capital, that is, the correspondence of the amount of unpaid capital displayed in the Balance Sheet with the credit balance on account 46 “Unpaid Capital” in the General Ledger.

Verification of withdrawn capital consists of establishing the correctness of the reflection by business companies of the actual cost of shares of their own issue or shares purchased by the company from its participants. The auditor must establish the correspondence of the amount of withdrawn capital displayed in the Balance Sheet with the credit balance on account 45 “Withdrawn capital” in the General Ledger.

The auditor determines the correctness of the reflection in the Balance Sheet of data regarding the provision of the following costs and payments for the following items: provision of personnel payments, other security and targeted financing.

When checking “Long-term liabilities”, the auditor determines the correctness of classifying liabilities as long-term and their reflection in the Balance Sheet.

Checking the correctness of reflection in the Balance sheet of long-term liabilities included long-term loans banks, long-term financial liabilities, deferred tax liabilities, other long-term liabilities.

When checking section IV of the Balance Sheet, “Current liabilities” include short-term bank loans, current debt on long-term liabilities, bills issued, current settlement obligations, current settlement obligations and advances received, current settlement obligations with the budget, current settlement obligations with insurance, current obligations for wages, current obligations for settlements with participants, current obligations for internal settlements, other current obligations.

Under the article “Deferred income”, the auditor must establish the correctness of the reflection of income received during the current or previous reporting periods that are due to the following reporting periods. The amount of deferred income reflected in the Balance Sheet must correspond to the credit balance of account 69 “Deferred Income” in the General Ledger.

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INTRODUCTION

Auditing activity is the entrepreneurial activity of auditors to carry out independent non-departmental audits of financial statements, payment and settlement documentation, tax returns and other financial obligations and requirements of economic entities, as well as to provide other audit services.

In the conditions of the creation of the rule of law and the emergence of a market economy, the definition legal framework audit activity is important. The audit provides great opportunities for the further development of economic and legal control, the task of which is not only to protect newly emerging economic relations from dishonest entrepreneurship, to prevent and combat offenses in the economic sphere, but also to form public legal consciousness at a higher level.

The development of audit was caused by the division of interests between enterprise administration and investors. Therefore, the emergence of the institution of independent auditors eliminates the problem of discrepancy between the interests of information compilers and users, leading to biased information. An audit eliminates the possibility of making business decisions based on unreliable information, which can lead to negative economic consequences for a business entity. The activities of auditors in Russia eliminate the problem associated with the need special knowledge to assess the reliability of the information received, which its users do not have.

1. BASICS OF FINANCIAL ANALYSIS

Financial analysis is used in auditing in two aspects.

Firstly, as a method of the financial mechanism of an enterprise, the processes of formation and use for its operational and investment activities. The result of the analysis is an assessment of the financial well-being of the enterprise, the state of its property, assets and liabilities of the balance sheet, the turnover rate of all capital and its individual parts, and the profitability of the funds used.

Familiarization with the balance sheet of an enterprise is a mandatory step in the auditor’s work, both at the stage of concluding a contract and during the audit itself. Financial assessments of accounting reports in a condensed and concentrated form are needed by the auditor as guidelines. They act as a hint for selection the right decision in the process of auditing activities. The auditor’s awareness as a result of the financial analysis given gives him confidence in his actions, helps him correctly plan the audit, and identify weak spots in the accounting system.

The auditor’s analytical procedures during preliminary familiarization with the client’s activities are reduced to the following actions:

comparison of current data with standard values;
comparison of financial ratios with non-financial indicators;
comparison of current data with data from previous periods;
comparison of current data with plan and forecast data;
comparison of current enterprise data with average general economic and industry data.

The purpose of using analytical procedures is to identify atypical situations in the activities of an enterprise and in its reporting.

Secondly, financial analysis is considered as a type of auditor service. The administration of the enterprise, founders, owners and shareholders need complete and detailed information about the financial position of the enterprise at the end of the reporting period, income received and their use.

Audit clients are interested not only in the current financial condition of their enterprise, but also in the growth prospects and the expected consequences of decisions made.

The main goal of financial analysis is to obtain several key parameters that give an objective and accurate picture of the financial condition of the enterprise, its profits and losses, changes in the structure of assets and liabilities, and in settlements with debtors and creditors.

In this case, the manager may be interested in both the current financial state of the enterprise and its immediate and long-term prospects.

The goals of the analysis are achieved as a result of solving certain interrelated analytical problems. The analytical task is a specification of the goals of the analysis, taking into account the organizational, technical and methodological capabilities of the analysis. The main factor in solving an analytical problem is the volume and quality of the initial information. It must be borne in mind that the periodic accounting or financial statements of an enterprise are only raw information prepared during the implementation of accounting procedures at the enterprise.

The basic principle of analytical reading of financial statements is a deductive method, i.e. from the general to the specific, which must be applied repeatedly.

In practice, the basic rules for reading financial statements have been developed: horizontal analysis, vertical analysis, trend analysis, method of financial ratios, comparative analysis, factor analysis.

Horizontal analysis - comparison of each reporting item with the previous period.

Vertical analysis - determining the structure of the final financial indicators, identifying the impact of each reporting item on the results as a whole.

Trend analysis - comparison of each reporting item with a number of previous periods and determination of the main trend in the dynamics of the indicator, cleared of random influences and individual characteristics of individual periods.

Analysis of relative indicators - calculation of relationships between individual report positions or positions of different reporting forms, determination of interrelations of indicators.

Comparative analysis is an intra-company analysis of consolidated reporting indicators for individual indicators of a company, subsidiaries, divisions, workshops, and an inter-company analysis of the indicators of a given company in comparison with the indicators of competitors, with industry average and average general economic data.

Factor analysis is an analysis of the influence of individual factors on a performance indicator using deterministic or stochastic research techniques. Factor analysis can be either direct, i.e., breaking up an effective indicator into its component parts, or reverse, i.e., combining individual elements into a common effective indicator.

Financial analysis is part of the overall complete analysis of economic activity, which consists of two closely interrelated sections: financial analysis and production (managerial) analysis.

The separation of these types of analysis is due to the division of accounting on an enterprise scale into financial accounting and management accounting that has developed in practice. This also gives rise to a division of analysis into external and internal. This division of analysis for the enterprise itself is somewhat conditional, because on-farm analysis can be considered as a continuation of external analysis, and vice versa; in the process of their production, information is exchanged.

Financial analysis, based only on financial statements, takes on the character of external analysis, that is, analysis carried out outside the enterprise by interested counterparties, owners or government agencies. This analysis, based only on reporting data, which contains a very limited part of information about the activities of the enterprise, does not allow revealing all the secrets of the company.

Features of external financial analysis are:

diversity of goals and interests of the subjects of analysis;
multiplicity of subjects of analysis, users of information about the activities of the enterprise;
availability of standard analysis techniques, accounting and reporting standards;
orientation of the analysis only to public, external reporting of the enterprise;
limited analysis tasks as a consequence of the previous factor;
maximum openness of the analysis results for users of information about the enterprise’s activities.

analysis of absolute profit indicators;
analysis of relative profitability indicators;
analysis of the financial condition, market stability, balance sheet liquidity, solvency of the enterprise;
analysis of the efficiency of use of borrowed capital;
economic diagnostics of the financial condition of enterprises and rating assessment of issuers.

On-farm financial analysis uses as a source of information, in addition to financial statements, also other systemic accounting data, data on technical preparation of production, regulatory and planning information, etc.

On-farm financial analysis can be supplemented with other aspects that are important for optimizing management: analysis of the efficiency of capital advances, analysis of the relationship between costs, turnover and profit, etc. In the system of on-farm management analysis, it is possible to deepen financial analysis by using data from management production accounting . It is possible to conduct a comprehensive economic analysis and evaluate the efficiency of economic activities. Issues of financial and production analysis are interrelated in substantiating business plans, monitoring their implementation in the production management system and selling products, works and services oriented to the market.

Features of management analysis are:

orientation of the analysis results for your management;
use of all sources of information for analysis;
lack of regulation of external analysis;
comprehensiveness of the analysis, study of all aspects of the enterprise’s activities;
integration of accounting, analysis, planning and decision making;
maximum secrecy of analysis results in order to preserve trade secrets.

We will use the following notation:

F – fixed production assets;
N – products;
L 1 – capital productivity ( N/F );
A – depreciation;
M – material costs;
L 2 – material yield ( N/M );
R - production personnel;
L 3 – labor productivity ( N/R );
U – remuneration of personnel;
S – cost of production;
TO – advanced capital;
R - profit;
E – working capital;
S E – sources of working capital formation.

Economic and production relations, which are the subject of study of economic sciences, are in close connection with productive forces. The content of the latter characterizes the technical conditions of production, on which labor productivity and economic indicators in general depend. That is why the basis of all economic indicators of economic activity of enterprises is the technical and organizational level of production (Block 1), i.e. the quality of the equipment used, the progressiveness of technological processes, the technical and energy equipment of labor, the degree of concentration, specialization, cooperation and combination, the duration of the production cycle and the rhythm of production, the level of organization of production and management.

The technical side of production is not directly the subject of economic analysis. But economic indicators are studied in close interaction with technology and production technology, its organization, and economic analysis in this case takes on the character of technical and economic analysis.

The level of economic indicators is significantly influenced by natural conditions. This circumstance plays an important role in a number of sectors of the economy, especially in agriculture, in the mining industry. Degree of use natural resources largely depends on the state of technology and production organization and is studied along with indicators of the technical and organizational level of production.

Economic indicators characterize not only the technical, organizational and natural conditions of production, but also the social living conditions of production teams, the foreign economic relations of the enterprise - the state of the financing, purchase and sale markets. The degree of use of production resources depends on all these production conditions: means of labor (Block 2), objects of labor (Block 3) and labor itself (Block 4). The intensity of use of production resources is manifested in such general indicators as capital productivity of fixed production assets, material intensity of production, and labor productivity.

The efficiency of use of production resources, in turn, is manifested in three dimensions:

volume and quality of produced and sold products (Block 5); Moreover, the higher the quality of the products, the greater the volume of products expressed in selling prices;
the amount of consumption or expenditure of resources for production (Block 6), i.e. production cost;
the amount of resources used (Block 7), i.e., fixed and working capital advanced for economic activities.

A comparison of indicators of production volume and cost characterizes the amount of profit and profitability of products (Block 8), as well as costs per 1 ruble. products. A comparison of indicators of production volume and the amount of advanced fixed and working capital characterizes the reproduction and turnover of capital (Block 9), i.e., the capital productivity of fixed production assets and the turnover of working capital. The obtained indicators, in turn, collectively determine the level of profitability of economic activities (Block 10).

The financial condition and solvency of the enterprise depends on the implementation of the profit plan and the financial plan as a whole, on the one hand, and on the turnover of working capital, on the other hand (Block 11).

The generalizing indicators of each block are called synthetic. The synthetic indicator of one block, which is the output for this block of the subsystem, will play the role of an input for another block subordinate to it. Through these general indicators, a connection is made between individual blocks in the system of economic analysis. Each block, as a relatively isolated system, is included in the system of analytical indicators that make up these general indicators. For example, the volume of products sold is a synthetic indicator for Block 5, the total cost of these products is a synthetic indicator for Block 6.

2. ANALYSIS OF THE PROPERTY SITUATION OF THE ENTERPRISE

The stability of the financial position of an economic entity largely depends on the feasibility and correctness of investing financial resources in assets.

In the process of functioning of an economic entity, its assets and their structure undergo constant changes. The most general idea of the qualitative changes that have taken place in the structure of active and passive capital, as well as the dynamics of these changes, can be obtained using vertical and horizontal analysis of reporting indicators.

Vertical analysis shows the structure of the economic entity's funds from their sources. Vertical analysis can be performed on either original reporting or modified reporting (with an enlarged or transformed nomenclature of items). From the analytical balance sheet you can obtain a number of important characteristics of the property and financial condition of the organization.

The advantage of vertical analysis is that in conditions of inflation, the relative values of the balance sheet indicators at the beginning and end of the year are easier to compare than the absolute values of these indicators.

Horizontal analysis characterizes changes in reporting indicators for the reporting period or the dynamics of their changes over a number of reporting periods.

Horizontal analysis of reporting consists of constructing one or more analytical tables in which absolute indicators are supplemented by relative ones - growth or decline rates.

An example of a vertical and horizontal balance of an economic entity is given in Table. 1.

From the data in this table we can conclude that there were no fundamental changes during the year. A reduction in the share of accounts receivable and short-term loans and borrowings, as well as an increase in the share of cash and securities, should be considered a positive trend. An increase in accounts payable of an economic entity should be considered a negative trend. During the analyzed period, the value of the organization’s property increased by 310 thousand rubles, including as a result of an increase of 14.7% in fixed assets, by 8.8% in inventories and costs, by 10.6% in accounts receivable and by 70.4% in cash and other assets. The share of the organization's own funds increased by 13.1%, and the share of raised funds by 43% (55-12). An increase in the organization's property by 72% (223:310x100) was achieved due to an increase in sources of own funds.

Table 1
VERTICAL AND HORIZONTAL BALANCE ANALYSIS

Indicators	For the beginning of the year		At the end of the year		Changes
Indicators		In % of total		In% of total		In specific gravity	In % of value

1. Fixed assets
2. Other non-current assets
3. Inventories and costs
4. Accounts receivable
5. Cash and other assets


6. Capital and reserves
7. Long-term loans and borrowings
8. Short-term loans and loans
9. Accounts payable

At the same time, the share of equity in the balance sheet at the end of the year decreased by 2.2% and amounted to 85.4%. At the same time, both the share (2.8%) and the amount (55%) of accounts payable increased.

The increase in the organization’s property by 28% [(88-1)/310x100] was covered by increasing the organization’s liabilities, i.e., accounts payable. It should be noted as positive point high share (58%) of immobilized assets in the property composition.

An important element of the production potential of an economic entity is its material and technical base. The material and technical base of the organization is characterized by the following indicators:

share of the active part of fixed assets (machinery, equipment, vehicles);
depreciation coefficient (the ratio of the amount of depreciation of fixed assets to their original cost at the beginning or end of the year);
renewal coefficient (the share of newly introduced fixed assets in their total);
retirement ratio (the ratio of the initial cost of fixed assets disposed of during the year that were available at the beginning of the year);
serviceability coefficient (the ratio of the residual value of fixed assets to their original cost).

Let us give a description of fixed assets according to the indicated indicators.

table 2

CHARACTERISTICS OF THE ORGANIZATION'S FIXED ASSETS

Indicators	For the beginning of the year	At the end of the year	Growth rate, %
Indicators	In thousand rubles	In thousand rubles	Growth rate, %
Initial cost of fixed assets
incl. active part
Residual value of fixed assets
Accumulated depreciation amount
Coefficient
validity

updates

From the data in table. 2 it follows that during the analyzed period the share of the active part of fixed assets decreased slightly - to 48%. The cost of fixed assets as a whole increased by 24.7%, including their active part - by 22.1%. This could be considered as a positive trend in the development of the material and technical base of an economic entity. However, at the end of the year, the organization experienced a decrease in the serviceability coefficient of fixed assets - to 60.2% and an increase in their depreciation rate - to 39.8%. The data presented indicate that the increase in the value of fixed assets occurred mainly due to their revaluation, and therefore the renewal rate of means of labor is low. This is a sign that an economic entity does not allocate enough funds to finance capital investments and a significant renewal of its fixed assets is one of the strategic directions for the development of the material and technical base in the future.

3. ANALYSIS OF FINANCIAL RESULTS

Various aspects of the production, sales, supply and financial activities of the enterprise receive a complete monetary assessment in the system of financial performance indicators.

The final financial result of the enterprise. Balance sheet profit or loss is the algebraic sum of the result (profit or loss) from the sale of marketable products, the result from other sales, income and expenses from non-sales operations.

R b = + R r + R pr + R in

Where
R b – balance sheet profit or loss;
R r – the result from the sale of commercial products;
R pr – result from other sales;
R in – the result of non-operating operations.

The financial results of the enterprise are also characterized by indicators of revenue from sales of products and the amount of value added tax.

Proceeds from the sale of products indicate the completion of the enterprise’s production cycle, the return of the enterprise’s funds advanced for production into cash and the beginning of a new round in the turnover of funds. After deducting the amount of VAT and excise taxes, as well as production costs, from the proceeds from sales of products, the net result from sales (profit or loss) is obtained.

Financial performance indicators characterize the absolute efficiency of the enterprise's management. We also calculate profitability indicators. Ratio of book profit to average cost the enterprise's property, capital, fixed and working capital gives overall profitability. Product profitability is defined as the ratio of profit from product sales to sales revenue.

Profit is the most important indicator of the efficiency of an enterprise. Profit growth creates a financial basis for self-financing the activities of the enterprise, implementing expanded reproduction and meeting the social and material needs of the employees and owners of the enterprise. At the expense of profits, obligations to the budget, banks and other organizations are fulfilled. Therefore, profit analysis should cover both factors of its formation and distribution factors.

Analysis of the financial results of an enterprise includes as mandatory elements:

study of changes in each indicator for the analyzed period;
study of the structure of relevant indicators and their changes;
studying the dynamics of changes in financial performance indicators for a number of reporting periods.

The objectives of analyzing the financial results of an enterprise are:

assessment of the dynamics of profit indicators;
validity of factual data on education and distribution of profits;
identifying and measuring the effect of various factors on profit;
assessment of possible reserves for further profit growth based on optimization of production volumes and costs.

In a market economy, the main goal of any business activity is to obtain maximum profit. Profit growth provides the opportunity for self-financing and expanded reproduction, satisfying the material and social needs of owners and work collectives.

At the expense of profits, the organization's obligations to the budget are fulfilled, and through accumulation funds - to banks and other organizations.

Therefore, the objectives of analyzing the financial results of an organization are:

assessment of the dynamics of balance sheet and net profit indicators;
identifying the degree of influence of various factors on profit;
assessment of profitability indicators;
identifying reserves for increasing profit based on optimization of factorial characteristics influencing it.

When analyzing financial performance indicators and assessing their changes in a dynamic plan, an analytical table is compiled. The information basis for carrying out such an analysis is the data from the profit and loss report (Form No. 2).

Table 3
ANALYSIS OF THE FINANCIAL RESULTS OF AN ORGANIZATION
thousand roubles.

From the data in table. 3 it follows that the balance sheet and net profit of the organization for the reporting period increased (by 24.8 and 25.5%, respectively). The increase in these indicators was mainly due to an increase in revenue from product sales and profit from other sales. The organization received a loss from non-operating operations.

In the analyzed organization, the balance sheet profit of 98.7% (159/161x100) is formed from profit from sales of products.

Balance sheet profit reflects the overall financial result of the financial and economic activities of the enterprise in the reporting period, taking into account all its aspects. Profit from sales of products is associated with factors of production and sales of products. The main focus of the analysis should be on studying the causes and factors of changes in this indicator. Profit from sales of commercial products changes under the influence of factors such as changes in:

sales volume;
product structures;
selling prices for sold products;
prices for raw materials, supplies, fuel, energy and transportation tariffs;
level of costs of material and labor resources.

Table 4
PROFIT ANALYSIS BY FACTORS
thousand roubles.

In table Figure 4 shows data and a digital example of factor analysis of profit from product sales.

Let's determine the degree of influence of factors on profit:

change in selling prices for products

243,853 – 212,000= +31,853 thousand rubles.

Additional profit was received mainly as a result of inflation

changes in prices for materials, tariffs for energy and transportation, tariff rates for labor

violations of economic discipline

technical specifications

Increase in production volume assessed at basic full cost

151,682/125,312 = 1. 210435.

Then the basic profit is adjusted by the resulting coefficient and the basic profit amount is subtracted from it:

32.705x1.210435 – 32.705 = +6.882 thousand rubles.

Increasing production volume due to structural changes in the composition of products. The difference between the growth rate of product sales volume estimated at selling prices and the growth rate of product sales volume estimated at base cost is determined.

32,705(212,000/158,017 – 151,682/125,312) = 4,287.0 thousand rubles.

Reducing costs by 1 rub. products. It is expressed by the difference between the base full cost of actually sold products and the actual cost, calculated taking into account changes in prices for material and other resources and reasons associated with violations of economic discipline.

151,682 – 151,524 = 158.0 thousand rubles.

Changes in cost due to structural changes in the composition of products. It is calculated by comparing the base full cost, adjusted for the growth rate of production volume, with the base full cost of actually sold products.

125.312 x 1.341628 – 151.682 = + 16.444 thousand rubles.

The total profit variance is

72.419 – 32.705 = 39.714 thousand rubles,

which corresponds to the sum of factor influences.

The calculation results are presented in a summary of the influence of factors on profit from product sales (thousand rubles)

Table 5
INFLUENCE OF FACTORS ON PROFIT FROM SALES OF PRODUCTS
thousand roubles.

When analyzing profits, it is important to separate the influence of external and internal factors. Generally speaking, the profit of an enterprise is the result of an increase in its profitability. Profitability is considered as the product of production productivity by the ratio of the prices of a unit of product and a unit of resource.

Large enterprises pay primary attention to the problems of controlling changes in industrial productivity and try to reduce the role of external factors or financial productivity. One of the conditions for the prosperity of an enterprise is to expand the sales market for products by reducing prices for the goods offered.

Profitability indicators are relative characteristics of the financial results and efficiency of an enterprise. They measure the profitability of an enterprise from various positions and are grouped in accordance with the interests of participants in the economic process and market volume. Profitability indicators are important characteristics of the factor environment for generating profit and income of enterprises.

The main profitability indicators can be grouped into groups:

calculated on the basis of profit;
calculated on the basis of production assets;
calculated on the basis of cash flows.

A necessary condition for making a profit is a certain degree of development of production, ensuring that the proceeds from the sale of products exceed the costs of its production and sales. The main factor chain that forms profit is represented by the following diagram:

COSTS->PRODUCTION VOLUME->PROFIT

The components of this scheme must be under constant attention and control. This problem is solved on the basis of organizing cost accounting using the direct costing system. Features of this system.

1. Dividing costs into fixed and variable. Variable costs directly depend on the volume and range of products produced, and with minor deviations, fluctuations in their value are synchronous with fluctuations in output volume. Fixed costs do not depend on changes in production volume, they depend on the duration of the reporting period.

2. Connection of production and financial accounting. Accounting and reporting are organized in such a way that it becomes possible to regularly monitor. Basic report model for profit analysis:

sales volume - 1,500;
variable costs - 1,000;
marginal income - 500;
fixed costs - 300;
profit (net income) - 200.

An audit of financial condition begins with determining the solvency of the enterprise. A solvent enterprise is one whose current assets (inventories, cash, accounts receivable and other assets) are greater than or equal to its external debt (liabilities). For example, let’s determine the current assets of a small private enterprise, “Fregat”, thousand rubles.

The external debt of an enterprise is determined according to data from sections II and III of the liabilities side of the balance sheet. This includes short-, medium- and long-term loans, as well as accounts payable. In our example, it is 364 thousand rubles at the beginning of the year. (170 + 194), at the end of the year - 237 thousand rubles. (94 + 143).

By comparing current assets with external liabilities, the auditor concludes that the company is solvent, since over the past and reporting years, current assets were greater than liabilities. However, it must be taken into account that the presence of inventories at an enterprise (especially state-owned) does not determine real solvency, because in a market economy, inventories of work in progress, finished goods and other inventory assets in the event of bankruptcy of an enterprise may not be salable to pay off external debts (part of them illiquid, and on the balance sheet they are listed as inventories).

Quickly realizable assets include cash and accounts receivable and, to a certain extent (with the exception of surplus and stale inventories), inventories. Therefore, it is necessary to make an updated calculation of solvency, i.e. determine the compliance of quickly realizable assets with external debt. Let us assume that there are no surplus or unnecessary materials in the inventory. Then quickly realizable assets will amount to 759 thousand rubles over the past year. [(650 - 85) + 194], and for the reporting period - 1115 thousand rubles. [(720 - 115) + 510]. Comparison with external debt of 479 thousand rubles. and 394 thousand rubles. indicates that assets exceed debt, and this characterizes the enterprise as solvent.

The auditor determines an increase or decrease in the level of solvency of an enterprise by a change in the indicator of working capital (current assets), which he defines as the difference between all current assets (in the example given, at the beginning of the year 1249 thousand rubles, at the end of the year - 1475 thousand rubles) and short-term debt, respectively 479 thousand rubles. and 394 thousand rubles. The comparison shows an increase in the working capital of the enterprise. If at the beginning of the year it was 766 thousand rubles. (1247 - 479), then at the end of the year - 1081 thousand rubles. (1475 - 394), i.e. increased by 513 thousand rubles. (1081 - 768).

Application of new forms of labor organization, restructuring organizational structure economic management at enterprises led to the emergence of joint-stock, small, rental and other forms of management. Here the audit has some features. For example, in state-owned enterprises the authorized capital represents centralized sources of financing intended for the formation of fixed assets and, to a certain extent, working capital. At joint-stock enterprises, the authorized capital reflects the share capital, at small enterprises - deposits, shares, etc., at rental enterprises - the residual value of fixed assets leased. This significantly affects the formation of working capital. In a state-owned enterprise, working capital is defined as: the difference between the authorized capital and fixed assets; in joint-stock and other enterprises, working capital is the difference between current assets (Sections II and III of the balance sheet asset) and external liabilities.

Working capital consists of those types of property that are fully located at the enterprise during one business year and carry out a full turnover or several turns. The sources of its formation are: an increase in net income, long-term liabilities, share capital, etc. It is necessary to take into account that the most reliable partner is considered to be an enterprise with a large amount of working capital, since it can meet its obligations and increase the scale of its activities. The guideline for optimizing the amount of working capital is its amount, which is equal to half of short-term liabilities. Attraction borrowed money to carry out economic activities, an enterprise may have different efficiency, which depends on the rational formation of the structure of sources of funds used.

Market business conditions force enterprises to urgently repay short-term debt at any time. The ability of an enterprise to pay off current liabilities is determined by an indicator that characterizes the ratio of working capital to short-term liabilities. This ratio should be equal to one. Both low and high ratios are unfavorable. In the example given, at the beginning of the year the ratio is 1.6 (768: 479) and at the end of the year - 2.74 (1081: 394), which indicates the ability of the audited enterprise to fulfill all external obligations. At the same time, the auditor should pay attention to the fact that the calculated coefficient is significantly greater than one, which indicates the irrational formation of finances at the enterprise. This situation should be confirmed by the overall liquidity indicator.

Liquidity is the ability of working capital to turn into cash necessary for normal financial and economic activities. Auditors present their findings to banks, suppliers, shareholders and other customers. Liquidity is determined by the ratio of all current assets to short-term liabilities (the latter are taken as one). According to the balance sheet under consideration, total liquidity can be presented at the beginning of the year as a ratio of 2.61 (1249: 479), for the reporting period 3.74 (1475: 394). The presented ratios give grounds for the auditor to draw a conclusion about the irrational formation of the enterprise’s finances. It should be noted that when the ratio of current assets to short-term debt is less than one, this means that there is nothing to pay external obligations with. In cases where current assets equal current liabilities, i.e. The ratio is 1:1, the entrepreneur does not have a free choice of solution. If the ratio is high, as in the example given, which indicates a significant excess of current assets over debts, the company has a large amount of available funds, uses expensive assets, i.e. profit from current assets is higher interest rates for borrowed funds.

The rational (optimal) option for forming the finances of an enterprise is considered to be the one when fixed assets are purchased from the free funds of the enterprise, working capital - 1/4 from long-term loans, 3/4 - from short-term loans. An entrepreneur will work better if there is less equity and more borrowed capital. Market relationships are formed according to this principle. Having a small own capital, you can get more profit with rational management.

The auditor determines the liquidity of the enterprise based on the total amount of current assets. However, the liquidity of a company can also be affected by extraordinary circumstances. In such cases, the auditor must calculate the liquidity indicator by payment terms, which will allow us to determine whether the enterprise will be able to repay short-term debts. In this case, the ratio of quickly realizable assets of cash, receivables and short-term liabilities is used. At the beginning of the year, this ratio is 0.38 (194: 479), i.e. the company was unable to pay its obligations promptly. A different situation arose at the enterprise at the end of the year, the ratio between assets and debt was 1.29 (510: 394).

Thus, the company is liquid, since cash and accounts receivable exceed short-term liabilities. The rational formation of sources of funds by the auditor is determined by their structure. The auditor should pay primary attention to his own funds (equity). On the balance sheet, equity (funds) consists of the entire amount of sources of funds at the beginning of the year 52% [(3695: 7084) - 10], at the end of the year 51% [(3574: 6987) - 10], i.e. it decreased by 1%, but ensures its dominant position in the right to property.

The assessment of the structure of sources of funds, which the auditor has to give to banks and creditors, concerns the change in the share of own funds in the total amount of sources of funds from the point of view of financial risk when concluding agreements and contracts. The risk increases in cases where the share of own funds (capital) decreases.

Intra-production assessment of changes in the share of equity (capital) is focused on the need to reduce or increase long- or short-term loans. The share of external loans, credits and accounts payable in total sources of funds depends on the ratio of interest rates for loans and rates for dividends. If interest rates for loans are lower than rates for dividends, then it is rational to increase the attraction of borrowed funds (short- and long-term loans). In the opposite situation, it is advisable to use your own funds (equity capital). Naturally, the structure of sources of funds will depend on these circumstances. The ratio of own capital to attracted (foreign) capital, as a rule, should be 1:2. The auditor, after studying the structure of the enterprise's sources of funds, provides information to banks and creditors about the expansion or curtailment of the enterprise's activities. A decrease in short-term loans and an increase in equity capital may be evidence of a winding down of the enterprise's activities. However, it is impossible to come to such a conclusion at the same time, since part of these funds may be influenced by other factors - interest rates for loans and dividends. The auditor's conclusion about the expansion or curtailment of the enterprise's activities can be based on retained earnings (in the balance sheet, the difference between the amount of book profit and the use of profit - section 1 of the assets and liabilities of the balance sheet). At the beginning of the year it is 80 thousand rubles, at the end of the year - 10 thousand rubles. These data do not indicate expansion of the enterprise's activities.

The structure of the enterprise's equity capital according to the balance sheet is as follows:

It must be taken into account that if the interest on a bank loan exceeds the average profit by 1 ruble. current assets, it is more profitable for the company to increase its own capital. Therefore, the ratio of equity capital to attracted capital is calculated, which is called the financing ratio.

The higher this ratio, the more reliable financing is for banks and lenders. In our example, at the beginning of the year it was equal to 10.41 [(3780 + 8) : (170 + 194)], at the end of the year - 15.03 [(3560 + 1): (94 + 143)].

As already noted, the optimal structure of finance is considered to be its formation at the expense of one’s own funds only in terms of fixed capital (fixed assets). For this purpose, the investment indicator is calculated (the ratio of equity to fixed capital). At the beginning of the year it is 1.34 [(3780 + 8): (4950 -2130)] and at the end of the year it is 1.44 [(3560 + 1): (4745 - 2280)]. It is considered optimal if own funds cover all fixed capital and part of the working capital. An enterprise will be viable if it repays all borrowed funds on time.

The auditor determines the ability of an enterprise to fulfill its obligations by analyzing the financial structure. From the above data it is clear that equity capital not only covers the fixed capital, but also used to form working capital, which indicates an irrational financial structure. Property with long-term operation must be financed with long-term capital, not necessarily equity. It is considered rational when the fixed capital is financed at least 50% from equity capital and 50% from long-term loans. For banks and creditors, this distribution of capital is positive, since there is a low risk of bankruptcy if the company has a large equity capital. For an enterprise, this means using its own finances, which it is advisable to invest in expanding its own production or investing in the acquisition of securities, providing loans to other enterprises, etc. In this case, the alienation of equity capital must be supplemented with borrowed funds. Determining the financial strategy is associated with calculating the effectiveness of the listed activities, which auditors must perform.

In calculating indicators of solvency and liquidity of working capital (funds), accounts receivable and inventories are used. Depending on how quickly they turn into cash, the financial condition of the enterprise and its solvency are determined. For this purpose, the turnover of accounts receivable is determined, which is calculated as the ratio of sales proceeds to the amount of debt. Thus, during the reporting year, accounts receivable were in circulation 7.5 times. The higher this indicator, the faster receivables turn into cash.

The auditor must especially carefully examine the organization of settlements with customers, since the volume of product sales, the state of accounts receivable, and cash depend on this.

There are certain principles of relationships with clients (buyers and suppliers), which can be stated as follows: sell for cash, buy on credit; lend to the buyer for a shorter period than you receive a loan from the supplier; upon agreement, determine and check the solvency of the concluded agreement.

The replenishment of cash at the enterprise depends on the turnover of inventories, which is calculated as the ratio of the cost of goods sold to the average annual reserves. The higher the turnover rate, the faster inventory is converted into cash. The auditor must make such calculations over several reporting periods.

For the purpose of normal production and marketing of products, inventories must be optimal. Having smaller but more mobile inventory means that less of a business's cash is sitting in inventory. The presence of large inventories indicates a decrease in the activity of the enterprise regarding the production and sale of products.

Thus, when checking the financial condition of an enterprise, the auditor examines not only the actual stability, solvency and liquidity of the enterprise, but also the prospects for increasing business activity and business efficiency.