Economic sciences / 7. Accounting and Auditing

Anna Shavliuk, postgraduate

Kyiv national university of trade and economics, Ukraine

Organizational and informational model of business partnership’s efficiency audit of trade enterprises

Establishing an effective monitoring system in part of optimal choice of business partnership relations in trade, based on targeting enterprise features and scope of its activities will enable the using of organizational and informational model of business partnership’s efficiency audit.

The organizational and informational model of business partnership’s efficiency audit in trade is as follows:

1. The purpose and objectives of business partnership’s efficiency audit.

1.1. Purpose: Assessment of business partnership at the stage of receipt of proposals from contractors or business partners of the proposed commissioning to ensure his own business need, assessment of the reliability of each potential business partner than absolute values and relative to each other.

1.2. Objective is to assess the reliability of potential business partners.

1.2.1. Assessment of financial indicators of potential business partners:

• Evaluation of profitability profit before interest, taxes and depreciation (EBITDA margin);

• Assessment of return on equity by Dupont formula;

• Assessment the feasibility of investment FIr (Feasibility investment ratio);

• Assessment of credit repayment ratio RL (Repayment of loans);

• Estimate the ratio of own intangible assets OIAr (Own intangible assets ratio);

• Evaluation of goodwill CG (Coefficient of goodwill);

• Evaluation of the dynamics of dividends DDr (Dividends dynamics ratio).

1.2.2. Evaluation of non-financial indicators of potential business partners:

• Assessment of the duration of the market operation activity;

• Assessment characteristics of presented products (quality, range);

• Assessment of unique technologies.

2. Objects and subjects of business partnership’s efficiency audit.

2.1. Objects: quotation; accounts and records to determine profitability, return on equity and earnings potential business partner; investment capacity; borrowing costs; possession of their own intangible assets; acquired goodwill in the market; dynamics of development; duration of operation of the market; product characteristics; unique technology.

2.2. Subjects: the company's management and top management; management divisions (economic, purchasing, marketing); shareholders; external users of information; contractors; audit clients; independent auditor.

3. The system of economic indicators of business partnership’s efficiency audit.

3.1. Absolute numbers: absolute value of profits before interest, taxes and depreciation; the absolute value of the duration of market operation activity.

3.2. Ratios: Profitability ratios earnings before interest, taxes and depreciation (EBITDA margin). Ratios return on equity by Dupont formula: ratios return on sales (ROS); asset turnover ratios; financial leverage ratios. Ratios of investing advisability FIr (Feasibility investment ratio). Ratios repayment of loans RL (Repayment of loans). Ratios own value intangible assets OIAr (Own intangible assets ratio). Ratios of goodwill CG (Coefficient of goodwill). Ratios of dividends dynamics DDr (Dividends dynamics ratio). Ratios characteristics of presented products. Ratios unique technology.

4. Information support of business partnership’s efficiency audit.

4.1. External Information: Legislation regulating foreign trade activities. Customs legislation. Normative legal acts regulating national trade activity. Standard accounting records in the trade.

4.2. Inside information (contract documents): International agreements (international cooperation, foreign representation agreements, international loan agreements, international loan agreements initialed by the National Bank, international agreements on investment); National (supply agreements, loan agreements, contracts, loan, investment treaties). Permits, patents, licenses, franchises, copyrights, trademarks, and trademarks. Accounting records and financial statements.

5. Methods of business partnership’s efficiency audit.

5.1. Accounting and analytical methods: Economic Analysis. Statistical calculations. Economic-mathematical methods.

5.2. Other methods. Questionnaire. Testing.

6. Summary and implementation of business partnership’s efficiency audit.

6.1. Summary of results: Grouping and systematization of audit results. Documenting results. Analytical grouping. Systematized grouping deficiencies in the audit report.

6.2. Implementation results: Assessment of the reliability of each potential business partner that was subject to audit in terms of performance criteria established business partnership. Coverage of the results by comparing potential business partners. Providing independent audit opinion on the reliability of each.

By carrying out business partnership’s efficiency audit trade entities actually will be able to assess the reliability and efficiency of their economic (financial, labor, etc.). The situation with resources in dealings with suppliers, customers and other stakeholders will be objectively assessed by auditor.

In the event of non-compliance or ineffective use of audit can provide reliable information and answer questions that caused the inconsistency. At the same time auditor will provide detailed analytics on potential business partners and independent audit opinion about the evaluation set parameters.