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PhD, Associate Professor Bulkot A.V., Master of Science Radiiovska M.V.

 

State Higher Educational Establishment «Kyiv National Economic University named after Vadym Hetman», Ukraine

 

Peculiarities of the equity audit at the enterprises, institutions, organizations

        

Under the conditions of the unstable economic situation in the country, constant legislative changes there is a need for improving the quality information management system, which is closely related to the improvement of equity audit.

Audit of the capital is one of the most important sections of the audit since equity is a guarantee of stable activity of the enterprise and the main informative indicator of any economic entity [2].  Structure and dynamics its own capital are the significant indicators that determine the financial position of the company [3].

However, today there is not generally accepted methodology for audit of the equity of the enterprise. Practical work in the study of issues of effective management of equity and development the methodology of audit indicates the urgency of the problem.

In Ukraine the definition of the equity is legally established in NP(S)A 1: equity is a part of the assets of the enterprise, which remains after deduction of its liabilities [4]. Equity shows the part of the property of the enterprise, which is financed with the owners` resources and means of the enterprise.

The purpose of the equity audit is to establish the authenticity and correctness of the reflection in accounting operations with equity in accordance with current legislation and to express an independent opinion on the correctness of the information displaying and the reporting of the enterprise [5].

The objects of the equity audit are: the elements of accounting policy (legislative and normative acts, which are managed by the company in the conduct of accounting equity of the enterprise; evaluation of the contributions and increase of the share capital; order of distribution of the net profit, etc.); entries in accounting registers and reporting; accounting transactions (the formation and changes of the authorized capital, the formation and use of the share capital, additional capital, reserve capital, seized capital, unpaid capital and undisposed (retained) earnings (uncovered losses); information about accounting violations, shortages, abuses, which found the documentary evidence in acts of audit inspections, conclusions of the auditors, enforcement ordinances, etc.

Checking of the primary documents will allow the auditor to highlight the major violations and apply accounting procedures “in essence”: formation of the authorized and other types of capital of the entity; calculation and payment of dividends; operations with the securities of their own emission; checking the distribution of profit, etc. [1].

A clear methodology of audit is worked out at the stage of planning and aims to collect the audit evidence.

On the planning stage, the auditor should clearly define the areas of the inspection and effectively apply the selected audit procedures in the process of equity audit. Among the main areas of the equity audit it is advisable to focus on the following: audit of the authorized capital, audit of the reserve and additional capital and audit of profit (loss) of the company.

After the audit, the revealed errors and facts of fraud should be grouped for the purpose of establishing their significance and preparing the final audit document – audit report.

If, according to the audit results, the auditor found no violations or found the violations that do not affect the legality of the functioning of the enterprise, do not harm the State, founders or shareholders, the auditor has a right to issue a positive audit report. If the auditor discovered violations that affect the legality of the functioning of the enterprise or harm the State, founders or shareholders [2], in this case, the auditor has no right to issue a positive audit report. In this case, the auditor has to publish the modified audit report.

Thus, the equity audit is a key to audit of the company since the audit results indicate the solvency or insolvency of the enterprise. Audit of the equity reveals a degree of financial independence and creditworthiness of the company. The result of the audit is important both for external and internal users.  External users need to know the level of solvency and independence of the company – it could become a decisive factor in the possibility of future financial investments in the company.  For internal users is important the solvency of the company and the legality of all transactions and functioning of the company for future management decisions.

So, summarizing all the above, we can make a conclusion, that the value of equity audit as the integral element of market relations is constantly growing. The intensification of this process in Ukraine is caused by the emergence of private property and the conflict of the interests of owners and hired management of the company. Although the audit as the direction of control is perceived ambiguously.  However there is an objective need in its functioning as an independent form of financial and economic control in order to stabilize economic development, eliminate the negative effect of transformation processes, ensure the interests and rights of the owners of the enterprise, improve the management system, prevent difficult economic situations. Therefore, for the further development of the audit there is a need to strengthen its theoretical basis and implement the reform measures in the context of requirements of the international audit standards.

 

Literature:

 

1.    Pylypchuk N.M. Audit of equity and ways of its further improvement / N.M. Pylypchuk // Bulletin ONU. Economics. – 2013. – V.18, I. 2(1) – P. 91–94.

2.    Odnoshevnaya O.A. Concept improvements accounting and audit company`s equity capital / O.A. Odnoshevnaya // Scientific Bulletin of Kherson State university. – 2015. – ¹13 – P. 154–157.

3.    Mochan A.O., Bandura Z.L. Equity as object of accounting and analysis / A.O. Mochan, Z.L. Bandura // Global and national economic problems. – 2015. - ¹18 – P. 1144-1147.

4.    NP(S)A 1 “General requirements for financial reporting”, approved by the Ministry of Finance of Ukraine since 07.02.2013 ¹73, with amendments. [Electronic source]. Access mode: http://zakon5.rada.gov.ua/

5.    Makarenko A.P., Malinina Y.M. Conceptual approaches to equity audit / A.P. Makarenko, Y.M. Malinina // Scientific papers of Poltava State Agrarian Academy. Series: Economical science. – 2013. – V.2, I.6 – P. 24-30.