Financial control and audit are the most important means of ensuring the legality of the activities of the state and its structures in general, organizations and citizens in particular. They involve checking the appropriateness of the distribution and use of funds. Let us further consider in detail what the financial control system is, what verification methods exist, who is authorized to conduct audit activities.
Purpose and tasks
The purpose of financial control is to check the compliance of operations performed with money. The main tasks should be highlighted:
- Checking the fulfillment of obligations to the bodies of territorial self-government and the state by citizens and organizations.
- Supervision of compliance with the rules for the implementation of monetary transactions, settlements and storage of funds.
- Checking the correct use of financial resources by municipal and state enterprises that are in their operational management or economic management.
- Prevention and elimination of violations of the rules.
- Identification of internal production reserves.
The implementation of these tasks ensures the strengthening of discipline, which, in turn, is one of the parties to the rule of law. Financial control is an effective tool that checks compliance with the prescribed legal order in the course of the activities of entities. It allows you to evaluate the effectiveness and validity of actions, their compliance with the interests of the state.
Types of financial control
Classification is formed according to various criteria. Depending on the execution time, there are subsequent, current and preliminary checks. In the latter case, the procedure is carried out before performing operations related to the formation, distribution and use of funds. This type of check is of great importance in preventing breaches of discipline. Current financial control is carried out in the course of transactions. A follow-up check is performed after the actions taken. In this case, the state of discipline is assessed, violations are established, ways of prevention are identified, and measures are taken to eliminate them. There are also initiative and mandatory checks. The latter is carried out either in accordance with the requirements of the law, or on the basis of a decision of the competent authorities. Depending on the authorities that initiate the procedure, there are the following types of financial control:
- Presidential.
- Representative bodies of local administration or government.
- Public.
- Independent.
- On-farm anddepartmental.
- Executive bodies of general competence.
Departmental control of finance is carried out by the appropriate authority and is aimed at checking the activities of the entities included in their system. It is similar to the procedure in the structure of religious or public organizations. Internal financial control also has some similarities.
Extra
Forms of budgetary control of finances are defined in art. 265 BC. These include:
- Preliminary check performed during the discussion of the draft plan of expenditure and income items.
- The current revision. It is made when considering individual issues related to budget execution.
- Follow-up check. It is performed when reviewing and approving reporting documentation on budget execution.
State Inspection
Such financial and budgetary control is carried out by legislative, executive (including specially created) federal authorities. Of particular importance in this area is the Decree of the head of state, which regulates the measures to ensure such verification. The document says that the procedure is aimed at monitoring the implementation of the federal financial plan and plans of extra-budgetary funds, and the organization of money circulation. During it, the state of the state debt, the country's reserves, and the use of credit resources are checked. At the same time, the provision of benefits and advantages in the sphere of monetary circulation is being monitored.
Subjects
BThe legislation establishes the delimitation of functions and powers of structures that perform financial and economic control. These subjects are defined by norms. The implementation of financial control is entrusted to:
- Accounts Chamber of the Russian Federation.
- CB.
- Ministry of Finance.
- Federal Service for Supervision and Monitoring.
- Control and audit structures of executive bodies.
- Customs Service.
- Other authorized entities.
State control of finances can also be carried out by representative authorities.
Intrastructural verification
Such financial control is performed in:
- Committees.
- Ministries.
- Religious / public organizations and other entities included in the departmental structure.
Financial control is assigned in this case to the heads of the relevant associations, specially created audit units, usually reporting directly to the head of the ministry, committee or other entity indicated above. The Internal Affairs Structure Service performs audits of the activities of structural units of ministries that use public funds at least once a year. An unscheduled inspection is carried out on the basis of instructions from higher managers, decisions of judicial and investigative instances, as well as in the event of a change in commanding staff or the liquidation of a unit. The duration of the revision is no more than 40 days. An extension of this period is allowed with the permission of the manager who initiated the audit. This financial control is carried outfor:
- Identification of cases of shortages and theft of money and material assets, other violations of discipline in the field of monetary circulation.
- Development of proposals to eliminate the causes and circumstances of committing illegal actions.
- Taking action to recover damages from the perpetrators and so on.
Internal financial control of the institution
It is carried out in accordance with the provisions of Federal Law No. 119. Financial control and audit of organizations is an activity of independent services and persons. During such audits, the following is checked:
- Accounting statements.
- Payment and settlement documentation.
- Tax return.
- Fulfillment of other financial obligations and requirements of an economic entity.
Specific activity
Instances that have the appropriate permission are en titled to perform such checks. Certified persons who wish to carry out this activity on their own can start work after the state registration procedure as an entrepreneur, obtaining a license and entering information into the state register of firms. Permits are issued:
- Central Bank (for bank audits).
- Department of Insurance Supervision (to inspect insurance companies).
- Ministry of Finance (for audits of investment funds, stock exchanges and general audits).
Types of independent procedures
Independent control of the company's finances can be proactive and mandatory. Firstcarried out directly by the decision of the subject. Mandatory financial control of institutions is carried out on behalf of:
- Investigator.
- The body of inquiry.
- Sudah.
FZ No. 119 regulates in detail issues related to payment for the activities of the auditor, the responsibility of the subject for evading mandatory inspections, the procedure for attesting a company for the right to conduct control activities.
Quality check
The financial control system functions in accordance with strict legal requirements. The quality of the performed independent audit can be checked by the body authorized to issue licenses, at the request of the audited entity itself, at the suggestion or initiative of the prosecutor. If errors are identified during the implementation of financial control that led to losses for the subject or state, the contractor may be charged:
- Full amount of losses incurred.
- Cost of performing a retest.
- Fine for violations, deducted to the budget.
Collection is carried out in court.
Independent Verification: Implementation Features
Audit in practice is divided into several stages:
- Assessing customer needs.
- Formation of groups of performers and definition of tasks.
- Schedule test.
- Assessment of internal controls.
- Risk identification.
- Performing general and essential procedures.
- Composingsummary report.
- Closing meeting.
- Analysis of results.
Customer needs
This stage is considered preparatory. As part of it, the performer must identify the needs and needs of the subject, find the best ways to meet them. For the effective implementation of this stage, interviews are conducted with employees, the manager himself. It is advisable to involve the relevant officials (tax officials, consultants, etc.) in the implementation of the first stage. Their experience with previous customers, as well as their skills, will ensure that customer satisfaction is as complete as possible.
Planning
It is held as part of the first meeting of the group. On it, each employee involved in the work provides the information collected at the first stage. Planning involves the development of an audit strategy. It should meet the identified needs of the client as much as possible. In addition, the strategy must take into account the likelihood of risk and the economic aspects of the work. The first meeting should be attended by the customer's employees, the employees executing the project. At the end of the meeting, the deadlines, schedule, results of the audit should be set, and other issues of importance in the work should be considered.
Evaluation of the company's own audit funds
As part of the audit activity, performers must be aware of the significant control procedures that the client uses in his firm. To them, includingother, include the process of closing financial statements. The contractor must determine those procedures that affect the material reporting items. At this stage, documentation is being prepared or updated, including descriptions, analysis forms for all procedures.
Risk Probability
A mandatory activity when performing an audit is the evaluation of the effectiveness of controls found in the essential procedures of the company's own audit. The contractor also makes a selective assessment of methods that are comprehensive. This is necessary to determine their degree of reliability and accuracy, reducing the amount of audit work.
General and essential procedures
Performance of the remaining activities is aimed at further reducing audit risk to an optimal level. They are made on the basis of the results of general and selective checks of the previous stages, in accordance with the developed strategy. Under general and substantive procedures, detailed data investigations and analyzes can be performed when the primary information is judged to be reliable.
Summary report
When compiling it, the possibilities and risks of the subject are analyzed, and the results of the audit are summarized. To do this:
- Substantial issues identified during the audit are being discussed and resolved.
- Audit risks identified during planning and assessment of the state of controls in the company are regulated.
- Describes additions to be included in client reporting.
- Commonanalytical verification of accounting documentation.
- Conclusion being formulated.
Closing meeting
It, like the preliminary one, is carried out with the participation of the relevant employees of the customer's company. The meeting discusses and analyzes the following issues:
- Project accounting statements.
- Letter to supervisor.
- Problems identified during the verification process and how to solve them.
- Tax questions.
- Other outstanding issues (if any).
By the end of the meeting, the employees present should come to the same understanding of all the issues discussed. At the same time, the final approved list of corrective entries with the calculations made and accompanying explanations and other necessary comments should be presented at the meeting. It is advisable to hold a closing meeting before the conclusion is approved.
Work results
At the end of the audit, the activities of the performers who were part of the group should be analyzed. Their work is evaluated in terms of the effectiveness of the administration of the developed project and the implementation of the audit. If shortcomings are found in the activities, it is advisable to sort them out at a general meeting.
Supervision of banking and credit organizations
Financial control by these entities is carried out in the course of lending, investment, and settlement operations. Banking supervision is necessary to ensureeffective use of loan funds. It focuses on strengthening financial discipline.
The role of verification in the overall payment structure
Financial and economic control acts as one of the most important parts of the payment system. Due to its implementation, the correctness, completeness and timeliness of income generation, the accuracy and validity of costs are ensured. The effectiveness of the audit is considered a prerequisite for a successful social and economic policy, the stable functioning of the administrative apparatus. The audit is also aimed at identifying inconsistencies in the activities of organizations with existing legal requirements. The financial control of the enterprise is carried out in relation to all its activities as a whole, its individual structural divisions. Audits are subject primarily to the work of accounting. The audit also applies to the financial and other economic services of the company. This allows timely detection of violations and bringing the perpetrators to justice.
Accounts Chamber
It acts as the leading auditing body in the country. In accordance with the BC, the powers of the Accounts Chamber are established. In particular, it controls the implementation of the financial plan, the state of off-budget funds, external and internal debt, the procedure for granting tax benefits.
Ministry of Finance
According to Government Decree No. 329 of June 30, 2004, the Ministry of Finance acts as the federal executivebody that implements the functions of developing state policy and normative regulation in the areas:
- Banking, currency, insurance, tax, budgetary activities.
- Accounting and Accounting.
- Audit activities.
- Processing, production and circulation of precious metals and stones.
- Customs payments and the establishment of the cost of transported vehicles and goods.
- Investing in the funded part of the pension.
- Conducting and organizing lotteries.
- Production and circulation of printing.
- Civil service funding.
- Combating money laundering and supporting terrorism.
The Ministry of Finance coordinates and controls the activities of the Federal Tax Service, the Services for Insurance and Budgetary Supervision and Monitoring. The Ministry is inspecting the implementation of regulations on issues related to the calculation and collection of payments, the establishment of the cost of transported vehicles and goods by the Customs Service. In its activities, the Ministry of Finance is guided by the provisions of the Constitution, sectoral federal laws, acts of the president and government, and international agreements. The work of the ministry is carried out in cooperation with other executive bodies of the federal and regional, municipal levels, public organizations and other associations.
Other entities
Representative bodies in the course of financial control can receive from the executive structures all the materials required for the approval of financial plans and revision of their execution. Feder althe treasury performs current and preliminary verification of operations with funds of recipients and managers (including the main ones). The latter audit the use of receipts by recipients. Chief administrators are authorized to carry out control in subordinate municipal and state organizations, including budget ones.
Methods
Finance control can be done in many ways. The main ones include:
- Revisions.
- Analysis.
- Check.
- Examination.
- Surveillance, etc.
The most common method is revision. It involves checking the primary documentation, in accordance with which financial and other operations were performed. The audit also concerns warehouse and accounting data. As part of this procedure, inventories are performed. Audit can be complex (frontal) and selective. Based on the results of the event, an act is drawn up in which the verification data is entered. Based on this document, measures are taken to eliminate violations (if any have been identified). Observation is focused on getting acquainted with the state of economic activity of the subject. The survey may use techniques such as surveys and questionnaires. This verification is done on site. Expenditure, reporting and balance documents are analyzed. All these methods are aimed at identifying inconsistencies with the requirements of the law and violations of discipline.
Conclusion
Finance control occupies the most important position in the payment structure of the state. Hecan be performed in various ways and services, affect different subjects. However, regardless of this, financial control pursues the goal of identifying violations, eliminating them, verifying the compliance of activities for the disposal of funds with the requirements of the law. Effective and timely verification ensures the stable operation of organizations and government agencies. This is essential to strengthening the economic condition of the country.
