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Annotation.
The article analyzes the following main stages: study and analysis of
the practice that has developed in the company of business processes and workflow,
compliance with performance standards, development of a concept for building an internal
control and audit system in accordance with the requirements and expectations of the
company’s owners and management; development of internal company regulations and
document management system and assistance in the formation of plans and methods for
conducting an internal audit.
Keywords:
audit organization, economic entity, audit activity, auditing, auditor, internal
control, audit planning, preliminary planning.
The question of the need for an audit in Uzbekistan has arisen since the
development of foreign trade relations at the beginning of market transformations.
The attraction of foreign capital required guarantees of return, and, consequently,
an independent assessment of the activities of entrepreneurial structures. The
usual way to obtain reliable information is through an independent audit. Thus,
the need for audit has become an objective reality and without it, the government
cannot control the targeted use of budgetary funds.
Audit activity in Uzbekistan began in 1992, when the Law “On Audit Activity” was
adopted. National Auditing Standards (NAS) were developed, which were based
on International Auditing Standards (ISA). Considering that changes are made to
the ISA from time to time, the NAS contains outdated provisions compared to the
ISA.
NAS is one of the elements of regulation of audit activity and is the basis for
the development of internal standards of audit organizations and methodology
for conducting audits. In Uzbekistan, a phased reform of auditing activities is
underway. The main reformer of audit activity is the Ministry of Finance of the
Republic of Uzbekistan together with the Chamber of Auditors of Uzbekistan and
the National Association of Accountants and Auditors. On 10 November 2020,
a plenary session was held at the Legislative Chamber of the Oliy Majlis of the
Republic of Uzbekistan to discuss the second reading of the bill of the Republic of
SHAVKATJONOV MARDON ZOKIRJON
OGLI
student of Tashkent Financial Institute
(shavkatjonovmardon@mail.ru)
SCIENTIFIC SUPERVISOR: ABDULLAEVA
NILUFAR JAVDATOVNA
,
Senior teacher of the
Department «Budget Accounting and Treasury»,
Tashkent Financial Institute
FEATURES OF
AUDIT PLANNING IN
THE REPUBLIC OF
UZBEKISTAN
https://doi.org/10.47689/STARS.univer-
s i t y - 5 - p p 5 3 - 5 7
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Uzbekistan “On Auditing Activities”. It is known that this draft law was developed
in order to ensure the implementation of the resolution of the President of the
Republic of Uzbekistan PP-3946 of 19 September 2018 on the approval of the
“Action Plan for the further development of audit activities in the Republic of
Uzbekistan.” The discussion was attended by deputies of the Legislative Chamber
of the Oliy Majlis, initiators of the draft law, heads and employees of public audit
associations, a group of experts and audit organizations operating in the country.
The draft law was developed in order to unify and systematize the documents
governing auditing into a single normative legal document that provides for the
introduction of a number of norms aimed at ensuring freedom of auditing. In
particular, it provides for the implementation of audit activities only on the basis
of international auditing standards, simplification of the procedure, and giving the
right to conduct an audit. In addition, it is planned to create an effective system
for improving the qualifications of auditors. Most importantly, in order to ensure
freedom of audit activity, it is planned to establish a procedure for applying a
simplified register of auditors and audit organizations, with the abolition of the
procedure for issuing licenses for auditing. The abolition of the requirement for
the minimum amount of the authorized capital of an audit organization, as well
as the conduct of audits in the same economic entity for a period of no more
than seven consecutive years will serve to further develop this type of activity.
On the other hand, in order to ensure and improve the quality of audit services,
a specially authorized state div, together with republican public associations
of auditors, exercises external control over the quality of their work without
interfering in the financial and economic activities of audit organizations. It also
envisages the implementation of audit activities only on the basis of international
audit standards, and an increase in the minimum number of auditors in an audit
organization from the current two to at least four, which will also improve the
quality of the audit.
The principle of comprehensiveness of audit planning involves ensuring the
interconnectedness and consistency of all stages of planning - from preliminary
planning to draw up a general plan and audit program. The principle of continuity
of audit planning provides for the establishment of associated tasks for a group of
auditors and the linkage of planning stages in terms of timing and related economic
entities (structural divisions allocated to a separate balance sheet, branches,
representative offices, subsidiaries). When planning an audit for a long period
(in the case of audit support for an economic entity during the year), the audit
organization should timely adjust the plans and programs for the audit, taking
into account changes and results of interim audits. The principle of audit planning
optimality implies the provision of planning variability in the audit firm’s planning
process so that the optimal variant of the overall plan and audit program can be
selected based on criteria determined by the audit firm itself.
For effective audit planning, before writing a letter of commitment and before
concluding an audit agreement, the audit organization must agree with the
management of the economic entity on the main organizational issues related to
the audit. At the preliminary planning stage, the auditor should become familiar
with the financial and economic activities of the economic entity and have the
following information:
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-on external factors affecting the economic activity of the economic entity,
reflecting the economic situation in the country (region) as a whole and its industry
specifics;
-on internal factors affecting the economic activity of an economic entity related
to its individual characteristics.
In addition, the auditor should be familiar with:
-organizational and managerial structure of the economic entity;
-types of production activities and the range of products;
-capital structure and share price (if the shares of an economic entity are subject
to quotation);
-technological features of production;
-level of profitability;
-main buyers and suppliers of an economic entity;
-the order of distribution of profit remaining at the disposal of the organization;
-existence of subsidiaries and affiliates;
-an internal control system organized by an economic entity;
-principles of personnel remuneration formation.
At the stage of preliminary planning, the audit organization evaluates the
possibility of conducting an audit. If the audit organization considers it possible to
conduct an audit, it proceeds to the formation of staff for the audit and concludes
an agreement with an economic entity. When planning the composition of the
audit team, the audit firm should take into account the working time budget for
each stage of the audit (preparatory, main, and final); the expected time frame
for the group; the quantitative composition of the group; position level of group
members; a succession of group personnel; qualification level of group members.
In the process of preliminary acquaintance with the client, the auditor needs to
assess the financial stability of the client, the position of the client in the economic
environment, relationship with the previous audit firm, if any. It is advisable for the
new auditor to contact his predecessor, from whom he can obtain information about
the intentions of management, disputes regarding the application of accounting
principles, audit procedures, or payment. But first, the auditor must agree on the
possibility of such contact with the client. In the event that there were litigation
or disputes between the former auditor or the client, the new auditor should be
advised that any information may not be provided to him. The auditor needs to
carefully evaluate the situation if the client did not give permission to receive
information from the previous auditor or if the previous auditor refused to give
information. In addition, the auditor can use the information provided by lawyers,
other audit firms, and entrepreneurs. The assessment of the possible continuation
of cooperation is also carried out by firms that have been cooperating with the
client for more than a year. Controversial issues may lead to the termination of
cooperation. When evaluating the reasons for inviting the auditor, the latter should
determine the most likely users of the financial statements. If the reporting is used
intensively enough or the enterprise will be sold (reorganized) in the near future,
the auditor should collect a larger amount of material with confirmation of the
reliability of the reporting.
General information about the enterprise is necessary in order to further make
a reasonable conclusion about the reliability of the reporting. In particular, it is
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necessary to find out the specifics of the activity and industry characteristics of the
enterprise, understand its organizational structure, determine production, financial
and other ties, get acquainted with legal obligations, and obtain information
from various sources. Discussions with management staff, meetings with senior
management and executive staff, and conversations with managers and non-
accounting personnel contribute to obtaining first-hand information. Visiting and
inspecting the main sites, production units, and warehouses allow you to see for
yourself the availability and safety of assets, to form an idea of the production
conditions. It is important to use external and internal reports and publications.
External reports are business press and newspapers, industry analyst r e ports,
comparisons with key competitors and industry averages, government and tax
laws and regulations, and official statements; internal reports are financial reports,
monthly financial information, minutes of meetings of the board of d irectors,
management board, management, shareholders, reports of managers, including
budgets, forecasts, projects, internal reports of auditors, consultants, instructions
on procedures, policies within the company. You should get acquainted with the
history of enterprise development, types of activities, and accou n t ing policies
that existed in previous years, study special literature and meet with the client’s
auditors. It is very important to obtain information about the company’s policy
in various areas; the degree of responsibility and rights of managers of different
levels; circle of persons who have the right to change the policy of the enterprise.
One of the most important questions to be clarified at this stage of the work is the
definition of parties related to and associated with the enterprise (related parties
are subsidiaries and any other parties that can influence the management and
operational policies of each other). Information about them should be disclosed
if it is material: the nature and extent of transactions between the parties should
be described (sales and purchases between a subsidiary and a parent company,
equipment exchanges between subsidiaries and affiliates, loans a nd financial
assistance, transactions with key customers and suppliers, etc.), as well as a mutual
debt between them.
We believe that each audit company is unique and does not offer standard
solutions. The internal control system should be appropriate to the nature and
scale of the operations carried out. In addition, we should remember that the State
without control is not the State, because the purpose of auditing is to control the
execution of the laws of the State and it is a key to the development of the country.
Literature:
Planning an audit of financial statements in accordance with international
auditing standards. Planning an audit of financial statements in accordance with
International Standards on Auditing Standards Planning ISA 300 330 (tandem-
agro.ru)
Audit of credits and loans of the enterprise. Revision of settlements with banks
on loans (com-roseltorg.ru)
On Audit Activity - “Adilet” LIS (zan.kz)
The new edition of the Law of Uzbekistan “On audit activity” was approved by
the deputies (uzdaily.uz)
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Law of the Republic of Uzbekistan “On Auditing”. May 26, 2000.
Karimov I. A. Global financial and economic crisis, ways and measures to
overcome it in the conditions of Uzbekistan. –T.: Uzbekistan, 2009. 56 p.
Audit / Ed. M. M. Tulakhodzhaeva, T. I. Dzhuraeva, F. G. Gulyamova. - Tashkent:
TSEU, 2013.
Sanaev N., Narziev R. Audit. -T.: Shark, 2001
Stages of implementation and problems of implementation of international
auditing standards in Uzbekistan (cyberleninka.ru)
