Add color to an audit

Our businessmen often perceive audit as a regular systematic review, a necessary evil, and auditors are considered for people who issue the pile of annoying demands. Diego Simeone of financial reporting – that’s an auditor, that is what he/she can and should be. The auditor has the experience, knowledge and breadth to integrate and coordinate the work achievements of highly specialized participants in the preparation of financial statements, and his preventive role as such is in most cases much more useful and of wider social responsibility, which, unfortunately, many of the owners and directors of companies don’t recognize.

The most precious part of the necessary visits to the doctor refers to its final results after review. I do not mean prescribed therapy or polite goodbye, but the recommendations on what to do in order to counteract the same health issue in the future: exercise, regular sleep and healthy diet, plenty of fluids desirable for the palate… This is already a lifestyle, which is difficult to change and the change requires commitment and often additional professional help. But every effort in this regard is beneficial in several ways, namely – it pays off for years.

Al of that has to be understood with imperative to meet the requirements of the legislation in terms of obligingness of an audit. As a car enthusiast, I can identify this as heresy spread among the drivers that their relationship with the car, the traffic conditions and their own impulses perceived solely as a matter of daily routine.

What chances do we miss to make this little dream (life) a better experience?!

Add colour to an audit, it’s not black and white picture with minimal movements on the screen. Do not reduce audit on “post factum” act and prescribed therapy. Take advantage of auditors to improve their overall business style and ride through the business environment in business class.

An integrator of different skills

Companies of the public interest operate under the watchful eye of quite different regulatory bodies and I would not speak about that on this occasion. However, a simpler and more centralized company proprietary structure, the most limited liability companies, they can be very interesting to auditors. In fact, this interest has all the prerequisites to be mutual.

In situations where the owner of the capital at the same time is most directly involved in the business as a director, his knowledge and experience in economics and accounting is very important. And this demand can be quite delicate. It is logical that a pharmacist starts trade of pharmaceutical products, that electrical engineer, for example, register dealership of Siemens, a talented journalist starts the company in publishing activities. You will agree that in a sea of sweat spilled during their education to the needs of the future of the profession, there is not a drop that was shed in order to acquire knowledge of financial reporting.

The auditors are also highly educated persons with a lifetime spent in contact with people of different professional orientation and instructed in the basics of business in the most diverse industries. As a result, auditors acquire tremendous breadth in understanding problems in their daily operations, and that the owners and managers of businesses often are not mature enough, because during the formal education they did not have a chance to become more familiar with accounting issues. Here the auditor takes the role of a professional interpreter in a language that is “digestible” for business owners no matter the profession.

The financial statements in the previous period weren’t a kind of statement of the accounting sector in the company, although they were perceived that way, especially not in time of adoption International Financial Reporting Standards (IFRS). The financial statements represent management’s statement of the company, i.e. a series of assertions backed by the law stands leadership, and they refer not only to the accounting aspect of the report, but on the wider business and future plans, which reflect the financial position of the company. So, the financial statements are more the result of multidisciplinary work of management, accountants, appraisers, lawyers, brokers, actuaries, including specialists specialized in other areas, depending on the activities of the company.

The auditor has the experience, knowledge and breadth to integrate and coordinate the work of all the achievements of these highly specialized participants in the preparation of financial statements. Diego Simeone of financial reporting – that is an auditor, that is what he/she can and should be. In cases where the auditor participates in the preparation of financial statements, it cannot be carried out by an audit, but his preventive role is usually more useful and of wider social responsibility, which unfortunately many of the owners and directors of companies does not recognize.

Born for much more

Further, in the era of digital technology, we are inundated with news of widespread fraud in the operations of companies with the aim of acquiring illegal gains of dishonest market players. Therefore, internal controls in companies are becoming increasingly important in order to prevent illegal activity. But there is no force in this world, even so perfectly designed system of internal control to address this risk. Perfect internal control is ideal to strive for, something like fidelity in love.

Again, I cannot think of a more competent person than auditors, which would be able to participate in the design and unify the procedures that would also be the result of a “joint venture” of engagement of experts of various profiles.

Unnecessary procedures ultimately increase operating expenses of enterprises and reduce his competitiveness, while the absence of the necessary procedures significantly increases the risk of illegal activities to the detriment of the company. The auditor’s just a person who is able to find the right balance and scope of internal control, to assess how much kilogram should have that Russian ballerina who walks on the wire, and not to fall from height.

Another area in which the auditor is necessary, but insufficient recognized is the harmonization of our regulations with those applied in the EU. In the process, many areas remain “lost in translation”, but when it comes to the implementation of IFRS, additional difficulty is that these standards are subject to frequent changes.

As many accountants are not much talented for languages, companies often find themselves in a situation that (according to our law) they must apply the standards of the “accounting Bible,” which was originally written in English and the official translations into Serbian are dramatically late. If the company hired an expert licensed certified auditor, who was up to date with any changes to IFRS and was not angry with the Anglo-Saxon vocabulary, it would be a huge advantage over the competition.

Auditors are available at each location in Serbia, because they constantly travel gaining experience and meeting with the various situations and problems in day to day operations. They have the privilege to learn from the best experts that few of the owners and directors of local companies have the opportunity to meet. However, they can use the knowledge of auditors for the benefit of your company. The first step is the realization that the auditor was not born to be dealt only with the audit of financial statements.