Which organizations are required to conduct a mandatory audit of reporting: 6 cases under Law No. 307-FZ
Which organizations are required to conduct audits? In Art. 5 of the Law “On Auditing Activities” dated December 30, 2008 No. 307-FZ lists cases of conducting a mandatory audit. The law describes the criteria for organizations subject to mandatory audit, as well as other conditions taken into account when deciding when to conduct a mandatory audit:
In fact, the list of cases of mandatory audit is open. This means that companies not listed there may also be subject to mandatory audit if such a requirement is established by other federal laws.
See also:
- “Small businesses have been exempted from mandatory audit: the law has been adopted”;
- “Standard audit for 2021: new criteria and table.”
Next, we will consider the main cases of mandatory audit under Law No. 307-FZ (in the figure these are cases 1-5). Case 6 does not require special decoding, since the law lists specific organizations. They are required to conduct an audit annually, regardless of the fulfillment/non-fulfillment of other mandatory audit criteria.
Find out how to pass a mandatory audit in the Typical Situation from ConsultantPlus. Learn the material by getting trial access to the system for free.
List of companies required to conduct audits published by the Ministry of Finance of the Russian Federation
The list of cases of mandatory audit of accounting (financial) statements for 2021 is posted on the official website of the Ministry of Finance of the Russian Federation (section “Auditing activities - General information - Statutory audit”).
It summarizes the cases of mandatory audit of accounting (financial) statements for 2017 provided for by the legislation of the Russian Federation.
AUDIT OF FINANCIAL INVESTMENTS
For each case the List contains:
- legislative norm(s);
- type of reporting subject to mandatory audit;
- subjects of audit activity who have the right to conduct statutory audits.
For ease of use of the List, cases of mandatory audit are combined into the following groups:
- according to the organizational and legal form of organizations;
- by type of activity of the organization;
- specific organizations;
- organizations that have certain financial indicators;
- organizations preparing consolidated statements.
The list is not a normative legal act, does not contain rules of law, and is for informational purposes only.
TYPES OF AUDIT REPORTS
Important!
The Ministry of Finance of the Russian Federation has published a list of companies that are required to conduct an annual statutory audit for 2021 (Departmental information dated January 12, 2018, No. IS-audit-20).
The List includes 71 cases of mandatory audit of accounting (financial) statements for 2021 (the List for 2021 includes 69 cases).
The list includes the following new cases of mandatory audit:
- an organization that is a tour operator operating in the field of outbound tourism, if the total price of a tourist product in the field of outbound tourism for the previous year amounted to more than 400 million rubles (clause 51);
- the organization is a fund created in accordance with the Federal Law “On Innovative Scientific and Technological Centers and on Amendments to Certain Legislative Acts of the Russian Federation” (clause 52);
- public law (clause 69).
MANDATORY AUDIT FOR LLC
PJSC or JSC: who needs to audit the statements
Legislators have singled out the obligation to conduct audits by joint-stock companies as a separate case. As soon as the phrase “joint stock company” appears in the legal name of a company, it automatically has an obligation to conduct an audit. It does not matter whether this form was chosen by the owners when the company was founded or whether it acquired this status after a transformation or change of organizational and legal form. The form does not matter: PJSC or JSC.
Which companies are recognized as joint stock companies and what types of them exist are shown in the figure:
Types of audit checks
The following types of audit control activities are distinguished:
- complete audit - analysis of all documentation of the enterprise, audit of accounting and reporting: accounting, tax;
- selective - checking certain areas of the company’s activities, which ultimately can give a reliable complete picture of business processes;
- combined. It is carried out using the methods of the first two;
- documentary - only the documentary base is subject to verification, bypassing inventory studies, personnel surveys, and structure building analytics;
- actual. It takes into account the audit of reporting on site, inventory together with employees, and activity analytics.
Mandatory or optional audits are planned directly at the enterprise. It should only be carried out by a certified expert who is a member of a self-regulatory organization of auditors. Such an expert must be included in the register and comply with the requirements of international standards.
Are you allowed to participate in organized trading? Get ready for the audit!
If an issuing company wishes to include its securities in the quotation list, it must submit an application of a certain form to the auction organizer and provide detailed information about itself. The standards for admission of securities to public placement, circulation and listing are given in Art. 14 of the Law “On the Securities Market” dated April 22, 1996 No. 39-FZ and in the Regulations on the admission of securities to organized trading (approved by the Bank of Russia dated February 24, 2016 No. 534-P).
The fact that the issuing company's securities are admitted to organized trading places it in the category of persons obligated to audit the financial statements.
The intricacies of accounting and taxation of transactions with securities will be revealed in the following materials:
- “Is the sale of securities subject to VAT?”;
- “Accounting for securities in accounting (nuances).”
How the type of reporting prepared affects the obligation of an audit
If a company presents and/or publishes summary (consolidated) financial statements, it automatically falls under mandatory audit (Clause 5, Article 5 of Law No. 307-FZ).
The requirements for consolidated reporting (its preparation, presentation and disclosure) are established by the Law “On Consolidated Financial Reporting” dated July 27, 2010 No. 208-FZ. The main provisions of this law, which help to understand the nuances of consolidated reporting, are presented in the figure:
Presentation and disclosure of consolidated financial statements is a process monitored by the Central Bank of the Russian Federation (with the exception of certain categories of reporting companies).
Find out more about the specifics of preparing consolidated financial statements here.
Revenue exceeded the criterion of 800 million by 1 ruble - an audit is inevitable
The number of persons required to conduct an audit may include companies that have never encountered an audit. To do this, it is enough to exceed the threshold level for one or both financial indicators specified in paragraph 4 of Art. 5 of Law No. 307-FZ.
The specific cost criteria in question are shown in the figure:
Who should conduct a statutory audit if the specified financial indicators are exceeded? Does the legal form of the company or its types of activities matter? In this case, exceeding one or both financial indicators is a separate criterion based on which a mandatory audit is assigned.
Example
The production structure of TekhnoStroyProekt LLC has been designing and manufacturing specialized electrical installations for the last 10 years. Thanks to a large contract in 2020, sales revenue amounted to RUB 801,331,120. The amount of assets at the end of this period is RUB 20,678,455.
Of the two criteria, only one was exceeded, however, TekhnoStroyProekt LLC is obliged to conduct an audit for 2021 and submit an audit report.
It does not matter that revenue exceeded the threshold level by only a fraction of a percent. For any excess of the established criterion (even by 1 ruble), the law requires an audit.
The considered cases of conducting a mandatory audit in accordance with the requirements of Law No. 307-FZ are not a complete list. We will tell you further who else is required to audit the annual financial statements.
Find out what is the responsibility for failure to conduct a mandatory audit in ConsultantPlus. If you don't have access to the system, get a free trial online.
Fines
The law specifies the following deadlines for submitting a mandatory audit report:
- simultaneously with the annual financial statements;
- separately, no later than ten working days from the end of the audit (maximum - until 31.12 of the year following the reporting one).
If these rules are violated, the company is subject to the following fines:
- Lack of an audit report – 5,000-10,000 rubles if the violation was the first, and up to 20,000 if it was repeated. The maximum possible disqualification of an official is up to 2 years.
- Failure to provide an auditor's report - financial sanctions are imposed on officials (300-500 rubles for any document not provided) or legal entities. persons (3000-5000 rubles).
- Disclosure of the audit report of a joint stock company - in case of violation of the requirements for publishing the report, a fine is imposed on the official (30,000-50,000 rubles or his disqualification for up to 2 years) and on the JSC itself (70 thousand rubles).
For small and medium-sized businesses, tax inspectors can issue a warning without imposing a fine.
If the law does not oblige the company to conduct an audit
If an organization does not fall under any of the conditions listed above, it would be useful to conduct an audit on its own initiative to:
- Check the accuracy of financial and accounting statements. The procedure will help to detect weaknesses and errors in documentation, eliminate shortcomings and correct data in a timely manner - before regulatory authorities intervene in the situation. This is an important stage in receiving investment and increasing confidence in the company.
- Make sure your employees are professional. It is important to keep track of all changes in legislation in a timely manner. If the company’s accountant does not have time to do this or makes mistakes, then it is better to quickly identify and correct it.
- Check tax risks. A necessary procedure before a possible audit by the tax office or in case of any suspicions from the company management about accounting errors.
Conducting an audit of an enterprise will help in effective business management - it will provide reliable information about the financial position of the organization and help avoid fines and other liability. Our company conducts mandatory and proactive audits for enterprises of any size. We are licensed for official auditing activities (IP Kobyakova I.B. - member of SRO NP AAS No. 20216028677).
Results
Cases when a mandatory audit is needed are described in Law No. 307-FZ and many other federal laws. This category includes joint-stock companies, organizations with a certain amount of revenue and amount of assets, as well as many other business entities (whose securities are admitted to organized trading, publish consolidated statements, etc.).
Sources:
- Federal Law of July 27, 2010 No. 208-FZ
- Federal Law of December 30, 2008 No. 307-FZ
- Federal Law of April 22, 1996 No. 39-FZ
You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.
