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Audit – savings and a positive image
Interview with Jacek Mateja, Partner in Deloitte Audit Department
www.deloitte.com/pl
On 1 October the first meeting organized by Deloitte was held to discuss issues related to audit in companies. Could you provide any details for our readers?
Jacek Mateja: - The series of CXO Meetings is addressed to company managers, CEOs, management board members as well as CFOs of companies operating in Northern and Western Poland. Seminars are held in groups ensuring optimum comfort of knowledge transfer as well as the opportunity to discuss issues in detail and ask questions.
The combined theoretical presentations dedicated to individual topics with more practical workshops during which we attempted to involve participants in discussions as well as encourage them to share their experience and opinions regarding the presented issues.
The series was opened with “Role of audit in strategic management of the company”, presented jointly with Anna Wach on 1 October 2009 in Szczecin.
When should a company audit its financial statements?
- One of the most important requirements to audit financial statements is formal and imposed on companies by the Accounting Act. However, it is not only the legal criterion that affects the willingness to have financial statements audited. A number of entities, including banks, owners, clients or even employees are interested in the approved financial statements and the opinion issued by a certified auditor. In the majority of companies, owners do not perform the function of management board members, hence the need to control the entity’s finances by the shareholders. Fraud may also be the case and financial audit is frequently the only tool to detect it. Our clients trust us and believe that the audit of financial statements will allow us to identify such instances of dishonesty and inform them accordingly. Additionally, a thorough and reliable audit is an opportunity to identify optimization possibilities (including tax optimization), which will frequently enable the owners to make considerable savings.
The formal requirements regarding financial statements audit are set forth in the Accounting Act. Entities subject to audit include those which meet two out of three statutory requirements, i.e. the average annual number of employees (in FTEs) is at least 50, the value of total assets disclosed in the balance sheet in the Polish currency exceeded the equivalent of EUR 2 million as at the end of the financial year or the net revenues from sales of products and goods as well as financial transactions in the Polish currency exceeded the equivalent of EUR 4 million.
Ever more frequently, audit decisions are taken by owners of private companies, universities, organizations and associations, who want to verify the correctness of their finances and introduce the required internal control streamlining solutions.
What should the result of an audit be?
- Pursuant to the applicable law, an audit report and opinion on the audit of the financial statements ought to be provided by the certified auditor. However, post-audit recommendations included in a Letter to the Management Board in which the auditor presents their observations and proposes the methods of streamlining the financial procedures applied by the company, are of key importance. Familiar with best practices, having industry expertise and practical knowledge, the auditor may provide objective and reliable information on the areas which require special attention of the owners.
Who uses audit data?
- CFOs and chief accountants who use the results of an audit and cooperate with the auditor in the right way, may initiate actions in many areas of the company’s operations. The auditor’s opinion itself provides valuable information for the company and its owners. It allows for verification of the correctness and accuracy of the financial statements as well as the fairness of the information disclosed therein. Audits constitute an invaluable source of information on the position of the audited entity. However, a survey conducted by Deloitte shows that the data from financial audits are not used to the maximum extent. They are mainly used by management boards and financial departments. Surprisingly, 12% of those surveyed admitted that the reports and information prepared as part of financial audits are not used by owners/major shareholders who, thanks to verified financial statements, are able to gain most comprehensive information on the condition of the audited company.
What is the CFO’s role in an audit?
- The present economic slowdown has clearly confirmed the thesis that nowadays the management boards of companies need CFOs who will be their partners. In order to fulfill the requirements imposed by the management, CFOs not only have to show their effectiveness in the time of recession, but also to identify the opportunities to improve performance and generate growth in various scenarios of market revival and manage risk effectively.
How can the auditor’s recommendations streamline corrective actions undertaken by companies?
- Appropriate recommendations may contribute to the improvement of the quality of capital group reporting, which increases the effectiveness of capital group management, accelerates information flow and reduces operating expenses.
Can audit results be used for corporate image building purposes?
- According to the survey conducted by Deloitte, the majority of CFOs appreciate the role of an audit (as much as 73% responded that the report and conclusions derived from the financial audit are a source of important information for the shareholders), providing wider access to its results is not common. For a significant number of companies good financial results or positive opinions about the current activities were not used to build the company’s image. All this when good quality of an audit builds market confidence and high quality of financial statements may be an effective PR tool.
What services does Deloitte offer to West Pomeranian companies?
- The Szczecin branch of Deloitte was established in summer 2007. Our office employs both experienced specialists and talented university graduates. We participate in domestic and international training to ensure our continuing education so that we can provide superior quality advisory services at competitive prices.
The Szczecin team delivers services to large and medium enterprises representing various industries, with Polish and foreign capital, having heir registered office or operating in Northern and Western Poland.
Our specialists from the Audit Department conduct financial statements audits in line with local GAAP and international standards. They also offer a wide range of corporate accounting advisory services.
Deloitte’s local office in Szczecin cooperates with other offices in Poland, Europe and around the world. We offer our clients top quality services in business consulting, finance and risk management. We also deliver comprehensive HR management services and have the largest actuarial practice in Central Europe.
More information on audit issues available at www.deloitte.com/view/pl_PL/pl/uslugi/audyt/index.htm
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