What is a Financial Audit?

Enterprise financial audit refers to the authenticity, legality, assets, liabilities, profit and loss of state-owned enterprises (including state-owned holding enterprises) in accordance with the procedures and methods prescribed by the Audit Law of the People's Republic of China Effectively conduct audit supervision, make objective and fair evaluation of the accounting information reflected in the audited enterprise's accounting statements according to law, form an audit report, issue audit opinions and decisions, and its purpose is to expose and reflect the true situation of corporate assets, liabilities, profit and loss, and investigate Various violations of laws and regulations in corporate financial revenues and expenditures, safeguarding the rights and interests of state owners, promoting the building of a clean government, preventing the loss of state-owned assets, and serving the government to strengthen macroeconomic regulation and control.

Financial Audit

First, check whether all types of statements are fully prepared. Read the statements carefully. Pay attention to the financial status, operating results, and changes in funds reflected in the statements compared with the analysis of other accounting periods. Do you have to disclose any significant factors? Combined with the audit of the contents of the report, verify whether the notes in the report are true. The audit points are as follows:

Financial audit balance sheet

Auditors should pay attention to checking the correctness of the balance sheet preparation method, the completeness of the statement items, and the consistency of the items and contents reflected in the statements.

(1) Check whether the balance sheet is prepared in accordance with the subjects and format prescribed by the accounting system, and reconcile the relationship between the various items in the statement.

(2) Compare the numbers of each item in the current balance sheet with the previous period or each period, and find out whether there have been significant changes or abnormal circumstances; at the same time, check the balance between the balance sheet and other statements and perform recalculation Check.

(3) Comprehensively check whether the balance sheet items and the general ledger account or relevant subledger figures match, and check the current account balance and balance of the general ledger with the sum of the current account balance and balance of each subordinate account of the subordinate account to which it belongs, Check that the records between the books match.

(4) Auditors should pay special attention to the above inspections. After analysis and comparison, if the amount of certain items does not match the production and operation activities of the enterprise, they must carry out a key inspection on these items, from the general ledger account to the original When necessary, the voucher shall be verified with the letter of current account and the inventory of assets such as inventory and fixed assets to verify the authenticity of the figures in the statements.

Financial audit income statement

(1) Check the completeness of each item in the income statement, whether there are omissions or errors, and check the relationship between the numbers of each item.

(2) Check the relationship between the profit and loss statement and other statements, and pay special attention to verifying that the product sales income, product sales costs, product sales expenses, sales taxes and additional current occurrences listed in the profit and loss statement are consistent with the number of its attached schedules. Whether the net profit listed in the income statement is consistent with the figures in the profit distribution statement.

(3) Check whether the number of each item in the profit and loss statement is consistent with the related general ledger and detailed account numbers. At the same time, through analysis and verification, find out whether the changes in the number of the profit and loss items are abnormal and further check the doubts.

(4) Based on the inspection of the detailed accounts of costs, sales revenue, profit distribution, etc., verify that the figures of costs, revenues, investment income, and non-operating income and expenditure are accurate. If necessary, check the relevant original vouchers.

(5) Combined with the inspection of tax adjustments, verify whether the calculation of income tax is correct, conduct a detailed inspection of each deduction item, review the relevant detailed account and the original voucher, and pay attention to whether there are multiple deduction items or the deduction amount exceeds the standard.

Financial audit cash flow statement

(1) Check whether the cash flow statement has been prepared in accordance with the specific accounting standards for enterprises.

(2) Check whether the determination of cash equivalents is appropriate.

(3) Check whether the calculation of cash inflows and outflows in the business activities, investment activities and fundraising activities of the enterprise is complete and accurate and consistent with the records of relevant accounting information and statements.

(4) Check whether the impact of exchange rate changes on foreign currency cash flows has been calculated correctly.

(5) Check whether major investment activities and financing activities (such as long-term investment and debt repayment) that do not involve current cash receipts and expenditures but have an impact on the financial status or future cash flow of the company are explained in the notes to the cash flow statement.

Consolidated financial audit statement

(1) Check the basis for preparing consolidated statements. That is to review: the comprehensiveness and completeness of the contents of the consolidated statement; the completeness of the information provided by the subsidiary (including differences in accounting policies of the subsidiary, parent-subsidiary transactions, debts and debts, investment information, subsidiary profit distribution, and equity change information); parent and subsidiary companies Consistency of settlement date and accounting period; consistency of accounting policies between parent and subsidiary companies; correctness of accounting treatment of parent company's investment in subsidiaries.

(2) Check the scope of consolidated statements. According to the long-term investment account of the parent company and the approval documents indicating the investment and invested relationship between the parent company and its subsidiaries, it is indeed an enterprise in the scope of consolidation. For subsidiaries that should be merged but not merged, find out for what reasons they are not included in the scope of consolidation; for enterprises that should not be merged and merged, find out whether the parent company has acquired (transferred) without approval Shares, etc.

(3) Check the economic exchanges within the enterprise group. That is, check whether the information provided by the parent company on economic transactions is complete, and verify the authenticity of the consolidated statement by checking the offset relationship of the consolidated statement.

Check whether the parent company's treatment of the investment income of subsidiaries is accounted for using the equity method in accordance with the accounting system and whether the minority shareholders' rights are correctly reflected. Whether the amount of the parent company's equity capital investment in the subsidiary is offset by the share held by the parent company in the owner's equity of the subsidiary.

Check the offset of creditor's rights and debts between the subsidiary and the parent company and between the subsidiaries. According to the relevant information, verify whether the creditor's rights and debts really exist; check whether the parent company will offset the consistent creditor's rights and debts according to procedures and regulations; check the inconsistencies of creditor's rights and debts item by item to determine whether they should be offset and how much; Whether the provision for bad debts provided by internal accounts receivable has been offset against management expenses and whether the offset amount is correct.

Check whether the mutual offset of unrealized internal sales profits is correct. On the basis of checking the original data, a partial check of the offsetting entries was conducted to verify the correctness and authenticity of the parent company's offsetting of internal sales and unrealized profits between the parent, the subsidiary and the subsidiary.

(4) Check whether the group company has prepared a complete offsetting accounting entry, use the prescribed offsetting procedure to prepare the entry for testing, and see if there is any summary that has not been prepared and the offsetting entry has not been prepared and the preparation of the offsetting entry is incorrect. And other issues.

Purpose of the audit

The purpose of audit refers to the objectives and requirements to be achieved by the audit, and is the guide for audit work. The audit purpose includes general purpose and special purpose.

The general purpose of audit is that the CPA audits the accounting statements of the audited entity and expresses an audit opinion. The CPA audit opinion usually includes fairness, legality, and consistency. Fairness is the primary content of audit opinions issued by certified public accountants. Legality means that the certified public accountant should evaluate whether the preparation and reporting of the audited entity's accounting statements and its financial accounting treatment have complied with the accounting standards and other relevant national financial accounting regulations. Consistency means that the CPA should evaluate whether the audited unit's treatment method meets the requirements of the consistency principle.

The special purpose of audit is that the certified public accountant audits specific matters other than the annual accounting statements of the audited unit and expresses an audit opinion. Special audit opinions generally include aspects of fairness, legality, and consistency, except that the objects expressed in the audit opinions are different.