The perspectives of the audit

The market trend is obvious – the consolidation of audit. About this they say the latest statistics and legislative initiatives of the state controller.
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Small companies will be forced either to join or to leave the market.
The locomotive of development, of course, will be the international experience of IFRS and ISA. The introduction of international standards establishes the integration of the Russian audit world audit. This new methodological approaches in the work that will qualitatively improve the market and raise the prestige of the services.
Given the current economic situation, the demand for audit services will decrease. This business will increase the need for services of consultants, due to the redistribution of assets, the need for optimization and protection from administrative pressure of the state (tax and legal support, restructuring and financial consulting, IT-support).
The future of audit for information technology. We will talk about the audit of computer systems and accounting databases. In the future it will be an electronic audit.
In its current form, the audit may not meet the needs of the market and consumers. The prospect of development is associated not with the classical audit of financial statements and forecasts of development of the enterprise. The audit must “see the future” of each particular client, which must be recorded in the audit report to improve its quality.The head audit organization – “outside the law”?
Comment by Andrey Starikova, head of legal and tax consulting audit company “Navigator-consult” on the question of amending the audit law, which in relation to the audit of commercial organizations place limitations on the transferability of the authority of the Executive body of another entity or individual entrepreneur.
1). Federal law dated 01.12.2014 N403-FZ “On amendments to certain legislative acts of the Russian Federation” (the beginning steps of the document – 02.12.2014), amended in the Federal law from 30.12.2008 N307-FZ “About auditor activity”. In particular, subparagraph “b” of paragraph 3 of article 16 of Federal law dated 01.12.2014 N403-FZ changes were made to the audit law, which in respect of the audit of the commercial organization establishes restrictions on the transferability of the powers of the Executive body of another entity or individual entrepreneur. The new version of subparagraph 4 of paragraph 2 of article 18 of Federal law dated 30.12.2008 N307-FZ:
“The powers of the Executive body of the commercial organization cannot be transferred by contract to another commercial organization or individual entrepreneur (Manager)”.
Paragraph 2 of article 18 of the Federal law from 30.12.2008 N307-FZ established the requirements for membership in audit organizations of the self-regulating organization of auditors. In particular, sub-paragraph 1 have restrictions regarding organizational and legal forms of audit organizations:
“a commercial organization may be created in any legal form except for public joint stock company, public or municipal unitary enterprises”.
From this rule it follows that the audit organization in any case can only be a Corporation (item 1 of article 65.1 of the Civil code of the Russian Federation (hereinafter – civil code)).
Paragraph 3 of article 65.3 of the civil code established the following:
“The Corporation is formed sole Executive body (Director, General Director, Chairman etc.).
The articles of incorporation may provide for granting of powers the sole Executive body to several persons acting jointly or formation of several sole Executive bodies acting independently of each other (the third paragraph of paragraph 1 of article 53). As the sole Executive body of the Corporation may be either a natural person or a legal entity.
In cases stipulated by the present Code, other law or the Charter of the Corporation, the Corporation formed a collegial Executive body (management Board, Directorate, etc.)”.
Thus, from the above it follows that today the audit organization and powers of the management body – sole Executive body, e.g. the General Director (or the sole Executive body collegial Executive body, e.g. the Board chair) in accordance with the direct provision of the Federal law may not be delegated by contract to another commercial organization or individual entrepreneur (Manager).
2). In accordance with the Constitution of the Russian Federation, civil law and labour law are divided, in particular on the basis of their management and administration (sub-item “on the article 71 and the subparagraph “to” article 72).
3). The Federal law of 05.05.2014 N99-FZ “On amending Chapter 4 of part one of the Civil code of the Russian Federation and on invalidating certain provisions of legislative acts of the Russian Federation”, a number of changes to the civil legislation of the Russian Federation. So, the current version of paragraph 4 of article 53 of the civil code now provides as follows:
“The relationship between legal entity and persons forming part of its bodies shall be regulated by this Code and adopted in accordance with it laws on legal entities”.
Thus, the regulation of relations between the legal person and controls that person fully (without exception) attributed to the jurisdiction of the civil legislation, namely in the conduct of the civil code and laws on legal entities.
The relationship between sole Executive body (sole Executive body), in particular the Corporation may not be subject to the labour legislation. Thus, a legal entity may not impose on the powers of the sole Executive body with signing the employment agreement. Such relations according to the civil code can only be executed civil contract (as it is seen, the contract of compensated providing of services).
This conclusion is indirectly confirmed by the final wording of the changed civil code of the Federal law from 05.05.2014 N99-FZ. Because the bill contained a provision on the possibility to conclude an employment contract, but the legislature removed that normal.
This conclusion is directly confirmed by the wording of paragraph 4 of article 3 and adopted the current Federal law from 05.05.2014 N99-FZ:
“Continue to bring the legislative and other normative legal acts acting on the territory of the Russian Federation, in accordance with the provisions of the Civil code of the Russian Federation (in edition of the present Federal law) legislative and other normative legal acts of the Russian Federation, as well as acts of legislation of the USSR, operating on the territory of the Russian Federation within the limits and in the manner prescribed by the legislation of the Russian Federation, shall apply insofar as not inconsistent with the provisions of the Civil code of the Russian Federation (in edition of the present Federal law)”.
4). As indicated above, the relationship between the entity and the management bodies of that entity (including sole Executive body), can be resolved only by the civil legislation.
Between the entity and the legal entity (including sole Executive body) shall be concluded a civil contract.
The sole Executive body (person) signing in accordance with the civil code of a civil law contract begins conducting business. In accordance with paragraph 1 of article 23 of the civil code, a citizen has the right to engage in entrepreneurial activities without forming a legal entity from the moment of state registration as an individual entrepreneur.
As seen, the above conflict can be resolved by amending the draft Federal laws, changing norms of Federal laws on legal entities, by specifying in the last special audit for corporations the norms on the powers of the Executive body of the commercial organization audit and mandatory guidance on the preferred application of such norms over the norms of paragraph 4 of article 3 of the Federal law from 05.05.2014 N99-FZ.