Auditing Financial Statements: Workplace Impact

Posted on Dec 17, 2024 in Economy

Audit of Financial Statements in the Workplace

What Affects the Company:

  • Mirando discharged from the joint checking the social security section of the EAC (Economic Activity Code) and the Convention of Visits.
  • Working Centers Collective.
  • Book

What Affects Workers:

  • Registration of workers in companies, looking at their professional category.
  • Social security listing code.
  • Collective agreement.
  • Employment contract (the same as the legal work).
  • Personal data (number of children, family situation, and existence of members with disabilities). These data are important for calculating income tax.

What Affects Payroll:

  • Salary concepts (the minimum marked on the agreement). We must also look at the senior management of special contracts, premiums, or conditions agreed upon with the workers.
  • Payroll preparation law: especially watch discounts for Social Security and withholding for Social Security and personal income tax.
  • Insurance: facts and entered. If there are delays: high justification section of workers and contributions.

What Affects Inspections of Work:

Past (you have to ask for the minutes) and ongoing.

Important Notes: Manuals, Computer

Payroll Forms of Payment:

  • Cash: the worker’s signature.
  • Transfer: It goes without signing the employee.
  • Check nominative: It goes without the worker’s signature.

Social Security:

  • Manuals
  • Computer
  • Network (Internet) is not required but encourage you to use it (bonuses for Social Security).

Against Labor Link

  • Total gross income from wages (640).
  • Total in payroll compensation (641).
  • Totals for the Company (642).
  • Total income tax withholding (475).
  • Accounting for arrears (if current year: accounts 640 and 642; prior years: prior year expenditures).

Audit of Financial Statements in the Tax Field

Tax Obligations:

  • IAE: if you are properly discharged in accordance with the activities of the company.
  • IBI means premises where work is performed.
  • Periodic settlements:
    • VAT (monthly 303; quarterly billing < 6,000,000).
    • Personal Income Tax (withholdings for employees: quarterly billing < 6,000,000; professionals: monthly: 110).
    • IBU (retention of rental: Monthly/Quarterly: 115).
    • IRC Payment (withholding capital income: monthly/quarterly: 123) When the company pays interest to natural or legal persons.
  • Periodic reports: intra-Community transactions (349): Buying.
  • Annual Liquidation:
    • IS (200 or 201).
    • Payments split the model (202): is paid 20/7, 20/10, 20/12.
  • Annual report: summary: VAT (390) income tax withholdings (190), IBU (180), IRC (193) transactions with third parties (347) report transactions > €3005.06.
  • Other taxes: Vehicle Tax, Fords Tax, Signs Tax (Lugo and most cities).

IAE:

High entries (840) activities/local obligation to pay: paid or not.

IBI:

Each local self-discharge; check payment or not.

VAT (303)

  • 477 VAT passed on.
  • 472 VAT borne.

Income

Invoices or requirements: place and date of issue, NIF of the buyer and seller and fiscal data, description of the transaction amount (base), type, contribution, and total.

Personal Income Tax:

  • Employees: base (640 wages and salaries – exempt pay); amount (475 HP credit on taxes).
  • Professionals: base (salary: 623 independent professional services); amount (475 HP credit on taxes).
  • Verification: look and type of restraint applied to workers and professionals.

IBU (115) or IRC (123)

Intra-Community Operations (349)

Declare the total purchases and total sales to other members of the EEC indicating the intra-community NIF, the name, and total operations for the quarter. Findings: Shopping: total intra-EU suppliers. Sales: customers must have an intra-community NIF.

VAT (LatAm: 390, quarterly 300)

Accounting Audit

The auditor will:

  1. Take the balance sheet: asset-liability.
  2. Look at each group’s balance sheet and notes, but what do you find? It does not check everything (because it is impossible) and if there are irregularities, sampling deepens. If not, it means it’s okay.

Analysis Active

Non-Current Assets

Intangible Assets (What is Audited?)

Intangible assets are those that you do not see, which are not tangible, such as the canon, patents, software, administrative concessions, etc.

Tangible Fixed Assets (What is Audited?)

The same as before (acquisition price, which are in the business, the redemption right, if it was necessary to provide provision for depreciation, if they are insured, check provisions for major repairs, if properly accounted for casualties in tangible fixed assets), and higher:

  • For the properties (buildings and plots) should be checked acquisition price, the deed of sale, registration of property in the RM, the cadastre.
  • Check if the buildings are fully amortized over the value of the plant construction and not on the purchase price (which is included in the lot). Only pays for the building, not the site.
  • Check that those elements that can have explicit identification (number of frame, serial number) appearing in the description of each element, with the aim of verifying whether or not the existing element in the company corresponds to the item posted.

NOTE: Although these are many, they are easier to audit, such as not checking if a client owes me money or not.

Investments (What is Audited?)

Are the properties that the company has no effect on the business, if not as an investment for profit or for subsequent sale.

Financial Investments L/P (What is Audited?)

There are two types of investments:

  1. Investment Group and associated companies (270 counted in the group as a rule).
  2. Financial investments to / p that are not group or affiliated companies (counted in the subgroup 25 as a general rule).

a) Difference between:

  • Group companies: are those for which the company exercises control, either by the number of shares held by the company or who exercises power in executive positions.
  • Associated companies: those in which we have a 5% (if listed) or 25% (if not listed) of participation in their capital without going to have control of it, depending on whether the company is listed or not in stock exchanges.
  • Another company.

b) Duration:

If the investment is:

  • More than 1 year: it is a long-term financial investment.
  • Less than 1 year: it is a temporary investment.

c) Accounting:

  • That is properly accounted for by the purchase price in case of stocks and bonds.
  • In the case of loans is accounted for by the value of repayment.
  • In the bonds, which is accounted for by the deposit.

d) Provisions:

That they are endowed with relevant provisions when the purchase price is below market value, or where loans or guarantees reasonable doubt exists for recovery.

How can I check?

  • In the case of bonds and equities: there must be, or where a deed reflecting the purchase of such shares/bonds, or a bank document which will reflect the stock and bond we have in the bank. In addition, companies must keep a register of shareholders in which is reflected in every memento the number of shares that each shareholder, so that the auditor may request a certification to the different societies in which they have shares.
  • In the case of loans and guarantees, there must be a document that incorporates the amount of the loan/deposit, maturity, and specific conditions governing such transactions (interest rate, repayment deadlines and criteria, guarantees or warranties, etc.).

See also important in financial investments, look at the reclassification of the time (i.e. loan of 10 million, 3 million are due in April, another 3 due in September, and therefore x +1 in January there are only 4 million long term, and that ultimately is what we have to be checked).

  • Check and verify the accrued interest, if the deductions were made for the interest paid (models 123 and 133).

Current Assets

Stocks (the most difficult to audit)

1 .- Check in physical units: physical count (if this is not possible to date of closure takes place at the time of the audit, and verify the inputs and outputs are checked stocks at the end of the year). There is no need to keep track of all stock, shall continue in higher priced stocks and stocks randomly from less.

2 .- Check the unit value of existence: if we use an accepted accounting method for valuing inventories (FIFO, LIFO, PMP, …).

3 .- Checking if they are adequately equipped with provisions for depreciation of goods: that is, if the market value is less than the purchase price.

4 .- Check the rotation of the goods to check for products that the company is buying or producing in excess. IMP!

Debtors AC/P (clients and debtors)

1º .- The auditor found that the customers what we should really figure in accounting, this will make a circularization (commanded by the auditor, not the company, but signed by the company) to customers of greater balance within busiest customers and randomly to other customers. It asks the client if you are satisfied with the balance and transaction volume, otherwise, express their rehearsals.

2 .- Check circularization: in case of disagreement should be studied and analyzed with the client the reasons for the discrepancy.

Banks

We must send a circularization to all banks to tell us her account balances to 31/12, the risk that the customer has guarantees, loans, and credits. All this we have to collate/check with the records of the employer. If no match, we must perform bank reconciliations: are that from the accounts of the employer, with the outstanding notes by the bank account or by an employer, get to the bank balance.

Box

There will be a physical count of the money the day he reaches the company to match what’s in accounting and subsequently analyze the support of the Treasury for cash transactions accounted for. Be checked and the largest amount of a smaller amount randomly.

Liabilities Analysis

Equity (Net Worth)

Capital

1. Look at the capital (whether or not signed) is checked through the book of shareholders the par value of shares, the number of shares, and whether they are fully paid (if a company has 1000 shares of 10 € / acc, social capital is €10,000). If they are not fully paid the term is checked for pending disbursements if they conform to commercial standards.

2 º. Looking equity: we must detect a capital participation by a shareholder to qualify as group companies, associated or linked. Ex: if I have a society, to which 25% belongs to another, they are dependent, as would be associated or group.

Reserves:

Check that have enacted minimum reserves established by law in accordance with commercial law and the articles of association.

Surplus Carried Forward

Check both the positive and negative carryover from previous years if they meet the accounting result of these exercises and if they are properly documented exercise exercise by such remnants.

Dividend Delivered to Account

The balance of this account must reap the dividends actually paid on account of benefit of this exercise and that those amounts do not exceed the limit allowed by law.