Audit of RAS financial statements
FBK provides services for statutory and voluntary audit of financial statements, audits of specific reports or items of financial statements prepared in accordance with the Russian Accounting Standards (RAS) established by Federal Law No. 402-FZ “On Accounting” dated 6 December 2011.
RAS financial statements are one of the most common types of financial reporting produced by business entities.
A statutory audit of RAS financial statements is required under Article 5 of Federal Law No. 307-FZ “On Auditing” dated 30 December 2008 and other laws, including for:
- entities whose securities have been admitted to public listing, as well as issuers of equity securities obliged to disclose information in accordance with Federal Law No. 39-FZ “On the Securities Market” dated 22 April 1996;
- entities that are professional securities market participants (with an exception of investment advisers engaged in investment consulting), credit history bureaus;
- entities that have the legal form of a fund (with certain exceptions) in case the receipt of property for the previous reporting year exceeds RUB 3 million;
- entities (except for state and municipal bodies, unitary enterprises, agricultural cooperatives, unions of these cooperatives, consumer cooperation organisations) that meet at least one of the following criteria:
- revenue from business activities under Russian tax law exceeding RUB 800 million during the year prior the reporting year;
- total balance-sheet assets exceeding RUB 400 million at the end of the year prior the reporting year;
- JSCs with shares owned by the Russian Federation, constituent and (or) municipal entities.
The full list of cases requiring a statutory audit of financial statements for 2024 (as per the Russian legislation) can be found in the Official Document of the Minfin of Russia published on 17 January 2025.
FBK performs voluntary audits of full or partial RAS financial statements in the absence of a statutory audit obligation provided the company’s management, owner or a business entity’s counterparty seek to obtain an independent professional opinion on specific financial information.
The most common objectives of a voluntary audit include a change of ownership or management, securing financing, conclusion of an agreement or fulfilment of its terms, purchase or reorganisation of a legal entity, verification of key performance indicators for the company or its top management.
Additionally, FBK performs agreed-upon procedures in cases when the client does not need the auditor’s opinion in the form of an official document, but needs the auditor’s findings (e.g., comparisons, inspections, enquiries, recalculations, observations, etc.).
Agreed-upon procedures are carried out in accordance with the International Standard on Related Services 4400 (Revised) “Engagements to Perform Agreed-upon Procedures Regarding Financial Information”, which results in the issuance of a report on the performance of agreed-upon procedures.
The value of the agreed-upon procedures consists in the auditor’s recording of the existence or absence of discrepancies based on the results of the procedures, which the client evaluates independently and uses for their own purposes.
The subject matter of the agreed-upon procedures may be financial or non-financial information, such as:
- specific transactions, account balances or disclosures in the reporting;
- expenses incurred through funding programmes’ criteria;
- income used to determine royalties, lease payments or franchise fees based on percentage of revenues;
- equity or net profit metrics.
1. Audit planning
- Understand the organisation’s operations, environment, applicable reporting framework and internal controls.
- Identify and assess risks of material misstatement of the financial statements.
- Develop an audit approach.
- Communicate with those charged with governance (Audit Committee, Board of Directors) as required.
2. Evidence collection
- Perform tests of controls, substantive tests and analytical procedures.
- Evaluate the results of the procedures conducted.
- Discuss the findings with management.
3. Audit completion
- Report audit outcomes to management and those charged with governance as required.
- Issue an auditor’s report.
Upon completion of the audit of RAS financial statements, the client receives
- auditor’s report: Drawn up in accordance with legal regulations and standards, expressing an opinion on the reliability of the financial statements;
- written information report on the audit’s findings with comments on the detected errors and internal control deficiencies and recommendations for their elimination as per ethical requirements. Moreover, the recommendations in reports and oral communications may apply to the issues arising in the course of the audit, such as the application of accounting standards and policies, disclosure requirements in the financial statements, proposed adjustments to accounting records, observation results and internal control upgrades;
- compliance assurance: Adherence to regulatory requirements;
- system improvements: Enhancement of the company’s accounting, reporting, risk management and corporate governance;
- loss prevention: Mitigation of financial risks.
