Audit services accounting
A lot of companies sometimes engage independent auditors due to the law requirements. The cost of audit services is quite high and shall be record in accounting and balance sheet accordingly.
According to the Russian laws, specialized companies and individuals who are members of self-regulatory specialized organizations can engage in auditing. Accounting of audit services suggests that the company invites independent third-party professionals. Even if there are qualified auditors in the company’s staff, you cannot engage them. By this you will breach the principle of independence and impartiality.
Compulsory and voluntary audit
The law provides for number of situations when a company is required to undergo a compulsory audit. Joint stock companies and enterprises whose securities are admitted to trading shall carry out audit annually. A regular audit is also compulsory for credit and clearing organizations, professional participants of the securities market. In addition, if the volume from the sale of the company’s products exceeds 400 million rubles or the value of assets exceeds 60 million rubles for the previous reporting year, the company must also order an independent audit.
Audits provided for by law are carried out annually for which independent experts from outside are invited. Moreover, the regulatory authorities are not interested in the fact of passing the audit, but in the presence of company’s documentation that confirms it – auditor’s report. Accounting reports of the company are subject to audit.
There is also a voluntary audit which is carried out upon necessity and decision of the company’s owner. This may be required when the chief accountant changes, the company wants to attract investors or conduct financial optimization.
Mandatory audit services accounting
According to the Tax Code, the cost of independent audits is included in other expenses. Therefore, organizations that are required by law to conduct an annual audit are entitled to take into account the costs of calculating income tax by reducing the tax base. It is stated in the art. 264 of the Tax Code. The tax related to the costs of compulsory audit is deductible as usual. Please note that the audit company or specialist shall sign the invoice. You will also need documents confirming the expenses so you can properly draw up the costs.
Enterprises and entrepreneurs using a simplified taxation system can deduct from the income the cost of the services of auditors. But only in case if they chose the calculation based on “income minus expenses” model. Thus, the costs of compulsory audit of accounting reports can be included in the company’s expenses and allow to legally pay less taxes.
Companies and entrepreneurs using the simplified tax system do not pay VAT. Therefore, they cannot accept the tax for deduction and spend its amount as expenses.
Voluntary audit services accounting
The company can independently invite auditors at any time when management decides to analyze the primary documentation. An audit may also be required to attract investors, or when changing the leading specialists of the financial department. It will be beneficial if there is doubt about the economic efficiency of the existing system of work or when there is a need to optimize economic schemes.
If you carry out a voluntary audit, you can attach the report of the auditors to the annual statements. In other words, the company has the right to take into account the costs of an independent audit when calculating taxes. The tax code does not limit recognition for tax purposes to the costs of auditors. Nor does the Tax Code draw a distinction between the voluntary and the compulsory procedure, therefore, the audit procedure can be documented according to the same scheme as the compulsory audit of accounting reports.
When taxing profits, an enterprise takes into account the costs of a voluntary audit. But note that the costs must comply with the requirements of art. 252 of the Tax Code. In other words, they should be economically feasible and aimed at generating profit. In addition, you will have to document all expenses. Therefore, be sure to make a contract with the auditors, and then the audit completion act. All these documents will be needed to report expenses on audit in accounting and tax accounting.
Independent audit requires costs that go beyond paying specialists. This may be a review of economic reports, work with information: analysis of economic information, recounting, comparison and other procedures aimed at determining the accuracy of the records. Other related services include collecting, organizing financial information, and, if necessary, transforming reporting forms.
All these procedures may be included in the list of auditors’ tasks. To reduce the company’s taxable profits, be sure to document these procedures. If you can confirm the fact of receiving the service, as well as its need as part of the audit, the costs of additional procedures will be spent together with other audit work.
VALEN specialists have many years of experience in the field of tax and accounting audit services. We cooperate with small and large businesses, provide legal support to individual entrepreneurs and international corporations. To get a consultation, leave a request on the website or dial: +7 (495) 7-888-096! We are also waiting for you at our office in Moscow.