Audit and accounting insights - page 10

During the year a number of economic events take place in a company, affecting the overall image of the entity. Not always, however, do those events have the same impact on the entity's results presented in accordance with the tax law and the balance sheet law. The discrepancies between the tax and balance sheet system are caused by different principles, functions and different methods of valuation of assets and liabilities components, which, consequently, leads to temporary positive and negative differences between the values stipulated in the financial statement and those that would be calculated and presented on the basis of the tax law.

When providing accounting and tax compliance services to national and international entities, I often see how difficult it is for an entrepreneur, especially a foreigner, to go through the company registration process and comply with all the associated formalities.

The results of active operations of business entities that seek to generate revenue are liabilities and receivables arising out of contracts concluded with contracting parties or resulting from the rights and obligations imposed by tax offices, the Social Insurance Institution (ZUS) or other state administration units. Today, I would like to draw your attention to the specific nature of receivables and the method of their presentation in the company's balance sheet.

The main purpose of an external audit is to protect the reliability of financial data presented by market participants in order to effectively reduce economic and investment risk. The role of a good auditor is not only to confirm the reliability of financial data, but also to go a step further, i.e. to identify customer needs, design a solution and implement it together – always in the context of the client's intended business purpose.

Perhaps a little out of spite, but personally I would like to draw your attention not so much to whether the cooperation of the auditor with the management or supervisory board of an audited entity should be currently assessed positively or not, but rather what perspective to adopt to assess such cooperation.

In today's article I would like to introduce, mainly on the basis of an analysis of world literature and research of American scientists, factors affecting the effectiveness of internal audit in enterprises.

One of the consequences of participation of foreign capital in a company and belonging to a group of companies from different countries is the financial and accounting system imposed by the group. Foreign shareholders welcome the information that the Polish Accounting Act allows for the possibility of keeping the books abroad. They forget, however, that there are also other requirements that arise from the Accounting Act or tax acts, whose observance is necessary to ensure the compliance of the books kept in accordance with legal regulations.

The problem of settling costs in time is that not every cost may be recognised in the ledgers on a one-off basis. The differences between such terms as: cost, expenditure or expense may cause additional trouble.

The economic reality is not so simple as it is described in academic textbooks, but this is the difference between theory and practice. This is particularly visible in our country, where young graduates of business schools often painfully collide with the business reality. Their enthusiasm is dampened on the occasion of an unassisted attempt at posting, settling taxes, preparing financial statements and performing audit controls. It's just the way it is and it can't be helped − at least until apprenticeship and training programmes based on case studies are implemented in the school system and classes are conducted by practitioners.

The time to close and prepare financial statements for the year 2016 is approaching. In order to fairly present the value of assets at the end of the financial year, you must make an inventory at certain times and frequencies as defined in Art. 26 of the Accounting Act.