Which balances should the accountant check before the auditor arrives?
If you find the error the auditor would find before they do, both the opinion and your nerves will be in better shape. Seven places to review at year end and one difference that was found.
The auditor works in accordance with the standards of auditing activity: under Article 9 of Law ZRU-677 these are the international standards on auditing. Yet many of the auditor's questions start with ordinary balances. If you review these balances yourself in advance, the audit goes faster and more smoothly.
Seven places to check at year end
- 5110 "Settlement account": the balance must match the balance on the bank statement to the last tiyin. Bank entries are made on the basis of the statement and the documents attached to it
- Cash desk (5010): count the cash in the cash desk and compare it with the balance in the books
- 4010 and 6010: prepare reconciliation statements with major customers and suppliers. If your figures do not match theirs, the auditor will find it too
- Old advances (4310, 6310): single out amounts that have not moved for years. An advance paid whose limitation period has expired is written off to 9430, and an unclaimed advance received to 9390
- 6410: look at the balance for each type of tax separately and compare it with the tax authority's data
- Groups 9000–9800: transit accounts for income and expenses. At year end they must be closed (mainly through 9910 "Final financial result") and left with no balance
- 0100 and 0200: for each fixed asset, accumulated depreciation must not exceed its initial cost
Example: the 1.2 million soum Dilnoza found
At the end of December, Dilnoza, the accountant at "Shams Elektr", compared the balance of 5110 with the bank statement. The books showed a balance 1 200 000 soum higher than the bank. The reason: the service charges deducted by the bank during the year had not been entered.
| Transaction | Debit | Credit | Amount |
|---|---|---|---|
| Bank service charges expensed | 9430 | 5110 | 1 200 000 |
Now the balance of 5110 equals the statement. Had the auditor found this difference, they would have asked for the reason and required a correction. Now no question arises.
Test yourself
5 questions on this topic: pick an option or reveal the answer.
To verify the balance a customer owes the company, the auditor sends a request to the customer and receives the reply directly. What is this audit procedure called?
Every month the accountant of "Sariosiyo savdo" compares the bank statement with account 5110 and prepares a reconciliation. The auditor independently prepared one of these reconciliations again from scratch. Under ISA 500, which audit procedure is this?
Internal control at "Gulobod sut" is very strong; the auditor performed tests of controls and confirmed that they operated effectively. Under ISA 330, what happens to substantive procedures for material account balances (for example, receivables)?
The balance sheet of Charxpalak savdo LLC is prepared as at 31 December. In February, before the statements are authorized for issue, the auditor found that a major customer had been declared insolvent; this customer's debt also existed at the balance sheet date. What is done under NAS No. 16?
In the registers of Nurli kelajak LLC, the auditor saw the following correction: the accountant did not delete the erroneous entry but recorded it in the same amount with the debit and credit accounts swapped, and then made the correct entry. Which correction method is this?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Law "On Auditing Activity" (25 February 2021, No. ZRU-677), Article 9 · international standards on auditing are the standards of auditing activity
- NAS No. 21 "Chart of Accounts", paragraph 225 · transactions on 5110 are recorded on the basis of bank statements and the payment and settlement documents attached to them
- NAS No. 21, paragraphs 188 and 272 · advances paid whose limitation period has expired 9430 / 4310–4330; unclaimed advances received 6310–6390 / 9390
- NAS No. 21, paragraphs 274 and 436 · analytical accounting of 6410 by type of tax; accounts for income, expenses and taxes on profit (9010–9030, 9110–9150, 9310–9390, 9410–9430, 9510–9590, 9610–9690, 9710, 9720, 9810–9820) are closed to 9910
- NAS No. 21, paragraph 410 · bank service charges in 9430 "Other operating expenses"
- Example · prepared by the author