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49Investment portfolio formation stages
1. Choice of investment policy Ï
2. Valuation of selected investment assets
I
3. Investment portfolio formation Ï
4. Investment portfolio management
I
5. Assessment of the effectiveness of the investment
Figure 1- Stages offormation of an investment portfolio 3
Drawing up an investment portfolio is a complex, analytical and very time-consuming process, from which you should not expect instant returns and quick results. Moreover, at the first stages of the formation of an investment portfolio, there will most likely be losses. The main task at such moments is to work for the future, so that in the future the largest number of assets are profitable. To do this, investors using this format should be very careful about the formation of the portfolio, and also take into account the effect of various factors so as not to lose existing capital.
REFERENCES:
1. Shedko Yu.N. Staffing for the innovative development of the Russian state // Fundamental and applied issues of effective entrepreneurship: new solutions, projects, hypotheses Materials of the V International Scientific Congress. - 2017. - P. 88 - 90.
2. Chinenov M.V. Investments. - M.: KNORUS, 2018. - 248 p.
3. World economy, finance and investment [Electronic resource] : the formation of an investment portfolio - Electronic data. - Access mode: http ://www. globfin.ru/articles/finance/invest. htm (Date: 23.01.2021).
STAGES OF THE AUDIT PROCEDURES AND TAX AUDIT SAMPLE AUDIT VAT
Khakhonova N.
doctor of Economics, Professor, Professor of accounting Department Rostov state University of Economics,
Russia, Rostov-on-don Abzaeba N.M.
Master's student of accounting Department Rostov state University of Economics, Russia, Rostov-on-don
Abstract
The article discusses topical issues of organizing and conducting a tax audit in the Russian Federation using the example of VAT calculations. The main stages and procedures of the audit are highlighted and characterized, the sources of the audit and the main errors identified during the audit are disclosed. Special attention is paid to the description of the problem of the audit of VAT settlements, which consists in the establishment of permissible limits for minimizing VAT payments by an economic entity in order to avoid possible problems with the tax authorities.
Keywords: Tax audit, VAT audit, stages of VAT verification, audit procedures for VAT verification
Practice shows that often conducting a compre- enterprises is a financially costly event, moreover, hensive initiative audit of financial statements for many many people prefer a thematic audit of taxation, i.e., an
3 Compiled by the authors.
audit of certain types of taxes. One of the main places in the taxpayer's tax burden is occupied by value added tax (VAT), and therefore checking the correctness of its calculation is one of the most popular audit services.
Since the entry into force of the ISA in Russia, the thematic audit has acquired its own specifics. Thus, " the audit company is obliged to participate in the delineation of responsibility, according to:
- protecting the client from possible litigation, potential fines that may arise in case of violations of legislation in this area;
- exclusion for the client of the possibilities and facts of tax overpayments (i.e., the amount of tax paid by the taxpayer in the absence of obligations to pay);
- collection of information to optimize the taxation of the organization - the client (namely, to reduce the amount of taxes payable) "[3].
In accordance with ISA 210 "agreeing the terms of audit engagements" until the beginning of the work the auditor provides management of the firm-client engagement letter, which provides an understanding of
the commitments, goals and audit, the degree of responsibility to the client. The scope of the obligations assumed by the auditor sets the limits of the study for inaccuracies in VAT calculations and specifies the actual objects of the audit. However, as Magomadov Kh. X notes in his research: "Given the differentiated economic, organizational and other aspects of accounting and tax accounting, the components of the audit often do not cover the entire amount of information that affects the client's tax obligations. Thus, the problems of the audit of VAT calculations consist in establishing such boundaries of the introductory and main stages of the audit study that can minimize the problems with the tax authorities for the economic entity (in the future)" [3] .
The purpose of the audit of the taxation of VAT-related transactions is to establish the compliance of the procedure for calculating VAT with the requirements of tax law.
The tasks of the VAT audit are presented in Figure
1.
OBJECTIVES OF AUDIT VAT
Assessment of the state of synthetic and analytical accounting of VAT settlements
Control over the reflection of current tax liabilities to the budget in accounting and tax reporting
Avoiding tax audits and sanctions, as a result of errors in the calculation and payment of VAT
to the budget
Analysis of the effectiveness of tax policy based on the VAT tax optimization system
Checking the formation of the tax base, the application of tax incentives and deductions
Verification of compliance with tax legislation in the formation of the tax base for VAT, completeness and timeliness of tax payment to the budget
Checking the correctness of filling out and submitting VAT tax returns, issuing invoices, purchase and sales books, tax registers
Fig. 1. Vat-related tax auditing tasks
The objectives of the VAT audit are to control the observance of civil and tax legislation in the formation of the tax base, the correctness of the determination of rates and the application of benefits, the assessment of
the effectiveness of the tax policy of an economic entity; verification of documentary registration of transactions with goods and materials and the reflection of transactions in accounting accounts, as well as in the tax return.
Tax audit is carried out in 3 stages: planning stage, main stage and final stage. Consider step by step the procedure for checking the correctness of VAT calculation.
At the beginning of the check, a request for information on VAT is generated to the audited entity. Sources of information when checking the correctness of calculations with the VAT budget throughout the entire check are:
- Financial reporting
- Order on accounting policy for accounting and tax accounting purposes;
- General balance sheet and on accounts 19 and
68;
- Sales book;
- Primary documents formalizing the movement of inventory items;
- Tax returns for VAT.
For each audit organization, it will be its own due to the breadth of discretion of audit practice [2].
First of all, there is an acquaintance with the accounting system. At this stage, in order to determine the level of risk in the audit of VAT, the auditor may be offered a questionnaire for filling out by the tax accountant.
Within the framework of the risk-based approach, at this stage, a Matrix of tax risks and control procedures of the organization can be drawn up in the context of each type of tax. The form of the matrix, or tax risk map, and an example of filling it out are presented in Table 1.
Table 1
Tax risk matrix and VAT control procedures
Kind of Tax Code Line Tax Return Directions for identifying risk Risk Control Procedure
VAT 010 Section 3 The organization's financial and economic activities Underestimating the market value of the donation of goods, works, services; underestimating the tax base; underestion of tax Reconciliation of data by checking the completeness, accuracy, consistency and correctness of the information received
190 Section 3 Reflecting in the tax reporting of significant amounts of tax deductions for a certain period Documentary and confirmation of the facts of the organization's economic life; Confirmation of compliance with documents to the requirements of Russian law
Such matrices can be developed when checking any area of tax accounting in accordance with the methodology and are very helpful in the formation of working documentation at all stages of the check.
As we have already found out, the implementation of internal control can be carried out by external auditors, therefore it seems to us possible to use this form for external audit purposes when checking taxation.
If the client has previously conducted an audit or was subjected to tax audits, then it is necessary to familiarize yourself with their results, identify the nature of errors and outline objects for in-depth control.
At the first stage of a tax audit in relation to VAT, the auditor carries out a number of mandatory procedures (Fig. 2.)
Formation of a plan and a tax audit program with the VAT budget
VAT tax audit procedures
Assessment of the level of tax liabilities and potential tax violations in the VAT
Fig. 2. Procedures for tax audit of VAT transactions
Auditors must analyze the workflow, assess the correctness of analytical and synthetic accounting for accounts 19 and 68, as well as to establish the level of materiality, analyze balances and transactions on the following accounts:
J subaccounts to account 90 "Sales" and 91 "Other income and expenses" - to account for proceeds from the sale of goods (work, services) taxed with VAT at different rates and not taxable;
1 subaccount to account 68 "Settlements with the budget for VAT" - to account for the amounts of VAT presented to the buyer;
J subaccounts to account 19 "VAT on acquired valuables" - to record the amounts of VAT paid for acquired valuables subject to VAT at different rates.
Then the auditor analyzes non-standard transactions that took place during the analyzed period, for example, a change in the method of calculating VAT, tax rates, the emergence of new activities in the organization, new business transactions.
Thus, at the first stage, the auditors are faced with the task in a short time to determine the most problematic areas of accounting and, on the basis of the information received, determine the further scope and procedure of work, having developed a plan and an audit program. The formation of an action plan and a program, broken down into solving problems with the establishment of deadlines and persons performing the check, is the final step of the first, preparatory stage, the quality of which largely determines the quality and result of the entire check of the client's taxation system.
The plan and the VAT audit program include checking the following issues:
- completeness, correctness and timeliness of the formation of the tax base and tax deductions;
- compliance with the ratios of key indicators when determining the tax base (for example, the correspondence of turnovers for calculating VAT in accounting and the sales ledger; balances on accounts 19 and 60 (76), etc.);
- turnovers on the credit of account 68 "VAT payable" in comparison with the data specified in the tax return;
- reconciliation of the amounts of received advances with the amounts of VAT charged on the received advances;
- confirmation of tax deductions by properly executed invoices, universal transfer documents or other documents;
- the validity of making corrections to tax reporting and tax registers of previous tax periods, etc.
The VAT audit program is a logical continuation of the plan and includes a detailed list of elements and procedures required to carry out each type of work stipulated by the plan. During the test, the program can be adjusted as necessary. In the context of ubiquitous computerization, the process of drawing up a plan. Programs and other working documents can be facilitated by the use of software products that automatically help to select the scheme of independent verification procedures, taking into account the characteristics of the audited entity, and also carry out an automated selection of the program project.
The main stage is the most time-consuming and difficult, because after drawing up the audit plan and program, an in-depth audit of tax accounting areas is carried out, where problem areas are identified, taking into account the significance level.
Value added tax can rightfully be considered one of the most difficult to calculate taxes, as evidenced by the number and range of errors detected at the main stage. They are facilitated not only by internal factors, such as insufficient knowledge of tax legislation or arithmetic errors, but also by dynamically changing tax legislation and contradictions of some provisions in regulatory acts. Here are the most common mistakes in calculating VAT:
- incorrect application of tax legislation;
- absence or violation of the organization's internal control system over the correctness of VAT calculation;
- applying the wrong tax rate;
- incorrect determination of the taxable base;
- submission of erroneous information for obtaining tax benefits;
- violation of the procedure for determining tax deductions;
- incorrect classification or calculation of incomes taken into account in taxation as exempt from taxation, when determining the VAT debt to the budget [4].
To establish the legality of the application of VAT deductions, it is necessary to check:
- Analytical accounting for account 19" VAT on purchased values ";
- Availability of separate VAT accounting for purchased goods and materials;
- Compliance with the order and timeliness of the application of deductions.
When auditing VAT, special attention is required for operations related to the performance of construction and installation work, with donation agreements and gratuitous transfer of goods or services, since it is in these areas that errors are most common when an accountant either underestimates the taxable base or charges tax on transactions that do not being an object of taxation [5]. Based on the errors identified by the auditor on the final report, the management is given a recommendation to make adjustments, submit revised tax returns to the tax office and, if necessary, make an additional payment. Corrections in the relevant accounting registers can be made on the basis of revised invoices, additional sheets of the sales ledger and purchase ledger, as well as the accountant's certificates.
To facilitate the work of auditors, classifiers of possible violations are often developed within audit organizations, where all kinds of violations in accounting and VAT taxation are systematized, indicating the corresponding control procedures.
At the final stage of the VAT audit, the results of the audit are summed up, consisting of:
- control and analysis of program execution;
- analysis and classification of detected errors and violations;
- formation of conclusions and results;
- preparation of recommendations to the customer of the audit;
- drawing up a list of documents to be submitted in support of conclusions.
The result of the check is the formation of an official document - a report with attachments, on which the signature of the person who conducted the check is put and the client's seal is stamped. Appendices to the report are working forms and statements of the audited company, numbered, laced and certified by the auditor.
In conclusion, we note that due to the risk-oriented nature of tax administration and tax control, the audit of calculations for VAT and other taxes should be carried out on a regular basis. In what format the control will be carried out (with the involvement of third-party specialists or on its own) - the decision of each individual enterprise. But undoubtedly, regular systematic control over strict compliance with tax legislation will help to minimize the level of tax risks of the organization, get rid of tax audits and organize an optimal system of accounting and auditing of VAT.
REFERENCES:
1. Audit: textbook / ed. prof. N.N. Khakhonova. - 3rd ed., Additional and revised. - M.: RIOR, INFRA-M, 2016. p. 98 - 99
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3. Magomadov Kh.Kh., Makayev S.M. Audit of VAT and income tax calculations: problems and solutions / Economy and business: theory and practice. -2019. - No. 3-4. - p. 70-73
4. Moiseenko I.A., Emelyanova I.N. Taxation and tax audit: textbook. manual / Stavropol: Publishing and Information Center "Fabula". 2018.134 p.
5. Popova L.V., Korostelkina I.A., Dedkova E.G. Tax audit. tutorial. - M .: Business and service. 2018.208s.
6. Chulkova L. Tax authorities got access to legal secrets / Tax Bulletin. - 2018. - No. 9. [Electronic resource]. - Electronic legal system "Consultant Plus".
