Yevheniuk Andrii Oleksandrovych

student of finance, accounting and audit department of National University of Ostroh academy

Haletska T.I.

PhD, senior lecturer


Annotation In the article the method and peculiarities of the performance of an audit of small enterprises are investigated.

Key words: audit, International auditing standard 1005 “Peculiarities of an audit of small enterprises”, fiscal accounting, auditor.


Problem statement Small business is an essential element of the market economy in Ukraine and in the world and occupies a significant market share both in number and in size of aggregate performance. Despite the fact that today audit of small businesses in Ukraine is not mandatory, more and most of small organizations appeal for help in the design of fiscal accounting, preparation for control and more to auditors. The increase of the interest from both theorists and practitioners is a sign of the relevance of this issue and it encourages to a more detailed investigation of the peculiarities of the performance of an audit on small enterprises.

Analysis of recent research and publications. The following local scientists studied the question of audit methodologies: M. Biluha, N. Dorosh, O. Petryk, V. Savchenko, B. Usach, L. Chernelevskyi and others.

The purpose and objectives of the study is to identify the characteristics of functioning of an audit of small enterprises.

Presentation of main material. Since 01.05.2011 the International standard of quality control , audits , reviews, other assurance and related services are used as international standard in Ukraine. Any national standard in Ukraine does not exist. An audit of a small business is regulated only by international auditing standards 1005 “Peculiarities of audit of small enterprises” [5].

According to it the audit of a small business is different from the big audit entity in a way that records of small business are simplified, and the audit itself is not so much complicated and requires fewer assistants.

A small enterprise is called any enterprise if:

  • a small number of people has the ownership right for the company (often only one person);
  • it has one or more of the following characteristics:
    • immaterial amount of income;
    • simplified system of accounting;
    • there is a limited system of internal control and , along with it , the ability to ignore them. [1]

Along with it, the peculiarity of an audit of small enterprises is that it is characterized by a limited internal control; gubernatorial control on them is often made by owner-manager. There is a risk of neglecting head control measures that could lead to fraud and distortion of information.

An engagement letter signed by the head during the performance of an auditing control on small businesses includes the written confirmation of the explanations provided by management in connection with audit in which they recognize their responsibility for provision reliable financial statements in accordance with the relevant Fiscal Accounting basis and approves the financial statements.

The main feature of audit of small enterprises is the fact that due to small amounts of transactions, which are carried out in the company, the auditor during the audit control covers 100% of the elements of the total amount of the checked information.

During the audit, the auditor or audit firm reflects in working papers the following information:

  • audit planning;
  • audit program;
  • results;
  • conclusions [2].

When assessing small business auditors take into account the following factors:

  • reasons of distortion of financial statements (for example, owner- manager dependence on the successful performance of the company ) and the possibility of statements distortion;
  • availability of distribution of its economic and commercial transactions;
  • suppression of income by the owner of enterprise (the level of life of the company manager differs from the amount indicated in the tax return);
  • frequent change of professional consultants;
  • whether there were cases of the performance of an audit in a very short time, cases of delay of the start date of the audit;
  • performance of transactions, which have a significant impact on income in the end of the year;
  • unusual transactions with related parties;
  • payment of excessive fees or commissions to agents and consultants;
  • credit accounts, which were not used for payments;
  • advances payment granted to third parties or received from third parties for the supply of goods and services for which during unreasonably long term any goods or services were provided;
  • disputes with tax authorities;
  • unusual delay in providing explanations to the auditor concerning unusual transactions [3].

Also, developing an audit plan, the auditor usually assesses the materiality of information, in which information is essential if its omission or misstatement can influence the economic decisions of users taken on the basis of financial statements. This allows to identify the most important articles of financial statement, to which the auditor should pay attention when developing an audit strategy.

One of the approaches to quantitative assessment of materiality is the usage of the percentage of the main indicators of the financial statements, for example:

  • profit or loss before tax (adjusted, if necessary, to the impact of overtime costs as owner- manager remuneration);
  • income;
  • result in the balance sheet;
  • so on [4].

Thus there is no clear definition of materiality, instead a range of values is used. The upper limit of the range is responsible for relevant information and values that do not reach the lower limit of the range are considered immaterial. At the same time, the materiality of information is affected not only by quantitative but also qualitative factors.

During investigation, the auditor performs the following analytical procedures:

  • comparison of the financial statements for the current year with figures of previous periods ;
  • comparison of the financial statements to any budgets, forecasts or expectations of management personnel;
  • analysis of changing trends of the important financial ratios;
  • control of compliance of reflected changes in the financial statements of the company , which became known to the auditor;
  • study of unexplained or unexpected financial statement items ;
  • so on [5].

On the basis of the mentioned information, the audit report is made. In many cases, the auditor may express an unqualified opinion concerning the financial statements of small enterprises. However, there may be circumstances in which it is necessary to make a modified audit conclusion.

There are the following types of audit findings:

  • an unqualified opinion (the provided information is complete and correctly reflects the assets and liabilities of the audited entity, which are checked). The fiscal accounting corresponds to actual accounting data, which means that accounting system complies with legal and regulatory requirements);
  • clear opinion – there are not fundamental uncertainty (there are restrictions. which have little impact on the fiscal accounting);
  • qualified audit opinion (when performing the audit control it is revealed that transactions are held with violations of the established order);
  • negative opinion (substantial violations and distortions were identified, and there is a list of those violations annexed to the audit conclusion) [6].

Conclusions. To sum up, the peculiarities of audit of small enterprises lie in the following patterns:

  • this type of audit is governed only by one international standard , 1005 standard “Peculiarities of audit of small enterprises”;
  • during the audit of small enterprises it is necessary to carry out continuous inspection, during which 100% elements of the total amount is checked;
  • small businesses have the option to use not only the forms of accounting , and its registers and tax systems;
  • division of responsibilities in the company is limited , as the company employs a small number of employees.

All this must be considered when developing the methodology of audit of small enterprises.


  1. Arene A., Lobbek Dzh. Audit. Translation from English; mail editor phd. V.Sokolov. – M: Finance and Statistics, 1995 – 560 p.
  2. Dorosh N.I. Audit: Theory and practice. – K., 2006. – 495 p.
  3. International audit standards, giving assuranc and ethics / Trans. from Eng. O.V., Seleznov, O.L. Olhovikova, O.V. Hyk and others – K.: 2007. -1172 p.
  4. Organization and methodology of audit of business function: Manual / main edition O.A. Petryk – K.: 2008. – 472 p.
  5. Usach B.F. Audit: Manual – K., 2003. – 233 p.
  6. Chernelevskyi L.M., Berenda N. I. Audit: theory and practice: Manual -K., 2008, – 560 p.

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