An important block in the functionality of internal governmental audit is the audit of financial statements.
Financial statements contain information that is useful for making management decisions, estimating future cash flows, estimating economic resources and liabilities in connection with resources entrusted to the institution, and evaluating the performance of the institution's management.
Reporting is used by external users to assess the effectiveness of the institution and for the economic analysis of its economic activities, as well as for the operational management of economic activities and subsequent planning and forecasting.
The adoption of the Law "On State Audit and Financial Control" in 2015 was an initiative to create a system of state audit in the Republic of Kazakhstan.
With the adoption of the Law on State Audit and Financial Control, the classification of violations is divided into financial and procedural. Along with this, today the audit of financial statements is aimed at timely elimination and prevention of misstatements in the consolidated financial statements. Also, the approach to checks from detections to warnings has been changed.
The current classification of violations makes it possible to adequately highlight significant and insignificant deviations.
To minimize the risks of material misstatements in the consolidated financial statements, the audit methodology is fully agreed with the supreme governmental audit and financial control body, the Accounts Committee for Control over Execution of the Republican Budget.
The Department of Internal State Audit for the Karaganda Region is currently auditing financial statements for the 3rd ABP (State Institution "Education Department of the Karkaralinsky District", State Institutions "Department of Culture and Language Development of the Karkaralinsky District", State Institutions "Construction Department of the Karkaralinsky District"), covering 2020, with a completion date in March 2021.
Administrators for the audit were selected according to the level of materiality of the volume of the balance sheet currency.
6,088.0 million tenge (balance sheet amounts) are audited in real time.
Intermediately, based on the results of the six-month audit for 2020, deficiencies in financial reporting in the amount of 446.4 million tenge have already been identified and prevented.
An interim report of the Far Eastern State Administration for the Karaganda region revealed financial violations in the amount of 26.2 million tenge, which is 5.8% of the total amount of violations (446.4 million tenge).
To date, the Department has sent recommendations to eliminate the violations identified.
This is a real preventive mechanism that allows administrators of budget programs to correct their shortcomings prior to the formation of financial statements and consolidated financial statements, also to reduce the administrative burden on accounting employees of institutions.
The analysis shows that the main volume of violations is related to the accounting procedure (80%), concealment of receivables and payables (10%), asset classification (6%), accrual of reserves (4%).