Regulations for Statutory Audit
Author:
Alexandru GROZA
JEL:
DOI:
Keywords:
audit, statutory audit, statutory auditor, national regulations, international regulations
Abstract:
The audit profession developed as a response to the practical and informational need of different users in order to underlie and make opportune and rational decisions during the life of an economic entity. In Romania, the auditing activity, and inferentially the audit profession, is new, but it was able to reach its maturity through the regulatory framework and the activity practice.\r\nThe literature explains the call for statutory audit through the means of three theories:\r\n-The motivational theory that explains the call for statutory audit through the superior professional conduct of the ones accountable for the financial statements;\r\n-The agency theory that explains the call for statutory audit through the argument that investors can not fully trust managers with the adequate usage of allocated funds;\r\n-The assurance theory that explains the call for statutory audit by using two principles: the assurance principle (the auditor offers a certain degree of reliability to the users of the audited information); the information principle (the audited information is more reliable and more useful for the main users in the decision making process).\r\nThe statutory auditing must comply with two requirements: regularity requirements and authenticity requirements. Regularity implies that the activity must be in accordance with the regulations in effect (national and/or international norms or standards, the European Union’s directives, the norms developed by the professional organizations), and in default of these, the base of auditing is represented by general accepted accounting principles and the professional reasoning. Authenticity implies the fact that the people in charge of the administration and the finance-accounting department are well intended when choosing and applying the accounting policies and procedures, when assessing the reality of the transactions and operations, when appraising the operations and risks.\r\n