6.5.3 Complete the text. Replace the Russian words and phrases by the English equivalents.

Инвесторы и кредиторы are the основные пользователи финансовых отчетов and they rely on financial statements to принимать решения such as whether to buy акции или облигации, lend money, and extend credit. By conducting audits, внешние аудиторы make financial statements consistent and meaningful. Чтобы оценить a company's position accurately, инвесторы и кредиторы need в достоверной финансовой информации on a company's sales, profits, debt, value, and so forth. Companies usually have своих собственных бухгалтеров и менеджеров prepare their financial information, which could bring about a conflict of interest. Hence, пользователи финансовых отчетов требуют услуг независимых аудиторов to verify the точность of company information and lend credibility to the financial information, что называется аудитом соответствия. Since individual users выверять информацию contained in financial statements, аудит с помощью внешних аудиторов reduces the количество ошибок в финансовых отчетах and prevents companies from issuing фальсифицированных отчетов. In addition, the Комитет бухгалтерских стандартов in 1997 issued its statement "Consideration of Fraud in a Financial Statement Audit," which requires greater effort on the part of внешних аудиторов to ensure that финансовые отчеты are free from fraud and искажений.

Text 2

Fair Presentation of Financial Statements

It is generally understood by accountants to refer to whether:

1. The учетные принципы, используемые в отчетах, have general acceptability.

2. The accounting principles are appropriate в данных обстоятельствах.

3. The финансовые отчеты подготовлены so they can be used, understood, and interpreted.

4. The финансовая информация, представленная в отчетах is classified and summarized in a reasonable manner.

5. The финансовые отчеты отражают the underlying events and transactions in a way that presents the финансовое положение, результаты операций и денежные потоки within reasonable and practical limits.

6.5.4 Text for discussion.

a. Look up the dictionary or Unit 6 Glossary for the meaning and pronunciation of the following words and word-combinations and use them to discuss the problems outlined in the text.

Performance auditing, management auditing, operational audits, compliance audits, scope, potential for conflicts of interest, external use, internal use, to evaluate performance, attainment of business goals, in conformity with company policies, strive for independence, government laws and regulations.

b. Briefly scan the text and outline the list of major points.

c. Read the text more carefully and comment on the following items:

- the importance of internal auditing;

- the similarity of internal and external auditing;

- the major difference between these two types of audit;

- the degree of independence of internal auditors.

Types of Internal Audit

Internal auditors also perform financial statement audits, operational audits (which are also referred to as performance auditing and management auditing), and compliance audits, although their audits have a different scope and their reports a different purpose. Because of the potential for conflicts of interest, internal auditors perform financial statement audits for internal use only. Nevertheless, much of the work internal auditors do is similar to the work external auditors do, except that it is not intended for external use. In addition, an operational audit involves reviewing an organization's activities to evaluate performance, attainment of business goals, and efficient use of resources. Internal auditors also perform compliance audits to ensure conformity with company policies as well as with applicable government laws and regulations. Even though internal auditors are employees of the companies they audit, they nevertheless strive for independence insofar as possible.