Special Auditing

Special auditing has different purposes which can be classified as follows:

  • Auditing of contractual obligations fulfilment (conformity auditing)
  • Auditing of financial statements in status – related changes: merging or divisions
  • Auditing of special items in the financial statements
  • Recapitalization
  • Auditing of projected financial information.

Conformity Auditing

Conformity auditing has especially drawn our attention in the cases of donations which are received by many institutions in our society:

  • State agencies (ministries, local self-government),
  • Non-governmental organizations,
  • University and research organizations,
  • Schools and other organizations.

The financier is usually a donor who requires the auditor’s report which determines the level of conformity of spending the assets with the propositions under which the assets were given.

Auditing of financial statements in status-related changes: merging or divisions

Each merging or division of capital is a complex operation which influences many interests. In order for the operation to have the intended outcome, the help of auditing is necessary.

Auditing of special items in the financial statements for the purpose of determining the validity of statements about them

Engagements in the auditing of special items in the financial statements have the purpose of determining the validity of the statements in them, that is, the level of conformity of this information with the basis for preparation and presentation.

Recapitalization Auditing

Recapitalization is a process of bringing in new capital with the purpose of reinforcement of the existing capital basis. It can follow as a consequence of:

  • Bringing in the external capital: as per the invitation for joint stock companies, that is, as per the decision of shareholders,
  • As per the decision on the internal recapitalization, that is, by turning profit or capital reserves into the fixed capital

The essence of this kind of auditing is performing auditing procedures which determine the validity of the statements given by the submitter of the financial statements on recapitalization.

Auditing of the projected financial information

All projections of financial statements are the statements based on the certain assumptions and calculations. Decisions are reached based on them, so they should be tested and the appropriate conclusions should be made based on the performed procedures. These conclusions make the reliable foundation for those who make decisions.