Implications of change management in public administration

Finances - Accounting
Knowing the group
Appreciating internal control
- associated with consolidated
companies
- associated with procedures of
the consolidation system
Controlling the
accounts of
consolidated companies
Analysis of the impact of events
not related with current
exploitation
Controlling the
consolidated accounts
Report regarding consolidated
accounts
Figure no.1 The phases of audition activity of consolidated accounts
1. Preparing and planning the mission of financial audit comprises three
important activities: generally knowing the group, analyzing the risks and defining the
significance steps, materially organizing the work. Among other things, in the case of
consolidated accounts the relationships with the auditors in the branches are primary.
a. generally knowing the group consists of, in a first stage, the auditor
gathering the significant information necessary for him to achieve his mission, among
which we mention:
legal context and existing regulations allow to determine the company‟s
obligations in the way of financial report (nature, periodicity, terms), of presenting
accounts (commercial company, credit financial company, insurance company);
group structure, group organizational chart and consolidation area,
weight of the different consolidated companies, different areas of activity, geographical
sectors in which the consolidated entities are placed, nature and importance of internal
transactions inside the group, exceptional elements capable of intervening
(reorganization, activities‟ transfers);
consolidation general organization, the procedure, usually informational,
of consolidation, involving consequences at the level of control organization;
group general context concerns information that allows the auditor a
better comprehension of the group‟s evolution. The main sources for this sort of
information are: talks with different managers, the report issued by past internal or
external auditors, consolidated accounts of previous exercises. The group‟s inventory
report and generally any information regarding the group‟s „internal life”, financial and
economical press, information published by groups with similar activities.
b. Analyzing the risks and defining the significance steps. After obtaining a
general image of the group, the auditor identifies the particular elements he will be
37