Государственный комитет Российской Федерации по рыболовству

Камчатский государственный технический университет

Кафедра иностранных языков

АНГЛИЙСКИЙ ЯЗЫК

Сборник текстов и упражнений для студентов специальности 060500 "Бухгалтерский учет, анализ и аудит"

Петропавловск-Камчатский 2003

УДК 4И (Англ) ББК 81.2 (Англ) Г95

Рецензент:

Н.П. Дьякова, доцент кафедры иностранных языков

Гурская Т. А. Г95 Английский язык. Сборник текстов и упражнений для студентов

специальности 060500 "Бухгалтерский учет, анализ и аудит". – Петропавловск-Камчатский: КамчатГТУ, 2003. – 39 с.

Методические указания составлены в соответствии с требованиями к обязательному минимуму содержания основной образовательной программы подготовки специалиста по специальности 060500 "Бухгалтер-ский учет, анализ и аудит" государственного образовательного стандарта высшего профессионального образования.

Рекомендовано к изданию решением ученого совета КамчатГТУ (протокол № 6 от 18 апреля 2003 г.).

УДК 4И (Англ) ББК 81.2 (Англ)

© КамчатГТУ, 2003 © Гурская Т.А., 2003

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I. ACCOUNTING

1. ACCOUNTING PRINCIPLES AND CONCEPTS

Vocabulary list

accounting бухгалтерский учет to a significant extent в значительной степени phase стадия, фаза capture (зд.) получение (информации) processing обработка (информации) communication передача (информации) recording запись (информации) book-keeping счетоводство record запись, записывать, отражать в отчетности at a profit с прибылью to meet one's commitments выполнять обязательства to fall dueнаступать (об обязательствах), подлежать

оплате, подлежать выполнению accounting equation бухгалтерское равенство assets активы liabilities пассивы owner's equity собственный (акционерный)

капитал компании financial statements финансовая отчетность balance sheet балансовый отчет, баланс income statement отчет о прибылях и убытках profit and loss account счет прибылей и убытков double-entry book-keeping бухгалтерский учет по методу двойной записи entry запись, проводка account счет cash basis метод записи доходов и издержек на счетах

только при их поступлении и выплате, кассовая база

accrual basis метод вычислений при учете доходов и издержек, запись доходов и издержек в момент завершения операции

debit дебет debit side левая сторона баланса, дебет счета credit кредит credit side правая сторона баланса, кредит счета

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TEXT

An accounting system in a given country is one of the key elements of the eco-

nomic system. It is determined to a significant extent by the level and direction of the economic system's development.

The most important theoretical concept of the Anglo-American accounting may be summed up as follows: the subject of accounting is the calculation of the financial re-sults of an economic entity's business activity.

Accounting is used to describe the transactions entered into by all kinds of organi-zations.

Accounting can be divided into three phases: capture, processing and communica-tion of financial information.

The first phase, the process of capturing financial information and recording it, is called book-keeping. Accounting extends far beyond the actual making of records. It includes their analysis and interpretation, it shows the relationship between the finan-cial results and events, which have created them.

Accounting can show the managers or owners of a business whether or not the business is operating at a profit, whether or not the business will be able to meet the commitments as they fall due.

Accounting is based on the accounting equation, which states that a firm's assets must equal its liabilities plus its owners' equity.

Assets and liabilities, profits and losses are listed in financial statements. The two main types of financial statements are the balance sheet and the income statement (profit and loss account).

The balance sheet lists a firm's assets, liabilities and owner's equity at a point of time. Changes in the balance sheet are made according to the principle of double-entry

book-keeping. This principle states that each transaction must be recorded on the bal-ance sheet as two separate entries so that the totals of each side will always equal one another, and that this will always be true no matter;how many transactions are entered into.

Balance sheets are diawn up periodically: monthly, quarterly, half-yearly, annually. There is an account for every asset, every liability and capital. Accounts can be

prepared either on a cash or accrual basis. Each account should be shown on a sepa-rate page.

The double entry system divides each page into two halves. The left-hand side is called the debit side, while the right-hand side is called the credit side.

The balance sheet shows a lot of useful financial information, but it does not show everything. A firm's sales, costs, and profits for a given period are shown in an in-come statement.

Answer the questions on the text: 1. What role does an accounting system play in an economy? 2. Into what phases is accounting broken down? 3. What is an accounting equation?

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4. What is the most widely practised principle of book-keeping? 5. What does the balance sheet list? 6. What is shown in the income statement?

Find English equivalents for the following Russian phrases from the text:

ключевой элемент экономической системы; финансовые результаты хозяй-ственной деятельности хозяйствующего субъекта; сделки, в которые вступают различные организации; получение, обработка и передача информации; отраже-ние информации в финансовой отчетности; работать с прибылью; выполнять свои обязательства; бухгалтерское равенство; активы должны быть равны пас-сивам; в балансе отражаются ... ; учет по принципу двойной записи; отражать в балансе, составлять баланс; счет прибылей и убытков.

Say in a few words what the text is about. Use the following opening phrases:

The text looks at (the problem of...)...; The text deals with the issue of...; It is clear from the text that...; Among other things the text raises the issue of...; The problem of ... is of great importance. One of the main points to be single out is ...; Great importance is also attached to ...; In this connection, I'd like to say ...; It further says that ..; I find the question of... very important because ...; We shouldn't forget that...; I think that ... should be mentioned here as a very important mechanism of... .

2. ACCOUNTANCY IN A FREE-MARKET ECONOMY

Vocabulary list

Accountancy бухгалтерский учет Performance показатели деятельности, результаты работы economic status экономическое положение managerial accounting управленческий учет outside user внешний пользователь financial accounting финансовый учет going-concern basis принцип работающего предприятия assumption посыл, предположение, допущение economic substance экономическая сущность relevance релевантность timeliness своевременность prudence предусмотрительность reliability надежность

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materiality материальность, существенность consistency неизменность, преемственность comparability сравнимость, сопоставимость harmonize гармонизировать, сближать

TEXT

In a free-market environment, accounting provides a means for transmitting in-

formation about the performance of enterprises to those with an interest in it. The basic functions of accounting in a market economy are to measure economic

activity of an enterprise and its profit, to show changes in its financial position and ensure that a fair report of the economic status and performance is made available to all those concerned. These functions are performed at two different levels.

The accountants in the US communicate financial information to many people. What users need financial information?

One branch of accounting, called managerial accounting, provides information that managers use in making decisions within the firm. Other accountants prepare financial reports for outside users. This branch of accounting is known QS financial accounting.

American accounting standards and objectives of financial statements fully meet the users' needs for useful information. The following basic principles ensure the pro-vision of such information in the manner the market requires. First of all, accounts must be prepared on a going-concern basis. It means accounting is based on the as-sumption that the business will continue to operate. Besides, accounts must reflect the economic substance of the situation rather than simply its legal form. Other characte-ristics that make information useful for the users are relevance, timeliness, prudence, reliability, materiality, consistency and comparability.

Though these concepts are recognized internationally, users of information often fail to get a true and fair view of business operations. In the present conditions, there is need to work harder to harmonize national accounting systems so as to make it easier for users to assess financial information, particularly taking into account growth of transnational corporations and increasing interdependence of financial markets.

Answer the questions on the text:

1. What is the role and functions of accountancy in a free-market economy? 2. Who uses financial information? 3. What are the major objectives of financial statements? 4. What is "useful" information for users?

Find English equivalents for the following Russian phrases from the text:

передавать информацию; измерять; изменения в финансовом положении предприятия; финансовый учет; управленческий учет; цели финансовой отчет-ности; принцип работающего предприятия; экономическая сущность; давать ис-тинное представление о деятельности фирмы; сближать принципы учета.

Say in a few words what the text is about. Use the opening phrases given above.

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3. PUBLIC AND PRIVATE ACCOUNTANTS

Vocabulary List

public accountant частнопрактикующий (лицензированный)

бухгалтер private accountant бухгалтер, действующий в пределах

одной фирмы practise иметь частную практику judgement мнение, суждение certified public accountant дипломированный частнопрактикующий

бухгалтер holder of a license владелец (держатель) лицензии be authorized иметь право, быть уполномоченным to grant a license предоставлять лицензию state government правительство штата to keep knowledge up to date поддерживать знания на современном уровне integrity (зд.) высокая профессиональная репутация confidentiality конфиденциальность to be held in low esteem не пользоваться уважением to have much in common иметь много общего auditing аудит consulting services консультационные услуги tax planning планирование налогообложения cost accounting производственный учет capital budgeting составление смет капитальных расходов budgeting for current operations составление смет текущих расходов financial information system финансовая информационная система professional body профессиональная организация

TEXT

The accounting profession in the market economy consists of public and private ac-countants. Public accountants are independent professionals who provide services for a fee. Accountants who are employed by business firms are known as private accountants.

The main form of business organization in the accounting profession is partner-ship, though some public accountants practise alone and the others have formed pro-fessional corporations. Public accountants try to avoid limited liability, because they believe that professionals should take full responsibility for their judgements.

The title certified public accountant refers to the holder of a license to practise public accounting. The license is granted by a state government. It is granted to people who meet educational and experience requirements and pass an examination. All Ameri-can certified public accountants are expected to keep their knowledge up to date and to

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maintain the highest standard of integrity, professional independence and confidentiality. In Russia accountants also try and do their best to keep up high professional stan-

dards. For many years they were held in a very low esteem in the country, now the situation is changing for the better. Public accountants in Russia offer different ser-vices. The main service is auditing. Besides, public accounting firms offer consulting services, some accountants are also active in tax planning and preparation of tax re-turns. Russian and American public accountants have much in common.

The work of private accountants in Russia differs greatly from what American ac-countants employed by business firms do because Russia is only entering a market economy.

Accountants who work for the US business firms have wide responsibilities. Their duties include cost accounting, capital budgeting for current operations, tax planning, they must know how to design financial information systems, and do may other things.

Answer the questions on the text:

1. What are public accountants? 2. What are private accountants? 3. How do public accountants organize their activities? 4. Who can get a license to practise public accounting? 5. What services do Russian public accountants provide?

Find English equivalents for the following Russian phrases from the text:

заниматься чем-либо; предоставлять услуги на платной основе; организовать товарищество; избегать ограниченной ответственности;

брать на себя ответственность за свои решения; иметь право выдавать ли-цензию; удовлетворять требованиям в отношении уровня образования и опыта работы; сдать экзамен; профессиональная репутация; конфиденциальность; поддерживать высокие профессиональные стандарты; аудит; иметь много обще-го; отличаться в значительной степени;

производственный учет; составление смет капитальных расходов; со-ставление смет текущих расходов.

Say in a few words what the text is about Use the opening phrases given above.

4. EXERCISES

Work on vocabulary and grammar

Exercise 1. a) Study the key words in the dictionary:

Balance sheet, account, depreciation, cost, expenses, assets, loss. b) Think of the words describing characteristics that make information useful.

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c) Think of the nouns that are most often used with the following verbs: to measure, to ensure, to communicate, to prepare, to debit, to credit, to draw up,

to disclose, to report. d) Match the verbs from (1) with the nouns from (2) below:

1) to meet 2) needs to ensure provision of information to harmonize standards to develop performance to assess service to provide license to grant accounting standards

Exercise 2.

a) Supply the articles where necessary. b) Write down 3-5 questions on the text. c) Explain what information must be disclosed in the accounting records. Say what

you have learned from the text about the UK rules for the preparation of accounting records.

Accounting Records

Every company must keep accounting records sufficient: - to show and explain ... company's transactions; - to disclose ... financial position of the company at any time with reasonable

accuracy; - to enable the directors to ensure that... annual accounts comply with ... statutory

requirements. The records may contain entries of daily receipts and payments,... record of assets

and liabilities and, where the business involves dealing in goods, stocktaking records and details of goods bought and sold.

The directors of every company have a duty to prepare annual accounts. The ac-counts must be made up to .. .company's accounting date (its financial year-end) and in accordance with the specified accounting principles. In ... UK, for example, they include ... following:

- The company is presumed to be ... going concern. - Accounting policies are applied consistently from ... year to year. - The amount of any item is determined on ... prudent basis. - The accounts are prepared on ... accrual basis. Details of any departure from these principles, the reasons for it, and its effect

must be explained in ... note to the accounts. In ... UK company accounts are almost invariably prepared using the historical

cost accounting convention, with or without modification to reflect changes in ... val-ue of certain assets. However, ... Company Act 1985 provides alternative accounting rules which permit company to recognize ... full impact of inflation and changing prices in their accounts.

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Along with ... rules applying to the preparation of accounts, there is ... overriding requirement that the balance sheet must give ... "true and fair" view of the state of af-fairs of the company and that... profit and less account must give ... "true and fair" view of the company's profit and loss.

Until 1992, cash basis accounting was ... only method recognized in ... Russia. Al-though the new accounting regulation permits the administration to select... method of recognized revenue and expenses,... traditional methods is sill dominant.

Words you may need:

accounting records бухгалтерские счета, бухгалтерская отчетность stocktaking records книга учета запасов accounting date отчетная дата accrual basis принцип начислений departure (зд.) отклонение Companies Act Закон о компаниях overriding первостепенный

Exercise 3.

a) Open the brackets putting the verbs in the correct form. b) Say what is a Chart of Accounts in Russia and what it provides for. In the West each company (to have) a certain freedom in the design of its own set

of accounts so as to reflect the nature of its business and the needs of its management in directing that business. In Russia this process (to regulate) centrally, there (to be) a tradition of using a uniform Chart of Accounts.

The first uniform Chart of Accounts (to appear) in Russia in the 1920s. It (to intend) for industries only and was revised periodically. In 1961 the first national uniform Chart of Accounts (to create) and put into operation. With only insignificant changes, this chart (to use) in accounting practice until 1992. In 1992 transition to a new chart (to make). The current Chart of Accounts (to consist) of about 100 accounts and 60 sub-accounts grouped into 10 main sections. All accounts included in this uniform chart (to call) "synthetic" (main or summary) accounts. On the basis of this chart, each en-terprise also may create a set of "analytic" (supporting) accounts if needed to supple-ment the synthetic accounts. The Chart of Accounts can be considered the most im-portant element of the accounting system in Russia because it (to determine) the accounting practice and other elements of the system.

The Chart (to provide) for the following: an interrelated classification, grouping, and generalization of information about business activities of enterprises, a unified methodological basis for the organization of accounting in the whole national econo-my, an effective system of control of indicators for business activities, comparability of accounting procedures used and information generated in the accounting systems of different enterprises, etc.

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Words you may need:

Chart of Accounts план счетов set of accounts перечень счетов

Exercise 4.

a) Fill each gap with a suitable word from the box. b) Sum up the text in 5-7 sentences and present your summary in class. c) Name the most important events in the development of the accountancy profes-

sion in the world.

accountants principles organized members

Back profession creation throughout

Number role organizations functions

Accountancy Profession

The organization of the accountancy profession dates __ to January 1853 when

eight accountants in Edinburgh, Scotland met for the purpose of seeking recognition of their __ as a separate and distinct profession. Their discussion of their professional situation resulted in the __ of the Institute of Chartered Accountants of Edinburgh. Since that time numerous professional accountancy organizations have been estab-lished __ the world. The process is going on.

In 1977 the International Federation of Accountants (IFAC) was established. Its initial membership was 63 organizations representing 49 countries, but within a decade, the __ grew to 105 organizations from 79 countries. The establishment of the IFAC recognized the need for international coordination of the objectives of pro-fessional accountancy organizations and means of achieving those objectives. Accountancy is an international profession. Under the conditions of global interde-pendence of countries through trade, finance, and crossborder investments, the __ of the IFAC is becoming more important.

The size and principles of accountancy __ vary. Some organizations comprise ac-countants working in commerce, industry, and government organizations, as well as in public practice (auditing), others consist solely of members in public practice.

The main follows: of the accountancy profession may be summarized as

- to protect the public by ensuring the observance by its members of the highest __ of professional and ethical conduct; - to promote and increase the knowledge, skills, and proficiency of members

of the organization and students; - to preserve the professional independence of __ in whatever capacities they

may be serving; - to maintain the legitimate rights of its __. IFAC was __ in recognition of the grow-

ing changes towards inter-nationalization of the world economy, business and trade.

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Words you may need:

Institute of Chartered Accountants Институт дипломированных бухгалтеров proficiency (зд.) опыт

Exercise 5.

Read the dialogue, translate the Russian remarks into English and act it out: Foreigner: As far as I know, in the past the major function of your accountants

was to control whether enterprises achieved the plan targets. Has the accounting sys-tem changed of late?

Russian: Политика экономических реформ вызвала необходимость создания эффективной системы бухучета. В этом направлении уже проделана большая работа.

F.: What accounting principles is your system based on at present? R.: Наша система учета основана на системе двойной записи. Учет в основ-

ном ведется на основе кассового принципа учета. F.: Your system seems to be formalized. It is based on the uniform chart ofaccounts

(план счетов) and forms of record keeping and reporting (формы учета и отчетности). R.: Стремясь способствовать прямым иностранным инвестициям путем соз-

дания совместных предприятий, наше правительство поставило задачу внедре-ния системы учета, сопоставимой с международными стандартами. Была разра-ботана процедура составления ежегодной финансовой отчетности, одобрен план счетов для совместных предприятий.

F.: It is also important to recognize that the development of accounting in any country is impossible without developing the accounting profession. Is anything being done in this direction?

R.: Да, мы разрабатываем и внедряем новые стандарты, организуем профес-сиональную подготовку и переподготовку бухгалтеров.

F.: 1 am glad to hear that the full potential of accounting is appreciated in your country now.

5. DISCUSSION

Exercise 6. a) Read the texts aud single out the main facts. b) Present them in a short review and compare the information and viewpoints

in Text (1) and Text (2). Text (1) For many years the accounting system in Russia was criticized by Western aca-

demicians for its failure to adhere to Western accounting principles. Such criticism is no longer valid. Since the early 1990s, accounting in the Russian Federation has changed significantly.

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The year 1991 was crucial in accounting development in Russia due to the follow-ing three events:

– Publication of the new Chart of Accounts; – Production of a new set of financial statements similar to those used in West-

ern Accounting; – Beginning of preparations for radical change in accounting and auditing regu-

lation. In 1992, Regulation on Accounting and Reporting in the Russian Federation was

approved by decree of the Government of Russia. The document diminished the con-trol function of accounting and declared the following equal objectives of accounting:

1. Maintenance of control over the availability, movement, and use of material, manpower and monetary resources according to approved norms and estimates;

2. Provision of full and reliable information about the performance and financial results of an enterprise, which is indispensable for operational management as well as for investors, suppliers, customers and creditors, tax, financial, and bank authorities, and others interested in the financial and business activity of the enterprise.

An essentially new Russian accounting system has come into being with the intro-duction of the new Chart of Accounts which includes greater cohesion to international accounting norms.

The essential elements of accounting methodology are as follows: – Documents form the legal foundation for recording transactions according to

the approved rules of bookkeeping. No entry should be made unless the bookkeeper has the primary document.

– Taking inventory is the sole means of controlling the physical safety of assets and their valuation. It is the main method of supervising persons who are financially responsible for assets. The safeguarding of assets is always entrusted to a financially responsible person.

– The uniform Chart of Accounts, which provides the nomenclature of accounts and correspondence among them, must be used by all types of enterprises.

– Double entry is a traditional accounting concept that is accepted in Russia as it is in all developed countries.

– Internal reporting includes the general ledger, summary (principal) account registers, primary documents, inventory data, etc. External reporting includes the Bal-ance Sheet, Statement of Financial Results and Their Uses, and supplemental forms that are uniform and obligatory for all types of enterprises. Nonprofit organizations and banks have their own uniform charts of accounts and financial reporting forms. Reporting is carried out according to the statutory regulation and presented within strictly prescribed time limits.

– Information generated by the accounting system must be timely, reliable, full, accurate, and objective.

– Historical cost accounting is the only method of internal and external reporting permitted.

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Words you may need:

primary document первичный документ taking inventory инвентаризация sole единственный financially responsible person материально-ответственное лицо nomenclature номенклатура (перечень наименований) correspondence корреспонденция (счетов) internal reporting внутренняя отчетность general ledger главная бухгалтерская книга summary account register сводный журнал inventory data инвентарные данные external reporting внешняя отчетность Statement of Financial Results Отчет о финансовых результатах and Their Uses и их использовании financial reporting form бланк финансовой отчетности historical cost accounting учет на основе стоимости приобретения

Text (2)

From the international perspective, it is important to remember that while based on similar principles, Russian accounting does not fully meet international accounting standards (IAS). The main differences are as follows:

– Sales are usually recorded on a cash basis. The cost of goods/services deli-vered but not yet paid for remains on the balance slieet until payment is received. Most Russian taxes are sales-based. As a result, companies try to minimize sales in their accounts. When sales are recorded on a cash basis, allowances are not made for bad debt, in spite of the fact that bad debts may represent a considerable share of ac-counts receivable. Sales figures for Russian companies tend to be understated com-pared with the accrual sales of Western companies.

– Cost of goods sold. Russian companies report the full cost goods sold, which includes production costs, transportation, depreciation, marketing, and financial ex-penses. No cost items are disclosed separately. Social costs are not included in the cost of goods sold.

– Depreciation. Only a straight-line depreciation method is allowed. The depre-ciation rates are fixed by the government and are as a rule significantly lower than in the West. Accelerated straight-line depreciation has been permitted since January 1, 1995 but is still rarely used.

– Fixed assets. Fixed assets pose the most serious problem. Fixed assets are ac-counted for a historical cost and cover property, plant and equipment. Land is not treated as a fixed asset and does not appear on the balance sheet at all. Even if depre-ciation rates are lower than in the West, fixed assets are generally undervalued com-pared with Western practice.

– Accounts receivable. Since most Russian companies record sales when they receive payment, the sales margin is not accrued until that time. Therefore accounts

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receivable are understated given that the sales margin is not reflected. Overdue ac-counts receivable are not disclosed separately.

– Consolidation of accounts. Russian companies, including holding companies, are not required to submit consolidated reports. No consolidation standards have been established yet. Some of the holding companies prepare aggregated reports, summing up 100 % of all subsidiaries and associates without accounting for intragroup transac-tions and minorities. Consequently, the reported results of Russian holding companies are usually significantly overstated.

All other aspects of Russian accounting are basically in line with IAS. The Russian government is taking measures to eliminate the most serious divergences.

Words you may need:

bad debts безнадежные долги accounts receivable дебиторская задолженность straight-line depreciation method метод равномерного

начисления износа accelerated straight-line метод ускоренного depreciation method начисления износа sales margin доход от продаж overdue просроченный consolidation of accounts консолидация счетов IAS – international accounting standards международный бухгалтерский

стандарт divergence отклонение

Exercise 7.

Read the dialogue, sum the its content using the phrases given below and act it out: The dialogue is about ...; According to the dialogue ...; The experts make it clear that... (stress the point that...; draw the attention of...

to the fact that...; suggest, remind, promise); Finally, the experts come to the conclusion that... (agree about...).

6. ACCOUNTING METHODS

American: Accounting is a kind of data processing and recording. In my country it's usually the accountant who decides on the form which this recording shall take and on the methods to be used.

Russian: Do you mean that in writing financial statements for stockholders and lenders accountants can make the firm look strong and healthy and when preparing tax returns, on the other hand, they can make the firm look poor and weak?

Am.: Accountants prepare financial statements according to rules set by law and

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by the accounting profession itself. Often the rules allow more than one way of re-porting information.

R.: Accounts can be kept on an accrual or a cash basis. How do the two methods differ in real life?

Am.: Firms that keep their accounts on an accrual basis report costs and revenues in the year in which sales are made even if the customers do not pay until later. Those that keep their accounts on a cash basis report costs and revenues in the year in which payment is made.

R.: I know that each method has its pros and cons. But how does each method af-fect the way the outside users of the income statement and the balance sheet see the image of the company?

Am.: The accrual basis matches the income statement more closely to the bal-ance sheet and accrual basis accounts show rapidly rising income. But little of the income is cash!

R.: What is more, the accrual basis assumes that all accounts receivable will be collected, but in reality some may not.

Am.: For these reasons, some people think the cash. basis is a more prudent way to draw up an income statement. Accountants have also to decide how to determine the monetary value of an item included in a financial statement.

R.: What problems can arise here? Am.: Assets can be recorded at the amount of cash paid to acquire them at me

time of their acquisition. R.: At the historical cost, in other words. Am.: Yes. In addition, current, replacement cost and net realizable value can be used. R.: Are goods held in inventory another problem area? Am.: Yes, there are two ways of dealing with inventories. One is FIFO,

theother is LIFO. R.: Theoretically, I believe, we can argue in favour of both methods. Whichworks

better in real life? Am.: In recent years many firms have switched from FIFO to LIFO. R.: Do you have an explanation? Am.: Yes. During periods of inflation, LIFO results in a higher cost of goods and,

hence, a lower reported income. As a result a firm that uses LIFO pays less income tax.

Words you may need:

accounting method метод учета cash basis monetary метод записи доходов и издержек на счетах value of an item только при их поступлении и выплате; кассовая база current replacement cost стоимость операции {статьи в балансе)

в денежном выражении net realizable cost чистая (потенциальная) стоимость реализации inventories товарно-материальные запасы FIFO «первая партия в приход – первая в расход» LIFO «последняя партия в приход – первая в расход»

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Exercise 8.

Give extensive answers to these discussion questions: 1. What is the role of accountancy in a free-market economy? 2. What is managerial accounting? 3. Who needs the information provided in financial statements? 4. How are accountants classified in Russia? 5. What services do public accountants offer their clients? 6. What is done in this country to create a strong and respected professional

body of accountants? 7. What accounting system is most widely practised in the world? 8. In what way does cash basis accounting differ from accounting on accrual basis? 9. What do you think of the problem of harmonizing national accounting standards?

Exercise 9. Write a short paragraph, explaining: a) What accounting is and what role it plays in a free-market economy. b) What sort of statement the balance sheet is. c) What sort of statement the income statement is. d) The difference between the two branches of accounting. e) Accounting principles. f) The functions of the Chart of Accounts.

Exercise 10 Prepare a short talk on the following: a) The work of public accountants, private accountants, and accountants who

work for units of the government and non-for-profit firms firms. b) Why do all firms need both fixed and working capital? c) How is Russian accounting developing? Do any of the Big Eight have offices

in Russia? d) What are your own sources of funds? Earnings from employment? Contribu-

tions from parents or others? e) If you are a student, describe the fixed capital and working capital of your uni-

versity. List some fixed assets that it owns. Exercise 11. A company needs the chief accountant, who will: – maintain accounts payable ledger; – supervise banking and cash activities, supply contracts, reconciliation of bank

statements; – deal with local tax authorities; – work directly with the CFO (chief financial officer – старшее должностное

лицо по финансовым вопросам, главный сотрудник по финансовым вопросам); – supervise the accounting department; – cooperate with internal and external auditors.

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The requirements include: – excellent English; – degree in accounting; – knowledge of the Russian accounting system; – familiarity with GAAP (generally accepted accounting principles – общепри-

нятые принципы бухгалтерского учета); – proper computer skills; – ability to work independently. Do many applicants stand a good chance?

Reading practice

Exercise 11. Read the text that follows to find the answers to the following questions: – What financial document presents the position of the enterprise? – What can assets include? – What can liabilities include? – What is equity? – What financial document measures the performance of the enterprise?

7. FINANCIAL STATEMENTS AND THEIR ELEMENTS

A. Balance sheet The position of the enterprise is presented in the balance sheet. That statement

shows resources and the claims to or interests in them and provides an indication of the financial strength of the enterprise.

The balance sheet includes the following elements: Assets

Assets include property, plant and equipment, financial leases, investments in sub-sidiaries and other enterprises; long-term receivables; purchased goodwill, patents, trade marks and similar intangibles; marketable securities;

current receivables (or trade debts); inventories; cash and bank balances; and pre-paid expenses.

Assets arise from past events, which may be cash or non-cash transactions. Assets may be purchased, exchanged for other assets, self-generated or received as grants or donations.

An asset is recognized when it is reasonably certain that the future economic bene-fit embodied in it will flow to the enterprise.

In a number of countries, intangible assets such concessions, patents, licenses, trade marks and similar rights and assets may be recognized in the balance sheet only if they were acquired for a valuable consideration. A number of countries allow assets to be carried on the balance sheet only if the reporting enterprise is the legal owner.

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Liabilities Liabilities include long-term loans and debentures, short-term loans, and bank

overdrafts, payables, pension plans and similar financial obligations. The scope of de-finition of liabilities covers obligations whose financial amounts can or cannot be es-tablished precisely. It therefore covers what is usually described as provisions in some countries. Provisions are liabilities, the amount of which cannot be established pre-cisely, or the occurrence of which is uncertain. In some countries, provisions may not be used to adjust the value of assets. In those countries, value adjustments on debtors are referred to as write-downs. In other countries, write-downs on debtors are com-monly referred to as provisions. Provisions should be distinguished from .reserves, which are amounts set aside under equity for future use with respect to obligations which may arise from probable or possible events.

A liability is recognized when it is reasonably certain that a future reduction in economic benefit will result from the settlement of the obligation.

Equity Paid-in capital is treated differently in many countries, in some of which all

amounts paid in by equity shareholders are classified as paid-in and are not further ca-tegorized. In other countries, paid-in capital is divisible into two types: that relating to the par value of the shares offered for sale and that relating to share premium or addi-tional capital. In consolidated balance sheets, the amount of equity should be given sep-arately for the shareholders of the parent enterprise and for other shareholders.

Equity is a residual arising from the deduction of liabilities from the assets of the reporting enterprise. Equity arises from two sources: that provided by shareholders (for example, paid-in capital) and that generated by the activities of the enterprise (for example, earnings less distributions to shareholders, unrealized surpluses).

B. Income statement/ profit and loss statement

The income statement, or profit and loss statement measures performance of an enterprise. The bottom line of this statement is the net result of the operations of the enterprise in the reporting period. It reveals the change during the period in the equity of the enterprise resulting from its operations.

Revenues Revenues are inflows or enhancements of assets (or reductions of liabilities) that

arise in the course of the normal activities of the enterprise. The events that result in revenues and revenues themselves are referred to by a va-

riety of names: including sales, fees, interest, dividends, royalties and rent. Expenses

Expenses are outflows or depletions of assets (or additions to liabilities) that arise in the course of the enterprise's normal activities.

The events from which expenses arise and expenses themselves are referred to by a variety of names, including cost of sales, wages and depreciation.

An expense is recognized when it is realized that an expenditure does not produce future economic benefits. It is also recognized when a liability is incurred without the recognition of an asset. When it is possible to do so, expenses are recognized in the income statement on the basis of direct association between expenses incurred and the

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earning of specific items of income. The process is commonly referred to as matching of expenses with revenues.

Gains and losses Gains are increases in equity that result from transactions that are incidental to the

enterprise's activities and from other transactions, events or circumstances affecting the enterprise during a period, except those that result in revenues or equity contribu-tions.

Losses are decreases in equity that result from transactions that are incidental to the enterprise's activities and from other transactions, events or circumstances affect-ing the enterprise during a period, except those that result in expenses or distributions of equity.

Gains are normally recognized when realized. Losses are normally recognized when realized or when it becomes evident that there is an impairment in the value of the assets, or an increase in the liabilities, to which the losses relate.

Exercise 12.

Read the text quickly and explain what "green accounting" is:

C. Green Accounting "Green accounting" is accounting for the environment. It is a major issue of public

concern currently being addressed by the Intergovernmental Working Group of Ex-perts on International Standards of Accounting and Reporting. In its first report, pre-sented in March 1990, ISAR considered some preliminary research of the nature, ben-efits and costs of environmental disclosures together with some tentative recommendations. In its second report, a year later, ISAR reviewed the response of governments and industries to its initiative in this area. On the basis of the results ISAR made some recommendations concerning monitoring information disclosures and accounting practices in this area.

Six major global industries (chemicals, forestry products, metals, motors, petro-leum and petrochemicals, and pharmaceuticals) have been chosen as the basis of this survey. The grounds for this selection were that such industries are particularly likely to have environmental information to report as they are industries that tend to have a significant impact on the environment because of the types of raw materials con-sumed, the production processes employed, or the nature of the end product.

The industries were asked to disclose information relevant to the following major areas of concern:

– policies and programmes about environment, – major environmental improvements achieved, – emission levels, – impact on governmental legislation, – legal proceedings, – financial impacts. The survey revealed that there is a high level of interest in environmental matters.

86 % of the surveyed enterprises provided at least some information. Besides, the lev-el of disclosure has increased greatly in comparison with the situation a few years

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ago. However, most corporations complied with only a very small number of the ISAR recommendations. The most common disclosures continue to be qualitative or descriptive in nature, but not quantitative. It is difficult to gain an objective view of a corporation's performance in this area.

A significant minority of corporations disclose information about the actual emission levels and contingent environmental liabilities. One major problem concerning envi-ronmental actions that few corporations have yet taken is the question of how to report the achieved results. For example, while the initiation of major environmental pro-grammes, the achievement of large percentage reductions of emissions and the making of large financial expenditures may indicate that a corporation is improving its perfor-mance, it may also indicate that the corporation has major environmental problems.

In contrast, the existence of no new programmes, stable emission levels and little financial expenditures may indicate that a corporation is either ignoring the problem or that the corporation has done extremely well in the past and that there is little room for further improvements. There is an encouraging sign, however, that a small number of corporations started to provide fairly detailed and objective information on the ex-tent to which they are meeting the industry norms and governmental requirements.

II. AUDITING

1. PERFORMING AN AUDIT

Vocabulary list

Auditing аудит Auditor аудитор Examine проверять, проводить ревизию Accounting records документы учета financial statements финансовая отчетность to offer an opinion сделать заключение (по результатам

аудиторской проверки) audit аудит, аудиторская проверка, ревизия,

проводить аудиторскую проверку build up наращивать, накапливать account(s) audit аудит счетов, ревизия счетов auditor's opinion аудиторское заключение supervisory board наблюдательный совет government agency ведомство, правительственная

организация in-depth audit report детальный аудиторский отчет audit process процесс проведения аудиторской

проверки

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audit procedures методика проведения ревизии / аудиторской проверки

judgement суждение, оценка audited company проверяемая компания preliminary analytical review предварительный анализ финансово-

хозяйственной деятельности assumption допущение, предпосылка, предположение figures данные legal position юридическое положение, юридический

статус misstatement сообщение неверных (неправильных)

сведений, искажение сведений to complete test audit завершить аудиторскую проверку evaluation оценка substantive test(ing) независимая проверка tests in totals проверка итоговых чисел materiality «существенность» (искажения) audit risk риск некачественного контроля inherent risk присущий (виду деятельности) риск control risk риск контроля detection risk риск (не)обнаружения approval of the financial statements подтверждение финансовой отчетности deviation отклонение unqualified opinion безусловное мнение (оценка, заключение) to qualify the opinion дать аудиторское заключение

с оговорками integrity добросовестность, профессиональная

честность certify выдавать свидетельство to conduct ai* audit проводить аудиторскую проверку generally accepted auditing standards общепринятые стандарты аудита

TEXT

Auditing is a process in which an independent accountant-auditor examines a firm's accounting records and financial statements and offers an opinion on their ac-curacy and reliability.

There are different types of audits, for example, financial statements audits, income tax audits, "value for money" audits, environmental audits, administrative au-dits, financial management audits, etc.

The accountancy profession has built up a significant amount of expertise in per-forming financial statements audits.

Accounts audits \ vere established as an instrument to protect third parties, the users of accounts, since the auditor's opinion helps establish credibility of financial statements.

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Special bodies of users, such as supervisory boards, employee representatives,

government agencies may sometimes need an in-depth audit report, which is usually confidential.

It should be stressed that auditors do not monitor, they offer an opinion, and the audit process and audit procedures are complicated and manifold. The auditor's opi-nion is gradually being built up from a mass of detailed work to the final judgement through the planning and testing stages. The auditor normally starts with a study of the business environment the audited company is working in and performs a pre-liminary analytical review.

Then he should direct his attention to the financial statements. Interestingly enough, however, the auditor's attention is not directed towards the financial statements' ele-ments as such. But towards the correctness of various assumptions made by the man-agement for their preparation. For instance, the auditor needs to know if figures are complete and accurate and reflect what they should reflect, if income and expenses are recorded in the proper periods and if the legal position is reflected adequately.

The auditor should focus on any misstatement whether it is intentional or uninten-tional. The management is responsible for the reliability of financial position. If the management is not prepared to take the responsibility it may be hard to complete the audit. In such situations the auditor should seek his own evidence by means of inde-pendent audit procedures.

Although the financial statements are the ultimate objectives of an audit, normally such audits cannot be completed without a proper study and evaluation of the ac-counting system and assessment of the internal accounting controls.

Defining the audit strategy the auditor has to decide whether to rely on internal controls or to resort to substantive testing applying analytical review procedures, such as tests in totals, comparison with budgets or even statistical analysis of figures.

In the planning stage as well as during the performance of audit procedures and, finally, in forming conclusions, "materiality" and "audit risk" are critical elements in the auditor's judgement. "Materiality" refers to the magnitude or nature of a miss-tatement (including an omission) of financial information.

"Audit risk" (including three different components - inherent risk, control risk, de-tection risk) is the risk that an auditor may give an appropriate opinion on financial information that is materially misstated.

The natural fmalization of the audit process is the auditor's report, reflecting the auditor's opinion on the financial statements. Unfortunately, audits do not always end up in an approval of the financial statements. Any deviation from the unqualified opi-nion should be explained in the auditor's report, including the uncertainty or the disa-greement that caused the auditor to qualify his opinion.

In order to protect the public interests and the profession's integrity an individual must be sufficiently educated and adequately trained before being certified to act as an auditor.

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Below you will find a sample of an auditor's opinion:

To the Shareholders of... Ltd.: We have audited the accompanying balance sheet of... Ltd. As of 31 December

... and the related statement of income for the year then ended. Our audit was conducted in accordance with generally accepted auditing stan-

dards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances to establish whether the balance sheet and the related statement complied with Russian regula-tions and were in agreement with the imderlying accounting records.

In our opinion, the balance sheet and the related statement of income ... Ltd. re-ferred to above have been prepared in compliance with the relevant Russian regula-tions and are in agreement with the underlying accounting records.

Moscow, 4 March

Answer the questions on the text:

1. What is auditing? 2. What audits are practiced nowadays? 3. What does the auditor's opinion help establish? 4. How is an audit planned? 5. What do auditors normally start with? 6. What do auditors direct their attention to when they analyze financial statements? 7. What responsibilities do managers (directors) undertake with regard to the audit? 8. What are the responsibilities of auditors? 9. Do auditors study and evaluate the accounting system and the internal ac-

counting control during the audit? Do they rely on internal controls? 10. What are the most critical elements in the auditor's judgement? 11. Do all audits end up in the approval of the financial statements? Why do audi-

tors sometimes disclaim or qualify their opinion? 12. Who has the right to act as an auditor? 13. What audit was conducted by the auditors whose opinion is stated in the sample? 14. What were the auditors responsible for? 15. What opinion was expressed?

Find English equivalents for the following Russian phrases from the text: Проверять (подвергать ревизии) учетную документацию; давать заключение

в отношении точности и достоверности финансовой отчетности; аудит финан-совой отчетности; ревизия правильности начисления подоходного налога; аудит максимального использования денежных средств; аудит мероприятий по защите окружающей среды; ревизия правильности действий руководства; проверка эф-фективности финансовой деятельности руководства; учетные работники нако-пили значительный опыт в ...; аудит счетов является инструментом защиты ин-тересов пользователей финансовой отчетности; заключение аудитора делает финансовую отчетность надежной; наблюдательным советам и ведомствам ино-

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гда нужны глубокие аудиторские отчеты, которые являются, как правило, кон-фиденциальными; аудиторы не контролируют, они дают заключение в отноше-нии точности и достоверности финансовой отчетности; деловая среда, в которой работает проверяемая компания;

аудиторы обращают свое внимание на правильность предположений руко-водства; преднамеренное или непреднамеренное искажение данных; брать на себя ответственность за ...; процедура проведения аудиторской проверки; оцен-ка системы внутреннего контроля; прибегать к независимым проверкам; анализ финансово-хозяйственной деятельности; «материальность» и «риск некачест-венного контроля» являются исключительно важными факторами при форми-ровании заключения аудитора; подтвердить финансовую отчетность; безуслов-ное заключение; аудиторская проверка была проведена в соответствии с общепринятыми стандартами аудита; балансовый отчет соответствует россий-скому законодательству.

Say in a few words what the text is about. Use the opening phrases.

2. AUDITING IN RUSSIA

Vocabulary list

statutory requirement установленное законом требование in force действующий "true and fair" view точное отражение to find faults находить недочеты chartered public accountant дипломированный частнопрактикующий

бухгалтер consultancy предоставление консультационных услуг to render a wide range of services предоставить широкий перечень услуг tax return налоговая декларация maintenance of accounting ведение системы бухучета institutional infrastructure институциональная инфраструктура audit chamber аудиторская палата statutory audit аудит, предписанный законом practising certificate свидетельство, дающее право заниматься

аудиторской деятельностью consolidated accounts сводная отчетность cost and management accounting производственный и управленческий

учет insolvency неплатежеспособность civil and commercial law гражданское и коммерческое право employment law закон о занятости

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TEXT

In most industrialized countries audit is a statutory requirement applying to limited

companies. The transition to a market economy has led to the establishment of new market mechanisms and creation of new institutions. Under the legislation in force, joint ventures are required to submit their annual financial statements, au-dited by an auditing organization, to the local financial authority.

Russia didn't use to have auditing firms in the past, but this profession is develop-ing very fast. There are hundreds of auditing firms in every big city now.

As in many other countries the auditor is responsible for ensuring that the accounts show a "true and fair" view of the business's financial position and performance. Au-diting in our country is a process in which an independent accountant examines a firm's records, analyses financial statements and offers an opinion on their accuracy and reliability. If the auditor doesn't find faults he confirms the Balance Sheet and the Profit and Loss Account Due to the specific business environment, auditors in Russia render a very wide range of consultancy services. They help their clients to prepare tax returns and give advice on the maintenance of accounting and organization of in-ternal control. They also give advice on how to set up businesses, how to improve an enterprise management, explain their clients rules for performing foreign trade trans-actions and foreign currency operations.

In order to play their proper part in the national economic development, auditors must be independent of pressures not simply from clients but also from government or state agencies. Moreover, an independent, effective and efficient profession re-quires a strong institutional infrastructure. That's why audit chambers have been set up throughout the country.

The strength and prestige of a professional body depends on the professional com-petence. To be entitled to carry out statutory audits of accounting documents in Rus-sia, an auditor must have a license.

As for the professional qualifications for auditors in the UK, they are really very high. Every chartered accountant undergoes several years of intensive professional training culminating in examinations of a very high standard. Even then, further expe-rience and study are required to obtain a practicing certificate. The examinations cov-er such subjects as auditing, analysis and critical assessment of annual accounts, gen-eral accounting, consolidated accounts, cost and management accounting, internal audit, legal and professional standards relating to the statutory auditing, company law, the law on insolvency, tax law, civil and commercial law, employment law, basic principles of financial management, etc. That is why, the UK accountants and auditors are respected over the world.

Answer the questions on the text:

1. What forms of business organization are audited in Russia? 2. Why is the auditing profession developing fast in Russia now? 3. What responsibilities do Russian auditors take? 4. Why is it that Russian auditors offer a wide range of services?

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5. What conditions can ensure existence of an independent, effective and efficient auditing profession?

6. What professional qualifications exist for auditors in the UK? 7. What examinations do the UK auditors take?

Find English equivalents for the following Russian phrases from the text: Проведение аудиторской проверки является требованием, установленным

законом; в соответствии с существующим законодательством; финансовая от-четность, проверенная аудиторской фирмой;

аудит быстро развивается; финансовая отчетность дает истинную картину финансового состояния; обнаружить недочеты; подтвердить счет прибылей и убытков; правила осуществления внешнеторговых сделок и операций с твердой валютой; организовать аудиторскую палату; иметь лицензию; пройти интенсив-ную профессиональную подготовку; получить свидетельство практикующего аудитора.

Say in a few words what the text is about. Use the opening phrases.

3. EXERCISES

Work on vocabulary and grammar

Exercise 1. a) Study the key words in the dictionary: Audit (ing), auditor, auditor's opinion, auditor's report, records. b) Match the verbs from (1) with the nouns from (2) below:

1) to share 2) certificate to take assumption to foster responsibility to seek faults to submit services to give advice to make point of view to obtain financial statements to find evidence to render standards

Exercise 2.

a) Supply the articles where necessary; b) Write down 3-5 questions about the text; c) Say what you have learned form the text about government auditing in Sweden; The Swedish National Audit Office (SNAO) is ... independent institution for cen-

tral government auditing and accounting in ... Sweden. The main task of... organiza-

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tion is to audit the effective fulfilmen of central government goals and commitments. In line with this, the organization analyses revenues and expenditures of ... central government, audits central government activities, examines accounts and performance of all government agencies and ... public organizations. The SNAO selects indepen-dently ... agencies and activities to be audited, ... auditing methods to be used, ... content of the audit reports, as well as the audit statements. All audits are carried out in accordance with generally accepted auditing standards. The audits principally have ... control functions, but substantial efforts are also made to ensure that the results of the audit can be used as ... basis for improving efficiency and effec-tiveness. The SNAO also has ... task of improving financial management at all levels of ... central government, of fostering high standards of financial management leading to the efficient use of central government funds, efficient cash flows and security of the payment system.

The government and ... Parliament use the information of the SNAO as a basis for their decisions on ... development and transformation of the Swedish public adminis-tration. Besides, ... government often turns to the SNOA for ... comments on measures proposed by different public commissions.

In addition, ... SNAO establishes ... norms, develops auditing methods, and offers training, and advice on issues related to auditing and financial management.

The staff are recruited on ... basis of educational qualifications and ... professional ability. Almost 95 per cent of the professional staff hold high professional qualifications.

Central government appropriations finance some fifty per cent of ... organization's ac-tivity and the remaining activities are fee-financed. The SNAO is ... active member of INTOSAI (the International Organization for Supreme Audit Institutions) and its Euro-pean equivalent EUROSAI (the European Organization for Supreme Audit Institutions).

Words you may need:

Swedish National Audit Office Государственная ревизионная служба Швеции foster v поощрять, благоприятствовать cash How поток наличных средств public administration управление на государственном

и местном уровнях appropriation n ассигнование fee-financed на хозрасчете INTOSAI Международная организация высших

контрольных органов EUROSAI Европейская организация высших

контрольных органов

Exercise 3. a) Supply the prepositions where necessary. b) Say what the auditors checked during the audit in accordance with the instruc-

tions given to them.

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Auditors’ Report

We have examined the books, accounts and vouchers relating ... the six months ended 30th September ... (year) which were presented ... us. We have made extensive enquiries ... the system of internal check ... force and are satisfied that it is working efficiently. Particular attention was paid to the methods in force for the authorization of accounts for payment and the handling ... cash. The cash balances ...the 30th Sep-tember ... (year) were counted and found to be in accordance ... the cashier's books. All bank payments have been verified with the bank statements and certificates of the balances on the accounts obtained ... the bankers.

We have checked all cash and bank payments ... the receipts and have to report that a number of small payments are unsupported ... vouchers. It has been possible, howev-er, to obtain other evidence to show that these disbursements were properly made. The cash books have been cast and all postings ... the various ledgers checked ... detail.

All invoices ... respect of goods purchased and expenses incurred have been ex-amined with the appropriate analysis of books, the totals of which have been checked. Several minor errors were detected which have not been rectified. The postings to the Creditors' Ledgers have been test-checked, being far too numerous to do in detail. The balances ... the individual Creditors' accounts have been compared with special audit statement obtained from them and found to be ... order. Our in-structions did not require us to examine the Sales Ledgers and Day Books: we there-fore report that in such work as we have performed we found no evidence or oppor-tunity ... defalcation or fraud.

Words you may need:

Voucher оправдательный денежный документ authorization of accountsfor payment разрешение на осуществление

платежей со счетов handling of cash использование наличности cash balance остаток кассовой наличности cashier's book журнал кассовых операций bank statement выписка из счета receipt квитанция disbursements выплаты cash book кассовая книга, журнал кассовых

операций cast подсчитывать, исчислять, подводить

итоги posting проводка ledger бухгалтерская книга, бухгалтерский

регистр expenses incurred понесенные расходы detect обнаруживать

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rectify исправлять Creditors' Ledger книга кредиторов test-check проверять с помощью теста audit statement аудиторский отчет Sales Ledger книга учета продаж Day Book книга операций рабочего дня Defalcation присвоение чужих денег Fraud мошенничество, обман

Exercise 4. a) Open the brackets putting the verbs in the correct form. b) Discuss the content

of the article. Misuse of Public Funds

It is a universally accepted truth in Russia that the heads of many public funds ha-bitually (to divert) trillions of rubles away from the stated purpose into lucrative deals for personal gain.

Over the first 10 months of this year, the Accounts Chamber, a watchdog of the State Duma, (to reveal) that nearly 1.8 trillion rubles, were not used for their desig-nated purposes.

The auditors (to find) that nearly every fund was not using its money as it was sup-posed to. For instance, the Moscow branch of Russia's Pension Fund (to buy) a building for about 2 billion rubles, (to spend) 11.5 billion rubles on its renovation and repair, and (to pay) another 6 billion rubles to an intermediary for "selecting the building", preparing the necessary documents, and obtaining the consent of the parties con-cerned." The Pension Fund (to misuse) more than 660 billion rubles despite the fact that people in some regions were left without pension payments for up to three months.

Many public funds (to set) up their own banks with charter capital running into hundreds of billions of rubles.

In spite of the obvious violations of regulations, all these operations cannot be put down as embezzlement without court rulings, and the violators are unlikely to be sued.

Misappropriations from extrabudgetary funds (to encourage) not only by people with a particular mentality and by a lack of adequate actions on the part of law-enforcement agencies, but also by the very system through which financial resources (to flow) from top to bottom. State extrabudgetary funds (to act) as an intermediary that collects payments and remits them to the recipients. Thus, they (to tempt) to "in-vest" the money in lucrative fast-yielding deals.

There would probably have been fewer cases of embezzlement and misuse of as-sets if public funds had initially been granted legal rights to earn money by, for exam-ple, transacting in securities and foreign-exchange valuables, and making short-term deposits in banks. So far the funds only (to have) a list of operations barred to them.

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Words you may need:

Misuse злоупотребление Divert отвлекать, отводить Lucrative прибыльный, выгодный, доходный personal gain личная выгода Accounts Chamber Счетная палата designated purposes указанные (запланированные) цели embezzlement растрата court ruling постановление суда sue преследовать в судебном порядке misappropriation незаконное присвоение, растрата remit переводить (средства) recipient получатель fast-yielding deals сделки, быстро приносящие прибыль valuables ценности bar запрещать

Exercise 5. Fill each gap with a suitable word from the box. Sum up the text in 5-7 sentences

and present your summary in class. free opinion (2)

statements Proper preparing responsibilities

standards performed accordance

audit (2) management view

Independent Auditors' Report to the Board of Directors and

Stockholders of ___ Company We have audited the consolidated balance sheet of __ Company and Subsidiaries

at December 31, ... and ... (years) and the related consolidated statements of income, stockholders' equity and cash Hows for each of the years in the period ended Decem-ber 31, ... (year).

Respective __ of directors and auditors are as follows: the company directors are responsible for the preparation of financial __; our responsibility is to form an inde-pendent __ based on our audit of these statements and to report our opinion to you.

Basis of opinion. We conducted our __ in accordance with generally accepted au-diting __. Our audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the ___ in the preparation of the fi-nancial statements, and of whether the accounting policies are appropriate to the com-pany's circumstances, consistently applied and adequately disclosed.

We planned and __ our audit so as to obtain all the information and explanations which we considered ___ in order to provide us with sufficient evidence to give rea-sonable assurance that the financial statements are __ from material misstatements,

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whether caused by fraud or other irregularity or error. In __ our opinion we also eva-luated the overall adequacy of the presentation of information in the financial state-ments. We believe that our ___ provides a reasonable basis for our opinion.

Opinion. In our __ the financial statements referred to above give a true and fair of the consolidated financial position of __ Company and Subsidiaries at December 31, ... (year) and have been properly prepared in ___ with generally accepted accounting principles and the Company Act 1985.

Words you may need:

Disclosure отражение (информации в финансовой отчетности) Fraud обман, мошенничество

Exercise 6. Read the dialogue, translate the Russian remarks into English and act the dialogue out: Foreigner: As far as we know, you are Russia's leading provider of accounting

and consulting services. The history of your firm mirrors the changes that have taken place in Russia over the recent years.

Russian: Да, вы правы. Наша фирма была основана еще в 1989 году. Все эти годы нам пришлось упорно работать, так как мы начинали практически с нуля. А сейчас мы активно сотрудничаем с Большой Шестеркой, крупнейшие пред-ставители нашего бизнеса обращаются к нам за помощью и советом.

F.: What services do you provide? R.: Мы предоставляем широкий перечень услуг: от услуг в области бухучета

и аудита до услуг в области финансового менеджмента и налогообложения. Главным является проведение аудиторских проверок и подтверждение финан-совой отчетности.

F.: Who are your clients? R.: Нашими клиентами являются компании всех форм организации бизнеса,

работающие во всех секторах нашей экономики, включая транспорт, торговлю и банковскую деятельность.

F.: We in the UK believe that if auditors are to play their role in economy they must be independent. What are your fundamental principles?

R.: Мы полностью разделяем вашу точку зрения в отношении независимости аудиторов, кроме того, мы уделяем большое внимание повышению их профес-сионального уровня.

F.: Are there any professional organizations of auditors in Russia? R.: Да, у нас существуют различные профессиональные организации, помо-

гающие аудиторским фирмам решать различные вопросы, включая повышение квалификации, лицензирование и т.п.

F.: Thank you for the opportunity to learn something about auditing in Russia.

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4. DISCUSSION

Exercise 7.

a) Read the texts and do the tasks that follow. b) Describe the two main functions of auditing. Discuss how public accountants

(auditors) and government auditors perform these functions. Explain the importance of internal auditing.

Audit is an examination of the records and reports of an enterprise by accounting specialists other than those responsible for their preparation. Public auditing by inde-pendent accountants has acquired professional status and become increasingly com-mon with the rise of large business units and the separation of ownership from con-trol. The public accountant performs tests to determine whether the management's statements were prepared in accordance with acceptable accounting principles and fairly present the firm's financial position and operating results. Such independent evaluations of management reports are of interest to actual and prospective sharehold-ers, bankers, suppliers, lessors, and government agencies. Generally speaking, audit-ing has two functions: to reveal undesirable practices and, as far as possible, to pre-vent their recurring in the future. A relatively new type of auditing is internal auditing. It is designed to evaluate the effectiveness of a business's accounting system. Perhaps the most familiar type of auditing is the administrative audit, or pre-audit, in which individual vouchers, invoices or other documents are investigated for accu-racy and proper authorization before they are paid or entered in the books.

In English-speaking countries, public auditors are usually certified, and high stan-dards of professional qualification are encouraged.

Most countries have specific agencies or departments charged with auditing of their public accounts.

Taxpayers in all countries are interested in the sound management of the collected revenue, they also want to know whether or not the executive branch of government is complying with the law, especially in the area of public finance.

Government auditors are working for sound, economical and efficient financial management, addressing the key problems in the field of public sector auditing, like strengthening the institutions that oversee financial management, changes in the scope and methodology of government auditing, ability to conduct performance audits in public enterprises, strengthening internal auditing in spending units, ex-post external audits of government activities, budget efficiency problems, performance of expenditure programmer.

The advantages accruing from an audit are obvious, taking into account the com-plexity of present-day commerce and business.

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c) Read the document below and discuss the results of the audit:

Independent Auditor's Report Dear Sirs, We have audited the accompanying general purpose financial statements of Cobb

County, Georgia, and the combining, individual fund and account group financial statements of Cobb County, Georgia as of and for the year ended September 30 ....

These financial statements are the responsibility of Cobb County, Georgia's man-agement. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing stan-dards. Those standards require that we plan and perform the audit to obtain reasona-ble assurance about whether the financial statements are free of material misstate-ment. An audit includes examining, on a test basis, evidence supportingJheJampunts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of Cobb County, Georgia at Sep-tember 30 ... , and the results of its operations and the cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. Also, in our opinion, the combining, individual fund and account group financial statements referred to above present fairly, in all material respects, the fi-nancial position of each of the individual funds and account groups of Cobb County, Georgia, at September 30, ... ,and the results of operations of such funds and the cash flows of individual proprietary funds for the year then ended, in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole and on the combining, individual fund and ac-count group financial statements. The accompanying financial information is pre-sented for purposes of additional analysis and is not a required part of the financial statements of Cobb County, Georgia. The information has been subjected to the au-diting procedures applied in the audit off-he general purpose, combining, individual fund and account group financial statements and, in our opinion is fairly stated in all material respects in relation to the financial statements of each of the respective indi-vidual funds and account groups, taken as a whole

Atlanta, Georgia, January 12, ...

Exercise 8.

Read the dialogue, sum up its content and act it out: Foreigner: As far as I know, when you started your economic reforms some

people believed that under market conditions the controlling function of the state would be losing its importance. Has this idea proved to be true?

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Russian: It's clear now that the idea was erroneous. Results of audits and inspec-tions reveal lots of branches of the tax law, misuses of public money, misappropria-tions and numerous cases of budget funds squandering.

F.: How can you account for so numerous financial infringements in Russia now? R.: The situation we are having now is a consequence of a weak legal base, short-

comings in running the country's finances, absence of a legal base for an active finan-cial control.

F.: What infringements are most frequent? R.: Well, first of all, I would single out diverting of money away from the stated

purposes into lucrative deals for personal gain. I mean funds allocated as returnable resources and budget resources allocated as the state support for different branches of economy. Then I would mention transfer of state funds to commercial units, embez-zlements. Defalcations, and misappropriation of funds.

F.: We have heard about scandals in your country when managers illegally placed so called "free money" in commercial banks and used the profit made to satisfy their own needs, like buying cars and real estate, going abroad on holiday an so on.

R.: That's true. In some cases, managers underreport their taxable profit, do not disclose income in accounting documents, start business operations without licenses, avoid paying excise duties, etc. There is no legally established responsibility for the misuse of budget funds, which causes irresponsibility, wastefulness, and criminal ac-tions on the part of senior officials and managers. Do you have similar problems?

F.: Well, yes, we have, but on a smaller scale. There is an efficient system of gov-ernment auditing in our country. We examine accounting and performance of all gov-ernment agencies and public corporations. What are the functions of government au-diting in Russia?

R.: Generally, we focus on compliance of government agencies, juridical persons with financial legislation of the Russian Federation, we audit execution of the federal budget and extrabudget funds, control money circulation, use of credit resources, ex-ternal and internal state debt, state reserves, safe keeping and use of state property. We are also responsible for many other things.

F.: What measures do you take when you detect financial misneeds? Do you hand your reports to investigating authorities?

R.:Yes, we do. Investigating authorities institute proceedings on the basis of our reports. We must work to improve the system of financial control in Russia because it does not fully meet the present-day requirements.

F.: You mean the vigorous emergence of the private sector? R.: Yes, the development of market relations and public and private finances.

Words you may need:

Squandering проматывание (средств) Infringement нарушение (законов) Wastefulness расточительность investigating authorities следственные органы to institute proceedings начинать судебное разбирательство

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Exercise 9. Give extensive answers to these discussion questions: 1. What is auditing? 2. When did auditing appear? 3. Do auditors perform a useful service to the community? 4. How do auditors conduct audits? 5. WTiat is the aim of audits? 6. Is it difficult to become a practising auditor? Are professional qualifications high? 7. What is government auditing? 8. Are there any international professional organizations of auditors? 9. What bodies in Russia perform government auditing? 10. Do many young people want to make a career in auditing? Why?

Exercise 10. Write several paragraphs on the following: a) Types of audit mentioned in this unit. b) What are government auditors responsible for? c) What do professional audit organizations do for auditors?

Exercise 11. Prepare a short talk on the following: a) If you have a job with an auditing firm (or want to be an auditor), what sort of

personal characteristics do you think are most important for auditors? Compare them with the personal features necessary for other financial professions.

b) If you have a job with an auditing firm, say how the Chamber of Auditors pro-vides you with information about possibilities to upgrade professional skills (courses being offered by different organizations). Is the information, if any, accurate, timely, complete and relevant? c) How is the work of auditors monitored?

Exercise12.

Talk to professional auditors to find out what they think about their professional organizations in Russia. Consider different aspects of their activities.

5. READING PRACTICE

Exercise 13.

a) Look through the text below to find the names of bodies responsible for contin-uing professional education in the UK.

b) Read the text carefully to say what CPE implies.

Continuing professional education The Audit Registration Committees of the Institute of Chartered Accountants in Brit-

ain are extremely interested in and concerned about continuing professional education (CPE). CPE is essential for all principals and employees who deal with audit work.

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Indeed, it is more than essential, it is compulsory. It is there to ensure that firms main-tain their competence to do audit work and maintain the high professional standards expected of firms of chartered accountants.

Principals and employees must keep up-to-date with changes in company law, ac-counting and auditing standards, etc.

The amount of CPE is not expressed as an absolute total, but a target of 150 points. One point is given for each "unstructured" hour of CPE (e.g. reading) and three points for each "structured" hour (e.g. course attendance). Of the target of 150 at least 60 points should be structured activities. For auditors, half those amounts (i.e. 75 points of total and 30 points of structured education) should be audit-related. Thirty structured CPE points is, for example, 10 hours of course attendance.

The current system of CPE has been in place since 1991. There are no exemptions due to the age of the practitioner or the volume of audit work undertaken.

The ARCs accept that in any particular year the targets may not be met. It is important that auditing firms should take a conscientious approach to CPE. However, the ARCs are becoming increasingly concerned about firms who have done little, if any, CPE.

In the Committees' view there is a wealth of CPE available. Courses are run by the institutes, district societies and commercial training organizations. There should be no excuse for not doing CPE. Firms should be aware that ARCs will take a firm line with firms who do inadequate CPE.

Exercise 14.

a) Read through the text for general information. b) Read the text more carefully and pick out information about the JMU. The EU 8th Company Law Directive set out the requirements for each member

state to have a common minimum regulatory system for auditors of limited compa-nies. The United Kingdom enacted this through the Companies Act 1989 and added a requirement for monitoring. Since 1 October 1991, a firm must be a Registered Au-ditor to conduct company audit work.

In 1990 the Department of Trade and Industry granted the status of Recognized Supervisory Body to ICAEW, ICAS and ICAI, thus allowing these institutes to regis-ter and regulate Registered Auditors.

Specifically, this work is done by Audit Registration Committees which register auditors and then organize monitoring.

Monitoring is conducted on behalf of the Institutes by the Joint Monitoring Unit, which was set up in 1987 to monitor the compliance of firms authorized to conduct investment business and whose role was extended in 1991 to include monitoring the work of Registered Auditors.

The monitoring activities of the JMU involve: – issuing and reviewing firms' Annual Returns, – conducting visits to firms, – reporting the results of visits to the ARCs. Activities of the JMU aim to as-

sess whether or not the firm has complied with Audit Regulations and Standards. The JMU seeks to assist firms by making practical suggestions for improvements of their audit performance.

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ABBREVIATIONS

ICAEW (Institute of Chartered Accountants of England and Wales) – Инсти-тут дипломированных бухгалтеров Англии и Уэльса

ICAS (Institute of Chartered Accountants of Scotland) – Институт дипломи-рованных бухгалтеров Шотландии

ICAI (Institute of Chartered Accountants of Ireland) – Институт дипломиро-ванных бухгалтеров Ирландии

ЛИТЕРАТУРА

1. Аверьянова Л.А., Шевелева С.М. English for bankers. Международные бан-ковские расчеты. – М.: Филология, 1998.

2. Воронцова И.И. Английский язык для студентов. – М.: Российский гума-нитарный университет, 1999.

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Оглавление

Стр.

I. ACCOUNTING…………………..………………………………………………..3

1. Accounting principles and concepts ……………………………………….….3 2. Accountancy in a free–market economy………………………………………5 3. Public and private accountants………………………………………………...7 4. Exercises ………………………………………………………………............8 5. Discussion …………………………………………………………………...12 6. Accounting Methods (dialogue and exercises) ……………………………...15 7. Financial Statements and Their elements ……………………………………18 a. Balance Sheet ………………………………….…………….................18 b. Income statement / profit and loss statement …………………...……...19 c. Green accounting ……………………………………………………....20

II. AUDITING ……………………………………………………………………….21 1. Performing an audit …………………………………………………………...21 2. Auditing in Russian …………………………………………………………...25 3. Exercises……………………………………………………………………….27 4. Discussion……………………………………………………………………...33 5. Reading practice……………………………………………………………….36

ABBRIVIATIONS…………………………………………………………………...36 ЛИТЕРАТУРА………………………………………………………………………36

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Гурская Татьяна Анатольевна

АНГЛИЙСКИЙ ЯЗЫК

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