The Role of the Statutory Audit in Ensuring the Quality of Financial Information

Abstract

Statutory audit provides independent assurance that the financial statements of entities such as correctly reflect their situation. Experience in many countries has shown that insufficient attention being paid proper role of statutory audit in the process of restructuring and modernization creates vulnerability and may lead to financial scandals, financial crises and long-term damage to the capital markets and lending. The role of statutory audit in the context of restructuring and modernization of the economy is reflected in ensuring the reliability of financial information reported by various entities. There can be no doubt that a reliable information enhances the confidence of investors and creditors, particularly important in this context. A good regulation of the statutory audit strengthens the confidence of investors and creditors, which is particularly important in the financial markets. Effective, investigative and independent oversight of the audit activity is vital in this context. The transposition of the audit directive and the Regulation on the specific requirements for the audit of entities of public interest provides an opportunity to improve the regulatory framework for audit activity and public supervision. The investigation used the qualitative research method and the observation technique based on the analysis of national and international normative acts. The results indicate a good harmonization of the regulatory framework of the financial audit activity in the Republic of Moldova with the international practices in this field. In order to better align with the provisions of the audit directive, the incorporation of some regulatory aspects of the statutory audit activity into the national legislation would be welcome. In order to exercise the public supervision of the audit activity, it is necessary to restructure and modernize the system, namely the creation of the Agency for the public supervision of the audit, which will be the only competent authority with final responsibility for the public supervision of the audit activity. UDC: [657.6:346.5](478); JEL Classification: M42.