The Auditing Services as one of the CERMA strategic directions

VASIL KACIASHVILI

Under the conditions of Market Economy, the system of control is needed both in governmental and nongovernmental sectors. The auditing services that are used for this purpose are mostly utilized in the fields of financial-commercial activities and aimed at making relevant financial conclusions.

Audit is one of the forms of financial control and one of the conditions for normal functioning of economic relations within society. It provides revision of liability coverage and obligation fulfillment, defends all forms of ownership, also guarantees legality and effective use resources in the process of GNP creation and distribution. Besides, it supports the step-by-step liberalization of the government interference in economic processes of the country.
For Georgia, improvement of financial control mechanisms is a priority direction of economic reform and plays an important role in current process of privatization in the country. The main function of a such financial control is accounting, namely, monitoring of correct application of financial accounting. This requires disclosure of high quality, transparent and comparable information from the side of enterprises, which, in the process of decision making, is the main condition for world capital market players and other users (local partners, banks, and stock exchanges) to analyze the information for decision-making and investing in Georgian companies.
It should be also noted that audit is not just the means of control. Audit supports the successful implementation of commercial activities, due to the fact that the recommendations, provided by business specialists, and that are applied successfully, finally result in economic success of the client.
In Georgia, in the past, audit was obligatory for all the firms and managers perceived this activity just as one of the mechanisms of bureaucracies, which did not bring any benefit to the company. However, according to August 2, 2005 amendment to Georgian Law about Audit, audit is now not obligatory for those “economic units”, the organizational-judiciary form of which, according to current legislation, considers limited responsibility of their owners. This amendment improves the situation for the production-based enterprises, because now the managers have the opportunity to evaluate the need of audit and make objective assessments of this activity.
Thus it is important that high quality audit services are provided to the clients. One of the companies guaranteeing that, is the Center for Enterprise Restructuring and Management Assistance (CERMA) which successfully implements economic policy of the government, conducts market researches, makes financial and strategic analysis, provides consultations in marketing, finances, management for joint-stock companies and enterprises. It designs business plans and connects enterprises with potential partners locally and internationally.
Along with other successful undertakings, for the purposes of modernization of financial accounting systems in the enterprises and for attracting foreign direct investment in the country, CERMA successfully implements one of its directions – provision of auditing services for Georgian and joint Georgian-foreign enterprises.
For the purposes of financial accounting regulation and attracting foreign investments, along with other successful projects, CERMA defines provision of auditing services as one of its core directions. This is actively conducted in Georgian and Foreign-Georgian joint companies. One of them is Geo-Nitro Georgian-Turkish joint company. Its manager who fully controls the enterprise on all levels of operations, is quite a good specialist and accounts every cent of the operations. His attitude is completely correct and reflects the opinion that the professional accountant has to keep information confidential, while fully accounting the financial situation of the company and in the case of errors giving relevant recommendations.
CERMA’s experience shows that those owners of enterprises (shareholders, proprietors), which needed audit report to submit it along with the balance sheet by the end of the fiscal year for taxation purposes, in most cases went eventually bankrupt.
Thus, CERMA has enough experience and professional staff to support the development of this type of governmental control in Georgia. Furthermore, CERMA is interested to provide this type of service due to the fact that by means of such activities it assists the gradual liberalization of governmental interference in economy, which in turn is essential for the future prosperity of the country.