Auditing and Related Services

Auditing Services

1 Auditing of a company's annual accounts, whether individual or consolidated.

Auditing of the annual accounts consists of verifying the information in said accounts to ascertain if they reflect the true nature of the company's assets, financial situation and results of the audited entity under the applicable regulatory framework of financial reporting; it shall also include alongside, where appropriate, a verification of the management's report.

At Alesco, we are fully aware of the difficulties involved in changing auditors insofar as the depth of knowledge acquired during the initial audit of a company is significantly greater than in the following years, which in turn suggests a more significant workload for the company being audited.

Our philosophy of working and approach to this situation is through maximum collaboration. The idea is that the entity's initial effort to transmit information about it ultimately is not lost/wasted. To this end, we commit to keeping the same staff who developed the work from the outset and, as their careers progress, we endeavour to train their replacements so that they have detailed knowledge of the client. We do this so that any change to the team leader or fieldwork manager will not harm the client in terms of time and effort.

These services are carried out according to technical auditing standards. Presently, an adaptation of the International Standards on Auditing (ISA-ES) to Spanish legislation and the Audit Act's provisions and implementing regulations.

2 Auditing of interim financial statements.

In cases where the regulations require it, Alesco provides audit services for such financial statements, together with explanatory notes.

3 Auditing a single financial statement or a specific accounting document.

For example, in cases of capital reduction for losses or capital increases charged to reserves, as set out in Articles 323 and 303, respectively, of the Corporations Act.

Other Review Services

Limited reviews of annual accounts or interim financial statements.

Those companies that have no legal obligation to audit themselves and yet still wish to obtain a report put together by a third party, which provides a certain degree of security that the company's financial information is reliable, can hire this limited review service for their annual accounts.

It does not afford the same weight and security as an audit because the depth and scope of the auditor's procedures are not the same. However, it provides better protection than unchecked financial statements, which can benefit the client's specific needs.

The work is carried out according to the standards set out in International Standard on Review Engagements (ISRE) 2400.

In addition, these services are provided within the audit of groups of companies, in those companies which are not legally obligated to be audited and which participate in the preparation of the consolidated financial statements, in respect of which, the group auditor needs to have a degree of assurance regarding the financial information. In this case, the work is carried out under the international standard ISRE 2410 (a review of interim financial statements by the entity's auditor).

Special reports under commercial law

Commercial law establishes certain types of work to be carried out by the auditors, they are:

i. Specific work related to auditing annual accounts

Special report on periodic public information of entities issuing securities admitted to trading on stock exchanges.
Special and complimentary report to the audit of the annual accounts of insurance entities, requested by the Directorate-General for Insurance and Pension Funds.
Supplementary report to the audit report on cooperatives' annual accounts with a credit section requested by certain public supervisory bodies.
Special report required under article 3.6 of Royal Decree 1251/1999, of 16 July, on Sports Corporations (SAD), following the wording given by Royal Decree 1412/2001.
Special report on specific half-yearly information from the ODS (article 20.5 of Royal Decree 1251/1999)
Supplementary report to the audit report on the annual accounts of credit institutions.
Supplementary report to the audit report on the annual accounts of investment services companies and their groups.

ii. Auditing work on specific accounts required by commercial legislation

Capital increase charged to reserves
Capital increase through credit compensation

iii. Work that is not of an auditing nature assigned by commercial legislation to statutory auditors

Bonds convertible into shares
Exclusion of pre-emptive rights
Valuation of shares in cases of anticipated inheritance (Mortis Causa) transfer or forced shares and in some instances of separation and exclusion of partners.
Settlement of usufruct without agreement between the parties on the amount to be paid

Agreed Procedural Reports,

Agreed procedural reports are diverse in nature; the procedures carried out have been agreed on beforehand with the client or third parties to only report on and describe specific facts, so no opinion or judgment is given.

These are some of the reports that we put together:

Compliance with covenant-based financing ratios
Compliance with ratios linked to the maintenance of concessions, commercial holdings, etc.
The verification of sales figures linked to clauses in real estate leases
Reviews of tax returns and eco-environmental fees: Eco members, AEE, Ecopilas, …
Reviews of the Indicators of Transparency and Good Governance of Developing NGOs.

Accounting reports justifying aid

The supporting accounts with the provision of an auditor's report are a means of justifying to a beneficiary the fulfilment of the conditions imposed and the achievement of the objectives set out in the grant award.

The most common reports focus on grants to research, development and innovation, training, cultural programmes, new technological developments, etc. With the funds coming from either European institutions through framework programmes, international collaborations, national programmes, autonomous communities, or specific autonomous bodies such as the CDTi.

There are many agencies, each with different programs and sub-programmes, that require an external auditor to certify the expenses that have been incurred and decide whether they are eligible to be subsidised. Our team has worked extensively in this area and has experience reviewing and dealing with these kinds of grants.

These reports, which have a lower degree of security than an audit, are still beneficial depending on the client's circumstances and needs.

Related Services

Over the last few years, there has been a significant change to the economic environment in which companies operate for several reasons, due to the financial crisis, technological causes, changes in the market it operates in, or changes in the regulatory, amongst other things.

When faced with these situations, the risks companies have to deal with are increasing, such as business, operational, fraud, and the profits and margins achieved in their business development are shrinking.

Additionally, the regulatory and social environment that affects companies has been significantly altered by increasing demand placed on them by regulatory bodies and by society itself.

Under these circumstances, companies must put systems and internal processes in place that allow them to analyse the risks, detect them when they occur, manage them properly, and prevent them.

At Alesco, our professionals have the skills, experience and the means, to design these increasingly critical systems and assist in setting them up if they do not already exist. Our team also reviews existing systems, assessing potential problems and providing detailed points for improvement.

The consequences of failing to implement adequate systems can do serious harm to an entity, its managers, shareholders, and owners. With prevention in mind, companies should ask themselves if they meet all the necessary regulatory standards, do they have adequate surveillance and control systems in place to mitigate the financial and business risks that it faces, are they subject to possible risks of fraud, both internal and external, as well as potential risks to the company's reputation.

In order to answer these questions, four scenarios need to be considered,

I have surveillance and control systems in place to ensure compliance (so-called "compliance" systems).
My current internal control systems allow for the detection of business risks that come up in the company's day-to-day operations. In turn, my processes efficiently and effectively manage the risks. Are these processes and systems updated to my current business reality?
These internal control systems are set up to detect fraud and embezzlement risks, whether internal and/or external.
The company applies surveillance and control programs in such a way that the reputation of the business cannot be affected by specific actions or acts carried out by it. (Corporate Social Responsibility)

At Alesco, we provide expert services in the design and implementation of internal systems and processes that ensure regulatory compliance, the assessment of appropriate internal control measures, and the correct identification of risks and proposals for dealing with them. In addition, we offer a review and updating services for pre-existing procedures.