233. IMPROVING FINANCIAL STATEMENT AUDIT PROCESS FOR FIXED ASSETS PERFORMED BY AASC AUDITING FIRM

MINISTRY OF FINANCE ACADEMY OF FINANCE - BACHELOR THESIS TOPIC: IMPROVING FINANCIAL STATEMENT AUDIT PROCESS FOR FIXED ASSETS PERFORMED BY AASC AUDITING FIRM Instructor: MA Le Thi Yen Oanh Author Name: Bui Thi Yen Minh Class: CQ54/21CL.01 Major: Accounting Ha Noi - 2020 COMMITMENT I declare that this thesis, submitted in fulfillment of the requirements for the award of bachelor, in the Academy of Finance, is wholly my own work unless otherwise referenced or acknowledged The document has not been submitted for qualifications at any other academic institution The data, result stated in the thesis are honestly derived from the actual situation of the company Author of the thesis (Sign and write full name) TABLE OF CONTENTS COMMITMENT I TABLE OF CONTENTS II LIST OF TABLE V LIST OF ABBREVIATIONS VI INTRODUCTION CHAPTER I THEORETICAL FRAMEWORK ON AUDITING FIXED ASSETS IN FINANCIAL STATEMENT AUDIT 1.1 Overview of fixed assets 1.1.1 Overview of fixed assets in financial statements 1.1.2 Main accounting requirements for fixed assets 1.1.2.1 Tangible fixed asset .7 1.1.2.2 Intangible fixed assets .16 1.1.3 Internal control over fixed assets .23 1.2 Financial statement audit process for fixed assets 25 1.2.1 Audit objective, audit evidence and common risk of Fixed Assets audit 25 1.2.2 Financial statement audit process for fixed assets 29 1.2.2.1 Auditing planning 29 1.2.2.2 Audit implementation 35 1.2.2.3 Audit finalization .43 CHAPTER CONCLUSION 46 CHAPTER II: FIXED ASSET AUDIT IN FINANCIAL STATEMENT AUDIT PERFORMED BY AASC AUDITING FIRM 47 2.1 Overview about AASC Auditing Firm Limited Company 47 2.1.1 Introduction about the company 47 2.1.2 Organization structure of AASC Auditing Firm Limited Company 50 2.1.3 Operation activities characteristics of the company 55 2.1.3.1 Type of services 55 2.1.3.2 Client networks 58 2.2 Characteristic, organization process Financial statement in AASC Auditing Firm Limited Company 59 2.2.1 Audit team 59 2.2.2 Characteristic audit organization process 60 2.2.2.1 The content of audit 60 2.2.2.2 The stage of audit 61 2.2.2.3 Audit planning 62 2.2.2.4 Audit performing .70 2.2.2.5 Audit finalization .71 2.2.3 Characteristic organized audit documentation 72 2.2.3.1 Concept and characteristics of audit files 72 2.2.3.2 The purpose of recognize audit file 72 2.2.3.3 The type of audit file 73 2.2.3.4 Basic requirements of organized audit documentation 75 2.2.3.5 Characteristic of working paper of AASC’s auditor in the audit .75 2.2.3.6 Storage and security 78 2.2.4 Quality supervision process at AASC Auditing Company Ltd 79 2.3 Fixed asset audit in financial statement audit client X performed by AASC Audit Firm 81 2.3.1 Audit planning .81 2.3.1.1 Before audit planning 81 2.3.1.2 Gather the clients’ information 82 2.3.1.3 Horizontal analytical procedures 87 2.3.1.4 Assess materiality and inherent risk 89 2.3.1.5 Internal control system and control risk assessment 89 2.3.1.6 Design audit program 98 2.3.2 Audit performing 98 2.3.2.1 Test of control 98 2.3.2.2 Substantive procedure .100 2.3.2.2.1 Analytical procedure 100 2.3.2.2.2 Test of detail procedures performing 101 2.3.2.3 Present fixed assets note to Financial statements 111 2.3.3 Audit finalization .115 2.3.3.1 Audit working paper review .115 2.3.3.2 Assess contingent liabilities .115 2.3.3.3 Events offer reporting date 116 2.3.3.4 Going concern assumption 116 2.3.3.5 Collect final remaining audit evidence 116 2.3.3.6 Issue audit report and management letter .116 2.4 Assessments on audit of fixed assets in financial audits conducted by AASC Auditing Firm Limited Company 117 2.4.1 Strengths 117 2.4.1.1 Audit planning stage 117 2.4.1.2 Audit implementation stage .118 2.4.1.3 Audit finalization .120 2.4.1.4 Other strength 120 2.4.2 Limitation 121 2.4.2.1 Audit planning stage 121 2.4.2.2 Audit implementation stage .123 2.4.2.3 Audit finalization .125 2.4.3 The cause of limitation 125 CHAPTER CONCLUSION 127 CHAPTER III: SOLUTION FOR IMPROVING FIXED ASETS AUDIT IN FINANCIAL STATEMENT AUDIT IN FINANCIAL STATEMENT AUDIT PERFORMED BY AASC AUDITING FIRM .128 3.1 Requirement and necessary of improving fixed assets audit in financial statement audit performed by AASC company 128 3.1.1 Necessary of improving Fixed asset audit 128 3.1.2 Requirement for solutions 128 3.2 Solution for improving fixed assets audit in financial statement audit in financial statement audit performed by AASC Auditing Firm Limited Company 129 3.2.1 Audit planning 129 3.2.2 Audit implementation 130 3.2.3 Audit finalization stage 134 3.3 Conditions for improving Fixed assets audit in Financial statement audit performed by AASC Auditing Firm Limited Company .135 3.3.1 Government 135 3.3.2 Accounting professional association 136 3.3.3 AASC Auditing Firm 136 CHAPTER 3: CONCLUSION .138 CONCLUSION 139 LIST OF TABLE LIST OF ABBREVIATIONS No Co Company EGA Evidences Gained Activities FSLI Financial Statement Line Items FAR Fix Assets Register Ltd Limited OM Overall Materiality PM Performance Materiality SUM Summary of Uncorrected misstatements VAS Vietnamese Accounting Standard 10 VSA Vietnamese Standard of Auditing INTRODUCTION Rationale for the research These days, following the openness of the economy and integration policy of the Party and State, our country's economy has been gaining important achievements One of these achievements is healthy and transparent according to the provisions of Law and Accounting Standards Contributing some of these achievements is the significant role of accounting firms, which has been considered as a tool to monitor and supervise the financial, accounting, and tax activities of enterprises, contributing to publicity and transparency transparency of Vietnam's business environment The audit history of Vietnam dates back to the 1991 when the first two local firms, namely VACO and AASC were established in response to the changes in Vietnam economy from a centrally planned to an open market economy With the modern method of working, these companies along with well-known other audit firms, day-to-day, add up value to clients with trustworthy brand names The appearance of first industrial revolution in England had initiated the age of machine in future with the second industrial revolution and the third revolution More and more global corporations were established in many field of manufacture with typical brands such as: Toyota (Japan), Samsung (Korea), Piaggio (Italy), Lockheed Martin (USA), Apple (USA) These enterprises day by day raise up quantity and quality of products with the support of modern technology Without facilitating modern technology, manufacture firms won't meet the demand of production Software, machines, robots, factories are designed for firms to adapt with the condition of market The faster the population grows up; the more products manufacturers have to produce People currently can help working without the support of machines and constructional facilities Producers all over the world cannot business with a lack of assets Assets always plays an integral role not only in manufactured companies but also in the development of industry and Economy With all reasons, the conclusion about the importance of assets in producing firms may be drawn Owning to the importance of assets in manufacturing companies, they have to be taken notice of illegal actions in management and using Fixed assets always account for a high proportion in Balance Sheet of all manufactured firms, so accountants may catch frauds and errors in accounting of fixed assets to attain their purposes Fraud in in fixed assets accounting segment in both situations also related to fraudulent financial reporting and misappropriation of assets on purpose On the other hand, errors in fixed assets accounting segment are out of purpose misstatement Fixed assets are, nowadays, playing a core functions in companies, especially the manufacturers, so auditing of Fixed Assets need such a secure and careful cycle that no misstatements may occur Recognizing the importance of auditing financial statements in general, as well as auditing items of long-term financial investments in particular, through reasoning provided at school, and through limitations on process audit of fixed assets in financial statement math during the internship at AASC, I chose the topic “Improving financial statement audit process for fixed assets performed by AASC auditing firm” for my graduate thesis Objectives of the research The first objective of the essay is to summarize and systematize theoretical framework of audit of fixed assets in financial audit Secondly, to refer to the practice of audit of fixed assets carried out by the auditors at AASC Audit Firm Thirdly, to evaluate the advantages and limitations of the audit of fixed assets at AASC Audit Firm accompanied by recommendations for improvement Methods of research Firstly, I summarized the knowledge related to audit of fixed assets that I have learned in university, and referred this to AASC’s working paper in planning phase ... SOLUTION FOR IMPROVING FIXED ASETS AUDIT IN FINANCIAL STATEMENT AUDIT IN FINANCIAL STATEMENT AUDIT PERFORMED BY AASC AUDITING FIRM .128 3.1 Requirement and necessary of improving fixed assets audit. .. fixed assets in financial audit Part 2: Financial statement audit procedures for fixed assets accounting performed by AASC Auditing Firm Limited Company Part 3: Solution for improving fixed assets. .. improving fixed assets audit in financial statement audit in financial statement audit performed by AASC Auditing Firm Limited Company 129 3.2.1 Audit planning 129 3.2.2 Audit implementation