AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM

N ATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM BARCHELOR THESIS Topic: AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM Student : Nguyen Dan Linh Speciality : Auditing Class : Kiem toan CLC 60B Student’s ID : 11182728 Supervisor : Assoc Prof Tran Trung Tuan HANOI - 2022 ACKNOWLEDGEGEMENTS I would like to sincerely thank The Instructor Assoc Prof Tran Trung Tuan, staffs and seniors in the Audit Department of Russel Bedford KTC Auditing Co., Ltd for their help and facilitated my completion of this report Due to time constraints and practical experience, this internship topic has many shortcomings I look forward to the contributions and instructions of the teacher and the brothers and sisters to help me complete my topic i STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Barchelor Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper I clearly marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content Hanoi,… /… /20…… Signature ii TABLE OF CONTENTS INTRODUCTION CHAPTER 1: CHARACTERISTICS OF AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM 1.1 Characteristics of cash and cash equivalents of clients affecting financial audits 1.1.1 Features of cash and cash equivalents on Financial Statements 1.1.2 Accounting for cash and cash equivalents .4 1.1.3 Common misstatements related to cash and cash equivalents 1.1.4 Internal controls over cash and cash equivalents .7 1.2 Audit objectives of auditing cash and cash equivalents in financial audits conducted by Russel Bedford KTC Audit Firm 1.3 Audit of cash and cash equivalents in financial audits process conducted by Russel Bedford KTC Audit Firm .11 1.3.1 Planning the audit 12 1.3.2 Implementing the audit 21 1.3.3 Completing the audit .25 CHAPTER 2: PRACTICE OF AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM – AT SPECIFIC CLIENT 26 2.1 Planning the audit 26 2.1.1 Learn information and evaluate customers 26 2.1.2 Signing audit contracts, personnel arrangements and auditing time 30 2.1.3 Planning and designing audit programs 31 2.2 Implementing the audit 33 2.2.1 Performing tests of controls with cash and cash equivalents 33 2.2.2 Performing analytical procedures 35 2.3 Completing the audit 47 iii CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING THE AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM 49 3.1 Assessments of the audit of cash and cash equivalents in financial audits process conducted by Russel Bedford KTC Audit Firm .49 3.1.1 Strengths 49 3.1.2 Weaknesses and causes 55 3.2 Recommendations for improving the audit of cash and cash equivalents in financial audits process conducted by Russel Bedford Audit Firm 57 CONCLUSION 61 REFERENCES 62 APPENDIXES 63 iv LIST OF ABBREVIATIONS KTC No VND FS IS GCS Russel Bedford KTC Audit Firm Number Vietnam dong Financial Statement Income Statement Global Construction and Service Joint Stock Company v LIST OF TABLES AND FIGUR Diagram 1.1: Audit process 11 Diagram 1.2: Customer survey, customer evaluation, consensus and signing of contracts: 13 Y Table 1.1: Questionnaire to learn the customer's internal control system .18 Table 1.2: Questionnaires looking for internal control systems for cash and cash equivalent 19 Table 1.3: General audit program applicable at KTC (Appendix 1) .24 Table 1: General information about GCS 26 Table 2.2: Auditor's Independence Assessment Questionnaire 31 Table 2.3: Auditor’s Assessment Questionnaire (Appendix 3) 31 Table 2.4: Materiality calculating 32 Table 2.5: Detail calculating materiality for GCS: 33 Table 2.6: Internal control Assessment Questionnaire with cash at GCS .34 Table 2.7: Cash_Leadsheet 36 Table 2.8: Cash_ Overall analysis 38 Table 9: Auditor's calculation of the different in cash 40 Table 2.10: Reconciliation bank balances between book and bank statement 41 Table 2.11: Transactions which should be adjusted .44 Table 2.12: Transaction’s test 45 vi INTRODUCTION The rapid development of the market economy requires the provision of highly reliable financial information with the examination and validation of independent audits The need for auditing is increasing, especially at the period when Vietnam is promoting the equitization of state-owned enterprises, companies listed shares on the stock market and must publicize financial information annually Audit activities in general and independent audit activities in particular have been affirming their positive role In fact, auditing has a very important role to play in our economy today Auditing is a tool for the state to regulate the macro-economy; investors need objective honest information to have the right investment direction and these investment decisions are economically and legally guaranteed; Through auditing practices create a healthy business environment and ultimately through audit activity as a measure to limit potential wrongdoing Cash is a short-term asset in a business On the financial statements, the amount of cash of the enterprise is related to many other items such as: Receivables of customers, payable to sellers, inventory, payable to employees The audit for cash in the audit of financial statements cannot be separated from the audit of the relevant items On the other hand, the possibility of frauds for the cash is very large and this item is often assessed as important in every audit, which makes the audit of cash and cash equivalent even more important Recognizing the important role of cash and cash equivalents and with the fact of being interned at Russel Bedford KTC Audit Firm I have chosen the topic: "AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM" for his internship With this topic, I would like to better understand the nature of auditing in cash and cash equivalent on both theoretical and practical means The content of the graduate internship thesis is divided into three parts: Chapter 1: Characteristics of audit of cash and cash equivalents in financial audits conducted by Russel Bedford KTC Audit Firm Chapter 2: Practice of audit of cash and cash equivalents in financial audits conducted by Russel Bedford KTC Audit Firm – at specific client Chapter 3: Assessments and recommendations for improving the audit of cash and cash equivalents in financial audits conducted by Russel Bedford KTC Audit Firm CHAPTER 1: CHARACTERISTICS OF AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM 1.1 Characteristics of cash and cash equivalents of clients affecting financial audits 1.1.1 Features of cash and cash equivalents on financial statements On the balance sheet, cash and cash equivalent is presented in the asset section, belonging to the liquid assets of the enterprise Based on the stored nature of the cash and cash equivalent, people divide the cash into three categories: Cash: This is the amount stored in the safe of the enterprise, cash can be VND and foreign currency of all kinds Cash in bank: This is the amount stored at the bank Cash in bank can include VND and foreign currency of all kinds Cash in transit: This is the amount of cash that the business is in the process of processing such as transferring to the bank, treasury, transferring it to customers, paying customers, via bank or post office but the enterprise has not received the bank's notice or the post office's notice of the completion of the business The cash being transferred can also be VND can also be foreign currencies of all kinds Each currency has different characteristics, and this affects the management characteristics for them as well as the process of control and comparison within the unit In the process of production and business, the currencies are used to meet the need to pay the debts of the enterprise or the purchase of supplies and goods for production and business as a result of the purchase and collection of debts In audits for cash and cash equivalent, management characteristics, especially cash recording, have an important influence on the selection of audit methods The introduction of the appropriate audit method determines that the auditor can obtain adequate audit evidence of quantity and quality ... Characteristics of audit of cash and cash equivalents in financial audits conducted by Russel Bedford KTC Audit Firm Chapter 2: Practice of audit of cash and cash equivalents in financial audits conducted by. .. CHARACTERISTICS OF AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM 1.1 Characteristics of cash and cash equivalents of clients affecting financial. .. fact of being interned at Russel Bedford KTC Audit Firm I have chosen the topic: "AUDIT OF CASH AND CASH EQUIVALENTS IN FINANCIAL AUDITS CONDUCTED BY RUSSEL BEDFORD KTC AUDIT FIRM" for his internship