Audit of trade receivables item in financial audits conducted by uhy auditing and consulting company limited

NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM o0o BACHELOR THESIS Major Auditing AUDIT OF TRADE RECEIVABLES ITEM IN FINANCIAL AUDITS CONDUCTED BY UHY AUDITING AND CONSULTING COMPANY LIMI[.]

NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM -o0o - BACHELOR THESIS Major: Auditing AUDIT OF TRADE RECEIVABLES ITEM IN FINANCIAL AUDITS CONDUCTED BY UHY AUDITING AND CONSULTING COMPANY LIMITED VU THI NHU QUYNH HANOI - 2020 NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAMS  BACHELOR THESIS Major: Auditing Topic: AUDIT OF TRADE RECEIVABLES ITEM IN FINANCIAL AUDITS CONDUCTED BY UHY AUDITING AND CONSULTING COMPANY LIMITED Student : Vu Thi Nhu Quynh Specialization : Auditing Student ID : 11164436 Class : Auditing AEP 58A Supervisor : Ph.D Doan Thanh Nga HANOI, 2020 ACKNOWLEDGEMENT During participating in internship program and completing my Bachelor thesis, I received many supports from Board of Director and the auditors at UHY Auditing and Consulting Company Limited I would like to express my sincere thank to you for assisting me to be able to accumulate knowledge and hand-on experience as audit assistant and complete this thesis I would also like to send my special gratitude to Ph.D Doan Thanh Nga who has invested her efforts in guiding me to complete Internship Report and Bachelor Thesis Due to the limited time and knowledge, it is difficult to avoid the limitations and shortcomings in my Bachelor thesis I hope to receive comments from the lecturers to further improve this thesis TABLE OF CONTENT ACKNOWLEDGEMENT TABLE OF CONTENT STATUTORY DECLARATION LIST OF TABLES LIST OF FIGURES LIST OF DIAGRAMS INTRODUCTION .1 CHAPTER 1: CHARACTERISTICS OF AUDIT OF TRADE RECEIVABLES IN FINANCIAL AUDITS CONDUCTED BY UHY CONSULTING AND AUDITING COMPANY LIMITED 1.1 Characteristics of trade receivables of clients affecting financial audits 1.1.1 Features of trade receivables on financial statements 1.1.2 Accounting for trade receivables .4 1.1.3 Common misstatements related to trade receivables 1.1.4 Internal controls over trade receivables .8 1.2 Audit objectives of auditing trade receivables in financial audits conducted by UHY Consulting and Auditing Company Limited 1.3 Audit of trade receivables in financial audits process conducted by UHY Consulting and Auditing Company Limited 10 1.3.1 Planning an audit of trade receivables item in auditing financial statements conducted by UHY Ltd .12 1.3.2 Performing the audit of trade receivables in auditing financial statements onducted by UHY Consulting and Auditing Company Limited 18 1.3.3 Completing the audit of trade receivables in auditing financial statements conducted by UHY Consulting and Auditing Company Limited .22 CHAPTER 2: PRACTICE OF AUDIT OF ACCOUNTS RECEIVABLES IN FINANCIAL AUDITS CONDUCTED BY UHY CONSULTING AND AUDITING COMPANY LIMITED – AT ABC JOINT STOCK COMPANY 24 2.1 Planning an audit .24 2.2 Performing the audit 37 2.3 Completing the audit 57 CHAPTER 3: ASSESSMENTS AND ECOMMENDATIONS FOR IMPROVING THE AUDIT OF ACCOUNTS RECEIVABLES IN FINANCIAL AUDITS CONDUCTED BY UHY CONSULTING AND AUDITING 59 COMPANY LIMITED 59 3.1 Assessments of the audit of accounts receivables in financial audits process conducted by UHY Consulting and Auditing Company Limited 59 3.1.1 Strengths 59 3.1.2 Weaknesses 63 3.2 Recommendations for improving the audit of accounts receivables in financial audits process conducted by UHY Consulting and Auditing Company Limited 65 CONCLUSION 68 REFERENCES 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 Ha Noi, 22/05/2020 Vu Thi Nhu Quynh ABBREVIATIONS VAS Vietnamese Standards on Auditing FS Financial statement BOD Board of Director ISA International Standard on Auditing ABC JSC ABC Joint Stock Company PM Performance Materiality MP Materiality Percentage UHY Ltd UHY Auditing and Consulting Company Limited CR Control risk DR Detection risk IR Inherent risk BS Balance Sheet GL General Ledger TB Trial Balance PY Prevous year LIST OF TABLES Table 1.1: Internal control over trade receivables .8 Table 1.2: Objectives of auditing accounts receivables .9 Table 1.3 Quesionnaire of audit’s independence at UHY Ltd 13 Table 2.1: Horizontal analysis – ABC Joint Stock Company 28 Table 2.2: Vertical analysis – ABC Joint Stock Company 29 Table 2.3 Questionnaire of ABC’s internal control system 31 LIST OF FIGURES Figure 2.1 Audit program for trade receivables at UHY Limited Company 33 Figure 2.2 General summary of accounts receivables from client 39 Figure 2.3 Contra account analysis of trade receivables 41 Figure 2.4 Reconciliation and balance analysis of trade receivables 43 Figure 2.5 Confirmation of receivables 47 Figure 2.6 Test of detail the balance of trade receivables 48 Figure 2.7. Payment after the balance sheet date 51 Figure 2.8 Examine balance of receivables derived from foreign currencies 52 Figure 2.9 Cut-off testing in trade receivables 53 Figure 2.10 Analysis the aged of trade receivables 55 Figure 2.11 Summary of trade receivables .58 LIST OF DIAGRAMS Diagram 1.1: Accounting diagrams of account receivables Diagram 1.2: Audit process in financial statement audit conducted by UHY Ltd .10 INTRODUCTION On the path of national development and international economic integration, open economic mechanism has created opportunities for enterprises of all economic sectors throughout the country to exchange and integrate Therefore, information about the financial situation, solvency, of the enterprise is not limited only within the enterprise but has also become the concern of many intended users such as investors, creditors, banks, tax authorities The demand for public, transparency and objectivity of financial statement is becoming more essential; For instant, investors need to know the current financial performance and future potential of the enterprise when considering investing capital into the enterprise; Creditors, banks need to know the economic potential and payment ability of businesses when approving loans for businesses to operate The function of financial audit is expressing audit opinions on whether the Financial statements are true and fair in all material respects, in accordance with applicable financial reporting framwork Futhermore, it creates the confidence of the financial information users, gives them a basis to consider and make right and approprite decisions During the audit of financial statements, the audit of account receivables item is very important because it is associated with revenue from sales and service item, it’s nature is complex and directly affect the going concern principle of business, which is specifically that receivables taking significant and direct impact to cash flow of the enterprise This item is also contained many errors and potential fraud Therefore, the audit of trade receivables item is an important content and accounts for large amounts in the audit process Trade receivables are one of the main items in the revenue cycle Recognizing the importance of the audit of trade receivables item so I have choosed my thesis topic is:" Audit of trade receivables item in financial audits conducted by UHY Consulting and Auditing Company Limited " ... financial audits conducted by UHY Consulting and Auditing Company Limited Chapter 2: Practice of audit of trade receivables in financial audits conducted by UHY Consulting and Auditing Company Limited. .. 1.2 Audit objectives of auditing trade receivables in financial audits conducted by UHY Consulting and Auditing Company Limited 1.3 Audit of trade receivables in financial audits process conducted. .. statements conducted by UHY Consulting and Auditing Company Limited .22 CHAPTER 2: PRACTICE OF AUDIT OF ACCOUNTS RECEIVABLES IN FINANCIAL AUDITS CONDUCTED BY UHY CONSULTING AND AUDITING COMPANY LIMITED