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TABLE OF CONTENT LIST OF TABLES AND FIGURES INTRODUCTION CHAPTER 1: CHARACTERISTICS OF THE ORGANIZATION AND OPERATIONS OF KMPG VIETNAM 1.1 History of development of the company 1.1.1 Overview, vision and mission .2 1.1.2 History of KPMG and establishment of KPMG Vietnam .2 1.2 Operation of KPMG Vietnam 1.2.1 Products, market and target customers 1.2.2 Clients and market 1.2.3 Financial Performance: 1.3 Management of KPMG Vietnam CHAPTER 2: ORGANIZING AUDIT PRACTICE AT KPMG VIETNAM 10 2.1 Organizing an audit team 10 2.1.1 Requirements for auditors: 10 2.1.2 Principle of organizing an audit team at KPMG Vietnam Co., Ltd 12 2.2 Audit process at KPMG Vietnam 14 2.2.1 Planning the audit 14 2.2.2 Implementing the audit 17 2.2.3 Completing the audit 18 2.3 Audit files 18 2.4 Audit Quality control .21 CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING ORGANIZATION AND OPERATIONS OF KPMG VIETNAM 23 3.1 Assessments of the organization and operations of KPMG Vietnam Co., Ltd .23 3.1.1 Strengths 24 3.1.2 Limitations and causes 27 3.2 Recommendations for improving the organization and operations of KPMG Vietnam Co., Ltd 28 CONCLUSION 31 REFERENCES 32 LIST OF TABLES AND FIGURES Table 1-1: KPMG’ financial results from 2017 to 2018 .7 Figure 1.1: Distribution of labor proportion in KPMG Hanoi Office .5 Figure 1.4: Organizational structure of KPMG Vietnam Figure 2-1: Structure of audit team organization 13 Figure 2-2: Example of an audit team: .14 Figure 2.2: Audit Planning Process .15 Figure 2.3 : Control Evaluation 16 INTRODUCTION Along with the strong development of the world economy and the trend of deep international integration, auditing increasingly proves its irreplaceable role As an activity of verifying and expressing opinions, auditing brings not only economic benefits but also contributes to creating a stable, healthy business school for the common development of the community KPMG is one of the first international auditing companies to appear in Vietnam With a long history and prestige of a leading company in the field of audit - consulting, KPMG has been a reliable choice for all customers who want to use the global quality of service with a reasonable cost "Accompanying with the development of enterprises" is the goal and strong commitment of KPMG Vietnam right from the first days of operation As a student who major in Auditing, I was initially acquainted with and practiced at the Company in the first phase of the final internship to apply the theory learned at the school into practice During the internship, with the enthusiastic help of colleagues in the Company, I learned the basics: Overview of the Company, the characteristics of the organization of the audit activities of the Company, general assessment of organizational structure and organization of auditing activities of the Company My article is divided into parts: Chapter 1: Characteristics of the organization and operations of KPMG Vietnam Chapter 2: Organizing audit practice at KPMG Vietnam Chapter 3: Assessments and recommendations for improving organization and operation of KPMG Vietnam I would like to express my sincere thanks to the devoted Assoc Prof Dr Tran Trung Tuan and colleagues in KPMG Vietnam Limited Company have been dedicated to helping me during the internship as well as writing reports However, due to limited time and awareness, the shortcomings cannot be avoided, I am looking forward to receiving the comments of the teachers and colleagues in the company so that I can complete my report and improve my knowledge CHAPTER 1: CHARACTERISTICS OF THE ORGANIZATION AND OPERATIONS OF KMPG VIETNAM 1.1 History of development of the company 1.1.1 Overview, vision and mission KPMG is one of the largest professional services companies in the world and one of the Big Four auditors, along with Deloitte, EY and PwC Its global headquarters is located in Amstelveen, the Netherlands (KPMG official website, 2020) KPMG international operates as a network of member firms offering audit, tax and advisory services The local firm works closely with clients, helping them to mitigate risks and grasp opportunities KPMG employs 162,000 people worldwide in 155 countries, sustaining and enhancing the quality of this professional workforce is KPMG's primary objective Mission Statement “KPMG Outstanding professionals, working together to deliver value Auditors offer Audit, Tax and Advisory services Three complementary areas of knowledge and insight that enable us to meet the needs of our clients Auditors turn knowledge into value for the benefit of our clients, our people and the capital markets.” Vision The KPMG vision is that auditors want to be leaders in the markets that auditors serve Our aim is to have the best reputation in our industry Auditors want to be recognized as a market leader in our professional services, because of our knowledge of the developments and issues in the markets, industries and sectors in which our clients operate 1.1.2 History of KPMG and establishment of KPMG Vietnam KPMG was formed in 1987 with the merger of Peat Marwick International (PMI) and Klynveld Main Goerdeler (KMG) and their individual member firms Spanning three centuries, the organization's history can be traced through the names of its principal founding members - whose initials form the name "KPMG." K stands for Klynveld Piet Klijnveld founded the accounting firm Klynveld Kraayenhof & Co in Amsterdam in 1917 P is for Peat William Barclay Peat founded the accounting firm William Barclay Peat & Co in London in 1870 M stands for Marwick James Marwick founded the accounting firm Marwick, Mitchell & Co with Roger Mitchell in New York City in 1897 G is for Goerdeler Dr Reinhardt Goerdeler was for many year chairman of Deutsche Treuhand-Gesellschaft and later chairman of KPMG He is credited with laying much of the groundwork for the KMG merger In 1911, William Barclay Peat & Co and Marwick Mitchell & Co joined forces to form what would later be known as Peat Marwick International (PMI), a worldwide network of accounting and consulting firms In 1979, Klynveld Kraayenhof & Co joined forces with Deutsche TreuhandGesellschaft and the international professional services firm McLintock Main Lafrentz & Co to form Klynveld Main Goerdeler (KMG) In 1987, PMI and KMG and their member firms joined forces Today, all member firms throughout the world carry the KPMG name exclusively or include it in their national firm names In 2019, KPMG Vietnam celebrated 25-year anniversary of establishing, coincidently I personally was in the internship in this special period with variety of events and occasions KPMG Vietnam has granted acceptance by local government, opening a representative office in 1992 In 1994, KPMG Vietnam Limited Liability founded according to Investment License No.863/GP approved by Ministry of Planning and Investment on May 17 1994 Consequently, company classified as one- hundred percent foreign investment with initial investment of Million dollars, operating in twenty years from signing letter Due to the expansion needs, the company raised capital to Million dollars in April 1998 The main activities of the companies were providing services, including: tax, audit, business advisory and management advisory 1.2 Operation of KPMG Vietnam 1.2.1 Products, market and target customers KPMG in Vietnam is committed to three imperatives: quality, insight, and integrity They are what drive the firm’s professionals to provide audit, tax and advisory services that reflect global consistency and unwavering integrity KPMG Vietnam’s passion to cut through complexity enables it to lead by example taking proactive approach to finding facts and turning knowledge into value for the benefit of firm’s clients KPMG Vietnam fully appreciates the dedication of people, who are the driving force behind the quality of the services and integrity of practice Member firms' clients include business corporations, governmental and public sectors, agencies and not-for-profit organizations They look to KPMG for a consistent standard of service based on high order professional capabilities, industry insight and local knowledge KPMG Vietnam team includes both Vietnamese and expatriate partners and staff with experience in Europe, America and the Asia Pacific This allows company to have a team with a variety of experience to address required needs People are driven to innovate, protect and create value for clients: “Auditors listen, auditors ask the right questions.” Insights and recommendations are straightforward, clear and add value Deep knowledge and clarity helps clients save valuable time and build competitive advantages On top of this, KPMG recognizes that the Vietnamese business environment is constantly changing and the strong relationships with the government and local networks enable the firm to assist businesses effectively as and when needed KPMG Vietnam is one of the largest audit service providers in the country It contributes to the development of national accounting standards as well improves the true and fair business environment in Vietnam KPMG has set a triangle hub in Vietnam–Cambodia area In Hanoi office, the number of employee accounts for more than four hundred staff Ho Chi Minh office proportionate slightly larger, total up the number of employees in Vietnam more than 800 people, providing professional service for more than 1,000 clients in the country Hanoi office mostly made up by Vietnamese staffs, of course there are expatriates from England, Korea, Japan and Malaysia All employees in KPMG has earned a Bachelor Degree, some have worked in local enterprises, governmental office, or foreign investment project The majority of staff earned practicing qualifications such as CPA Vietnam, ACCA, and granted Vietnam’s Accountancy and Auditing certification by Ministry of Finance Several high- performed outstanding employees have opportunities to take part in KPMG Go Program, the Global Mobilized program for excellent employees They have opportunities to travel and work in years in any place in the world, as long as they pass the entrance exam relating to the destination’s accounting requirements and practices Figure 1.1: Distribution of labor proportion in KPMG Hanoi Office Employees Others 25% Tax Service 11% Advisory 6% Audit 58% (Resource: KPMG Hanoi’s report) The largest proportion of Hanoi office’s employee contributed by Audit assurance departments, made up to 58% number of the company staff Tax and advisory departments are small in number but generating quite high income for the office Other employees come from DPP Departments, the department which incharge for updating new Circular release, new regulations or enacting from government and local authorities Also, company’s reporting department composes final audited financial statements, occupied by qualified staffs specialized in MS Word and back-office software Other basic department are HR Department, IT Specialists and Passionate Team 1.2.2 Clients and market As one of the first international auditing firms appearing in Vietnam, KPMG Vietnam has built a strong belief in customers' hearts With effective services, the Company has cooperated with reputable customers in many different fields Beside traditional customers, KPMG Vietnam constantly focuses on developing a network of potential customers The leading strength of KPMG is high quality of services provided and professional working style that makes its’ customers expanded constantly in number and variety of fields of activity (mainly foreign-invested enterprises), including: -Producing beverages and soft drinks: Southeast Asia Brewery, Company Cocacola Vietnam, Pepsi Vietnam - Producing food: cooking oil, monosodium glutamate, spices: Cailan, Miwon Vietnam - Producing cars, motorcycles, and spare parts for motor vehicles: Honda, Yamaha, Toyota Vietnam - Providing telecommunication services, manufacturing electronic components: FPT, Motorola - Construction business, real estate, consulting company: Song Da Jurong, Davis Lang don & Seah In addition, KPMG Vietnam is providing audit services banks in Vietnam, especially foreign banks Regular customers of KPMG are the leading banks such as Vietcombank, Citi bank, Lienviet Post Bank, Malayan Banking Berhad, MUFG Bank, Oversea Bank, The Siam Commercial Bank Public, AnBinh, Shinhan, CTBC, Saigon Bank…together with major credit institutions such as Vietnam Debt Fund SPC, Vietnam Property Fund Limited… In addition to providing audit services for projects and non-governmental organizations is also a field that brings big revenue for KPMG: Rural Development Project, Norwegian Red Cross Association Besides, KPMG also provides consultancy for international organizations such as UNDP, UNICEF, FAO 1.2.3 Financial Performance: In recent year from 2017 to 2019, with professional working style, experience and high professional qualifications, KPMG Vietnam's experts have contributed to the financial situation and business results as wel as reputations The financial result is as followed: Table 1-1: KPMG’ financial results from 2017 to 2018 Unit: million VND Items Revenue Total expense (include taxes) Payable to Stated budget Profit after tax (PAT) After tax profit margin Number of clients Number of staffs 2017 447,469 2018 481,848 2019 505,821 446,697 480,680 503,046 8,416 12,637 13,658 772 1,168 2,775 0.0017 0.0024 0.0055 1,482 1,594 2,000 525 525 525 (Resource: KPMG 2019 annual report ) From the above data table, we realize that KPMG’s business results increased gruadually in consecutive years Especially, the company's profit after tax increased 3.5 times in 2019 (from VND 772 million in 2017 to VND 2,775 million in 2019 Along with that the professional quality and salary of employees is constantly improving This is reflected in the high increase in costs (mainly training costs and labor costs) from VND 446,697 million in 2017 to VND 480,680 million in 2018 and by 2019 to VND 503,046 million Following a number of years of stagnation, the business once again recorded growth in revenues The net results for the year were satisfactory This was the result of strong growth in Advisory and better than expected results in Audit, where they were able to counter the decline in revenues in the national practice More than ever before, the emphasis on the Audit front was on raising quality levels in every single aspect of the organization and the execution of the work Something that has ...CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING ORGANIZATION AND OPERATIONS OF KPMG VIETNAM 23 3.1 Assessments of the organization and operations of KPMG Vietnam Co., Ltd ... the characteristics of the organization of the audit activities of the Company, general assessment of organizational structure and organization of auditing activities of the Company My article... Characteristics of the organization and operations of KPMG Vietnam Chapter 2: Organizing audit practice at KPMG Vietnam Chapter 3: Assessments and recommendations for improving organization and