Topic Complete the audit process of sales items and service provision revenue in auditing financial statements of ASCO Auditing Company Name Hoang Linh Chi Code 11150602 Class Audit 57A Supervisor Pro[.]
NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM ******** BACHELOR THESIS Topic: Complete the audit process of sales items and service provision revenue in auditing financial statements of ASCO Auditing Company Name : Hoang Linh Chi Code : 11150602 Class : Audit 57A Supervisor : Prof Dr Phan Trung Kien HANOI, 2019 TABLE OF CONTENTS INTRODUCTION CHAPTER AUDITING THE REVENUE OF SALES AND SUPPLY OF SERVICES IN THE AUDIT OF FINANCIAL STATEMENTS 1.1 Overview of revenue of sales and service provider 1.1.1 Concept and classification 1.1.2 Characteristics of sales and service provision revenue affect the audit work 1.1.3 Internal control for sales and service provision items 1.1.4 Internal control for sales and service provision items 13 1.2 Process of auditing items of sales and service provision in financial statements audit .17 1.2.1 The meaning of the process of auditing sales revenue and providing services in financial statements audit 17 1.2.2 Objectives for auditing items of sales and service provision 17 1.2.3 The content of the audit process of sales and service provision items in financial statements audit 19 CHAPTER AUDIT TB COMPANY AND HL IMPORT-EXPORT COMPANY’S ITEMS OF SALES AND SERVICE REVENUE IN THE AUDIT OF FINANCIAL STATEMENTS CONDUCTED BY VIETNAM PRICE AUDITING AND ASSESSMENT CO., LTD – ASCO 26 2.1 Designing audit programs of revenues in the audit of TB company and HL Company’s financial statements 26 2.1.1 Overview of the overall audit plan of TB Company and HL Company’s financial statements 26 2.1.2 Modify standardized audit program 35 2.2 Conducting audit program 41 2.3 Completing the audit of sales revenue and service provision in the audit of TB Company and HL Company’s financial statements 54 CHAPTER SOME COMMENTS TO COMPLETE THE PROCEDURES AND AUDIT METHODS OF REVENUE SALES AND SERVICE SUPPLY IMPLEMENTED BY ASCO AUDITING CO., LTD 64 3.1 Conclusions of the process of auditing the item of sales and service provision in audit process of financial statement made by ASCO Auditing Company Limitead 64 3.1.1 Advantages 64 3.1.2 Disadvantages 66 3.1.3 Causes of restrictions .67 3.2 The need to complete and require perfection 68 3.2.1 The necessary 68 3.2.2 Request for completing .70 3.2 Recommendations to improve 71 CONCLUSION 76 APPENDIX 77 INTRODUCTION A solid and transparent economy cannot be without audit participation Appearing from the early 90s of the twentieth century, the auditing activity has quickly developed and gradually asserted an important position in the economy in the transition period under the market mechanism and strengthening the association enter economic development in Vietnam With the function of verifying and expressing opinions on financial statements, it reflects the operational status of audited and audited units, creating trust for investors, credit institutions, customers and interested people , contributing to professional guidance and strengthening the financial and accounting activities in particular and general management activities, improving efficiency and management capacity For all manufacturing enterprises as well as businesses operating in the field of trade and services, Sales & Service Supply is one of the most important items because it reflects the business results of enterprises It relates to many key indicators on financial statements (corporate income tax and profit, etc.) Therefore auditing sales and service provision revenue is one of the important and essential parts of conducting financial statements audit for any customer The conclusions on the fair honesty of the item of sales and service provision presented have a great influence on the management decisions of the business owners as well as the decisions of investors On the other hand, the item of sales and service provision is easily changed, distorted in the direction of the owner, can be increased to polish the financial situation of the business or can hide the revenue to reduce the amount of corporate income tax payable, Recognizing the importance of auditing the item of sales and service provision on financial statements and over the time of internship at the company, she chose her thesis topic: "Completing the audit process items of sales and service provision in financial statements audited by ASCO Auditing Company Limited" The purpose of the research is: (i) Clarify the status of the audit process of sales and service provision in customer units performed by ASCO Auditing Company Limited (ii) Assessing the situation and recommendations, proposing a number of solutions to improve the audit process of sales items and providing services in financial statements auditing at the Auditing and Valuation Company Limited Vietnam ASCO The content of the topic beyond the pledge, the list of abbreviations, indexes, introduction, conclusions and appendices has main parts as follow: Chapter AUDITING THE REVENUE OF SALES AND SUPPLY OF SERVICES IN THE AUDIT OF FINANCIAL STATEMENTS Chapter AUDIT TB COMPANY AND MACHINCO EQUIPMENT JOINT STOCK COMPANY’S ITEMS OF SALES AND SERVICE IN THE AUDIT OF FINANCIAL STATEMENTS CONDUCTED BY VIETNAM PRICE AUDITING AND ASSESSMENT CO., LTD - ASCO Chapter SOME COMMENTS TO COMPLETE THE PROCEDURES AND AUDIT METHODS OF REVENUE SALES AND SERVICE SUPPLY IMPLEMENTED BY ASCO AUDITING CO., CHAPTER AUDITING THE REVENUE OF SALES AND SUPPLY OF SERVICES IN THE AUDIT OF FINANCIAL STATEMENTS 1.1 Overview of revenue of sales and service provider 1.1.1 Concept and classification Business activities of enterprises are a series of closely related stages Each stage must carry out specific tasks according to a reasonable technology, the amount of time determined and the amount of expenditure that is required on the resources used That process is generalized into three phases Phase 1- Market research: This is a very important stage, enterprises conduct market research surveys to see what needs and tastes of the market need goods and services? What types of goods and services need to be designed, types and quality? Especially important is that product that serves target customers, who is the potential? High, low or medium income market segment? Phase - Production: Prepare inputs such as human labor, materials, fuel, machinery, technology, and organize the process of combining inputs to create goods chemistry and service Phase 3- Consumption: Organizing the process of selling, consuming goods and collecting money Enterprises build sales channels, agents to sell goods, increase revenue, recover capital to create new production and business cycles At that final stage, revenue is determined and recorded as one of the most important indicators to help evaluate the entire production process in the period of the enterprise Revenue is a very important financial indicator on the business results report of the enterprise Therefore, it is very important to understand the concept of revenue as well as how to classify revenue in an enterprise Recognizing this importance, the Ministry of Finance issued accounting standard No 14 "Revenue and other income" according to Decision No 149/2001 / QD-BTC dated December 31, 2001 According to this standard, revenue is defined as "The total value of economic benefits earned in the accounting period, arising from normal production and business activities of the enterprise, contributing to raising owner capital" Therefore, revenue is determined to include the total value of the economic benefits the business has received or will be obtained Third-party collections are not considered revenue because this is not an economic benefit, but does not increase the owner's equity In addition, the capital contribution of shareholders or owners, although increasing equity capital, is not considered as a revenue due to the arising of normal production and business activities of the unit Revenue in the enterprise includes: - Sales of goods and service provision; - Internal revenue; - Financial revenue In which: Sales of goods and service provision are all the proceeds or will be collected from transactions and transactions arising in revenue such as selling products, goods, providing services to customers including surcharges and additional fees (if any) In addition to sales and service revenue targets, there is also a Net Revenue (NR) target for sales and service provision In fact, this indicator is often lower than the revenue target recorded This is represented by the following formula: Net revenue on sales = sales and service provision revenue Deductions Sales Service Provider The deductions for accounting standard number 14 also define the following: - Sale price reduction: is a discount for buyers due to poor quality, wrong specifications or backward tastes - Returned value of goods sold: is the value of the volume of sold goods determined to be consumed and returned by customers - Commercial discount: is a listed discounted price for customers who buy goods in large quantities - Payment discount: is the amount of money that the seller deducts to the buyer, due to the buyer paying for the purchase before the time limit under the contract - Taxes: Special consumption tax, export tax must be paid to the State (if any) 1.1.2 Characteristics of sales and service provision revenue affect the audit work Revenue from sales and service provision reflects the scale of the re-production process of the enterprise, reflecting the level of directing the production and business organization and payment organization Obtaining sales and service provision revenue proves that the company has produced goods and has provided goods and services that meet the needs of consumers Sales revenue is an important source for businesses to cover the costs of working tools, wasted labor in the production and business process, paying for the capital invested for business production jointly, have money to pay salaries, wages, bonuses for employees, extract social insurance, health insurance, labor unions, financial obligations to the state Implementing full and timely sales revenue, contributing to speeding up the transfer of working capital to create favorable conditions for the reproduction process Sales of goods and services have the main characteristics affecting the audit of this item as follows: - Revenue from sales and service provision is the main income of most businesses (especially manufacturing and commercial enterprises), which is an important indicator on business income statement, directly affecting the profit enterprises, therefore, are susceptible to using tricks to increase or decrease profits in the direction of the owner Therefore, this is an easy-to-arise item Fraud, errors, increased types of control risks, increased detection - Directly related to other sensitive indicators such as cash, customer receivables, VAT, are easily lost Therefore, it is necessary to set up and apply the internal survey process closely Auditor when studying and evaluating the control system of this item must fully understand to assess the internal control system is strong or weak, thereby designing the most complete and scientific audit procedures - The number of operations related to sales and service provision is high, continuously arising with various sales and payment methods, causing difficulties in management, causing mistakes, mistakes and time- consuming cheating Influence many audit environments 1.1.3 Internal control for sales and service provision items 1.1.3.1 Overview of the structure of internal control system for items of sales and service provision The internal control system is usually composed of departments, namely the control environment, the accounting system and the control procedures 1.1.3.1.1.Control environment: - Includes influential influences on the design and operation of internal control processes including the coffee accounting system, specific control