NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM BACHELOR’S THESIS Major Auditing Topic AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPA[.]
NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM BACHELOR’S THESIS Major: Auditing Topic: AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPANY PHAM THI PHUONG THAO HANOI - 2020 NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM BACHELOR’S THESIS Topic: Audit of Financial Income and Financial Expense in financial audits conducted by Asian Auditing Company Student : Pham Thi Phuong Thao Speciality : Auditing Class : Auditing 58B Student’s ID : 11164828 Supervisor HANOI - 2020 : Dr Le Quang Dung TABLE OF CONTENTS ACKNOWLEDGEMENTS STATUTORY DECLARATION LIST OF ABBREVIATIONS LIST OF TABLES AND FIGURES INTRODUCTION CHAPTER 1: CHARACTERISTICS OF AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPANY 1.1 Characteristics of financial income and financial expense of clients affecting financial audits 1.1.1 Features of financial income and financial expense on financial statements 1.1.2 Accounting for financial income and financial expense 1.1.3 Common misstatements related to financial income and financial expense 1.1.4 Internal controls over financial income and financial expense .8 1.2 Audit objectives of auditing financial income and financial expense in financial audits conducted by Asian Auditing Company 1.3 Audit of financial income and financial expense in financial audits process conducted by Asian Auditing Company 10 1.3.1 Planning the audit 10 1.3.2 Implementing the audit 14 1.3.3 Completing the audit .17 CHAPTER 2: PRACTICE OF AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPANY– AT ABC COMPANY LIMITED 20 2.1 Planning the audit 22 2.2 Implementing the audit 38 2.2.1 Performing tests of controls 38 2.2.2 Performing analytical procedures 42 2.2.3 Performing tests of details .49 2.3 Completing the audit 56 CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING THE AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPANY .61 3.1 Assessments of the audit of financial income and financial expense in financial audits process conducted by Asian Auditing Company 61 3.1.1 Strengths 61 3.1.2 Weaknesses and causes 63 3.2 Recommendations for improving the audit of financial income and financial expense in financial audits process conducted by Asian Auditing Company 66 3.2.2 Implementing the audit 69 3.2.3 Completing the audit .70 CONCLUSION .71 REFERENCES .72 APPENDIX .73 ACKNOWLEDGEMENTS The process of implementing the graduation thesis is the most important stage in the life of every student Graduation thesis is a premise to equip us with research skills, valuable knowledge before starting a career First of all, I would like to express my sincere thanks to the lecturers of School of Accounting and Auditing of National Economics University, who have devotedly taught and equipped me with the necessary knowledge during my time in the university, it is the basis for me to complete this thesis I would like to express my sincerest appreciation to Dr Le Quang Dung for his guidance, assistance, supervision and encouragement from the beginning to the accomplishment of the thesis These are very valuable suggestions not only in the process of doing this thesis but also as a luggage for me in the process of studying and making a career in the future And finally, I would also like to express my gratitude with much appreciation to Asian Auditing Company for helping and guiding me during my internship period STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Bachelor’s 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, ./ / 2020 Signature LIST OF ABBREVIATIONS ASA Asian Auditing Company VACPA Vietnam Association of Certified Public Accountants LIST OF TABLES AND FIGURES Table 2.1: Members of the audit team .21 Table 2.2: Assignment of audit team members 21 Table 2.3: Working papers search about ABC customer base information .23 Table 2.4: Preliminary analysis of business performance of the unit 26 Table 2.5: Evaluation of internal control systems 29 Table 2.6: Determination of materiality .31 Table 2.7: Audit program financial income and financial expenses 34 Table 2.8: Working papers Summary of financial income 40 Table 2.9: Working papers Summary of financial expense .41 Table 2.10: Working papers Analysis of fluctuations Financial Income this year compared to the previous year 43 Table 2.11: Working papers Analysis of fluctuations Financial Expense this year compared to the previous year 44 Table 2.12: Working papers Analysis of monthly fluctuations financial income 46 Table 2.13: Working papers Analysis of monthly fluctuations financial expenses 48 Table 2.14: Working papers Reference with the results of auditing the other parts of financial income 50 Table 2.15: Working papers Reference with the results of auditing 51 the other parts of financial expense 51 Table 2.16: Working papers Tests of Details of Financial Income 53 Table 2.17: Working papers Tests of Details of Financial Expense 54 Table 2.18: Working papers checking the test cut-off of Financial Income 55 Table 2.19: Working papers checking the test cut-off of Financial Expense 56 Table 2.20: Working papers Summary of adjusting entries for Financial Income 57 Table 2.21: Working papers Summary of adjusting entries for Financial Expense 58 Table 2.22: Working papers Summary of figures after auditing Financial Income .59 Table 2.23: Working papers Summary of figures after auditing Financial Expense 60 INTRODUCTION Rationale Currently, with the rapid development of a market economy, information is important for business managers as well as for other subjects such as: company employees, organizations for borrowers, managers, suppliers and credit institutions, customers, government, general public In order for information users to make an accurate decision, the information needs to be truthful and reasonable However, for some reasons, sometimes the information given is not true and fair Therefore, the independent auditor was born and acted as an independent third party to give opinions on the true and fair view of the financial statements of the units and contribute to complete and improve the efficiency and reduce business risk In Vietnam, since the economy has transformed from planned economy to a market economy, our economy has been developing strongly, gradually opening and integrating the economy world Therefore, businesses in Vietnam are also constantly growing in number and size of business As a result, financial information becomes more and more important to users and seizes the opportunity that independent auditing organizations have appeared and developed Activities of independent auditing companies contribute to the verification and comment on the degree of true and fair view on the material aspect of the items in the financial statements of enterprises to help users to make the right decision And during my internship at Asian Auditing Company, I realized that Financial Income and Financial Expense is an important indicator on the Income Statement of customers of Asian Auditing Company because it directly affects the accounting profit targets before and after tax and other indicators: Undistributed profits, Corporate income tax payable Besides, based on financial income and financial expense, it is possible to analyze the financial situation of the business effectively, whether the use of financial leverage and financial investments really bring the efficiency of the business Therefore, the accuracy of the information about financial income and expense is extremely important Recognizing this importance, I chose the topic "Audit of Financial Income and Financial Expense in financial audits conducted by Asian Auditing Company" ... improving the audit of Financial Income and Financial Expense in financial audits conducted by Asian Auditing Company CHAPTER CHARACTERISTICS OF AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN FINANCIAL. .. situation of the process of auditing Financial Income and Financial Expenses in auditing financial statements Scope: Studying and assessing the practice of the process of auditing Financial Income and. .. FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPANY .61 3.1 Assessments of the audit of financial income and financial expense in financial audits process conducted by Asian Auditing Company