Improving the audit process of purchase and payment cycle in the financial statement audit performed by ey vietnam

THE MINISTRY OF FINANCE ACADEMY OF FINANCE NGUYEN DINH LAN ANH CQ57/22.01CL GRADUATION THESIS IMPROVING THE AUDIT PROCESS OF PURCHASE AND PAYMENT CYCLE IN THE FINANCIAL STATEMENT AUDIT PERFORMED BY EY VIETNAM MAJOR: AUDITING CODE: 22 INSTRUCTOR: Associate Professor Ph.D TRUONG THI THUY Ph.D NGO NHU VINH HANOI, 2023 i PLEDGE I would like to assure you that this is my own research, the data and results stated in the thesis are honest from the actual situation of the internship unit Author of the dissertation Anh Nguyen Dinh Lan Anh ii TABLE OF CONTENT PLEDGE i TABLE OF CONTENT ii LIST OF ABBREVIATIONS v LIST OF TABLES vi LIST OF FIGURES vii OPENING .1 1, The rationale for research 2, The objectives of the research .1 3, The methods of research: 4, The scope of research: 5, The structure of research: CHAPTER 3: RECOMMENDATIONS TO CONTRIBUTE TO THE IMPROVEMENT OF THE PURCHASE AND PAYMENT CYCLE AUDIT PROCESS IN THE AUDIT OF FINANCIAL STATEMENTS PERFORMED BY EY .3 CHAPTER 1: THEORETICAL FRAMEWORK ON PURCHASING AND PAYMENT CYCLE AUDITING IN FINANCIAL .4 STATEMENT AUDIT 1.1 Overview of purchasing and payment cycle in financial statement 1.1.1 Overview of purchasing and payment cycle in financial statement 1.1.2 Main accounting requirements for purchasing and payment cycle .6 1.1.3 Internal control over purchasing and payment cycle 1.2 Purchasing and payment cycle audit in financial statement audit 10 1.2.1 Audit objectives in auditing purchasing and payment cycle .10 1.2.2 Risk of material misstatements in purchasing and payment cycle audit 11 iii 1.2.3 Sources of audit evidence in purchasing and payment cycle audit .12 1.3 Purchasing and payment cycle audit in financial statement audit 13 1.3.1 Audit planning .13 1.3.2 Audit implementation 16 1.3.3 Audit finalization 25 CONCLUSION FOR CHAPTER .27 CHAPTER 2: PURCHASING AND PAYMENT CYCLE AUDIT IN FINANCIAL STATEMENT AUDIT PERFORMED BY EY VIETNAM 28 2.1 Overview about Ernst & Young Vietnam Ltd company 28 2.1.1 The introduction about EY Vietnam 28 2.1.2 Organization structure of EY Vietnam 28 2.1.3 Operating activities features of EY Vietnam 30 2.2.1 Feature of organizing audit team of EY Vietnam .33 2.2.2 Feature of organizing audit documentations .34 2.2.3 Financial statement audit process of EY Vietnam 35 2.3 Purchasing and payment cycle audit in financial statements audit client ABC performed by EY 36 2.3.2 Audit implementation 56 2.3.3 Audit finalization 58 2.4 Assessment of auditing purchasing and payment cycle in financial statement audit performed by EY Vietnam 58 CONCLUSION FOR CHAPTER 63 CHAPTER 3: SOLUTIONS FOR IMPROVING PURCHASING AND PAYMENT CYCLE AUDIT IN FINANCIAL STATEMENT AUDIT PERFORMED BY EY VIETNAM .64 3.1 Requirements and necessary of improving purchasing and payment cycle audit in financial statement audit performed by EY VIET NAM 64 iv 3.1.1 Necessary of improving purchasing and payment cycle audit 64 3.1.2 Requirements for solutions 65 3.2 Solutions for improving purchasing and payment cycle audit in financial statement audit performed by EY VIET NAM .66 3.2.1 Audit planning .66 3.2.2 Audit implementation 69 3.2.3 Audit finalization 73 3.3.1 Government 74 3.3.2 Accounting professional association 74 3.3.3 EY Vietnam 75 3.3.4 The audited company 75 CONCLUSION .77 LIST OF REFERENCE v LIST OF ABBREVIATIONS PM Performance Materiality SAD Summary of audit differences nominal amount SCOT Significant class of transactions TE Tolerable errors vi LIST OF TABLES Table 1: Balance sheet 51 vii LIST OF FIGURES Photo 1: Sources of risk 16 Photo 2: EY Global Methodology Roadmap 35 Photo 3: Form 800 to understand about the client’s environment 44 Photo 4: Form 800 to survey on the internal control 50 Photo 5: Form 800 to determine PM, TE, SAD 54 Photo 6: Form 280 (R) SCOT 55 Photo 7: EY smart sampling 55 Photo 8: Samples for test of control 56 Photo 9: Samples for test of detail 56 OPENING 1, The rationale for research Today, in the current market economy and international integration, auditing activities have been formed and developed rapidly and auditing activities have played an active role in the overall development of the economy Auditing financial statements helps companies improve the quality of business management, creating the reliability of information on financial statements Auditing of financial statements is a part of an external audit In auditing financial statements, auditors will examine and express an opinion on the true and fair view of an entity’s financial The audit result of financial statements serve many subjects such as audited entities, shareholders, investors, banks, etc Among different processes at the enterprise, the purchase and payment cycle receives a lot of attention from financial statements users as this cycle includes expenses and trade payables As a result, stemming from the requirement to improve the quality of financial statement audits, the need and importance of information in the purchase and payment cycle for financial statements is undeniable Since then, in order to improve the quality of the audit of the purchase and payment cycle, auditors need to pay a lot attention to this cycle with a view to providing financial statements users accurate information about an entity’s financial position Recognizing the importance of this issue and based on the knowledge gained and time spent at Ernst&Young Vietnam Ltd, I have chosen the topic as: “Improving the audit process of purchase and payment cycle in the financial statement audit performed by EY Vietnam” to research 2, The objectives of the research In order to complete the process of auditing the purchase and payment cycle in the audit of the financial statements, the thesis aims at the following specific objectives: Firstly, systematize the basic theories on audit of the purchase and payment cycle in the audit of financial statements and; Second, analyze the current status of the purchase and payment cycle audit process in the audit of financial statements, assess the current situation and; Third, propose some recommendations to improve the process of auditing the purchase and payment cycle in the audit of financial statements 3, The methods of research: To achieve the purpose of research, I used methods of synthesis, document analysis, dialectical inference, logic, mathematics, and audit interviews 4, The scope of research: The object of the research is: The process of auditing the purchase and payment cycle The scope of the research is: Studying the process of auditing the purchase and payment cycle in the financial statement audit Sample survey at Ernst & Young, applying the sample audit program issued by the Vietnam Association of Certified Public Accountants (VACPA) The reason for choosing the sample is that the above auditing companies have relatively good audit procedures in implementing the purchase and payment audit process in the audit of financial statements 5, The structure of research: In addition to the Introduction, the list of tables and appendices, the structure of the thesis includes chapters: CHAPTER 1: THEORETICAL BASIS OF THE PURCHASE PAYMENT CYCLE AUDIT PROCESS IN AUDIT OF FINANCIAL STATEMENTS