A field research on auditing of borrowing and cost of borrowing items in auditing companies in vietnam

Auditing process for the borrowing and cost of borrowing item in the audit of financial statements .... Survey results on audit procedures for audit of borrowing and cost of borrowing it

Rationale

In today's interconnected society, the Vietnamese economy is thriving, with businesses operating in sync with global developments The auditing industry is also experiencing significant growth, enhancing its market presence and reputation among clients Once seen merely as a tool for verifying financial statements, auditing now offers customized services that cater to specific client needs To fulfill client expectations and achieve desired outcomes, audit firms must develop clear strategies and plans to ensure a smooth, efficient audit process that meets high-quality standards.

The cash flow of a company is akin to the blood vessels in the human body, ensuring the smooth circulation of business activities To attract investors, some management teams may engage in fraudulent practices and accounting irregularities to manipulate financial statements As financial markets evolve and trade agreements expand, businesses are increasingly involved in complex loan mobilization operations, including a range of short- and long-term loans with varying interest rate structures and collateral requirements This complexity heightens the risk of errors in accounting for loans and interest expenses Therefore, conducting thorough audits of borrowing and related costs is essential to enhance audit quality, identify potential accounting discrepancies, and improve loan management.

In today's landscape, the emergence of numerous audit firms employing diverse audit procedures necessitates a thorough analysis of how different firms audit loan items and interest expenses This understanding is vital for ensuring consistent quality across the audit market By evaluating current practices, we can recommend effective measures to enhance audit quality for these firms.

Nguyen Thi Van Anh 2 Class: K22CLCG and advise management agencies to implement measures to minimize the quality gap between different audit firms

The investigation of audit procedures among auditing firms in Vietnam has been underexplored, particularly regarding their variations and similarities Notable contributions to this field include Le Thi Tuyet's (2020) thesis, "Improving inventory procedures in auditing financial statements by independent auditing firms in Vietnam," which highlights discrepancies in inventory count procedures and suggests enhancements Additionally, Nguyen Thi Thanh Hoai's (2021) study, "Study on factors affecting determination of audit procedures for the revenue item in the audit of financial statements performed by independent auditing firms in Vietnam," provides a thorough analysis of the factors influencing the selection of audit procedures for revenue across various firms These works underscore the need for further research to improve audit quality in the industry.

This study seeks to enhance audit quality by investigating the auditing of borrowing and cost of borrowing items in financial statements By proposing actionable recommendations, it aims to advance research and improve the overall audit process The thesis is titled: "A FIELD RESEARCH ON AUDIT QUALITY."

THE AUDIT OF BORROWING AND COST OF BORROWING ITEMS IN AUDITING COMPANIES IN VIETNAM”

Aim of the study

This research is among the scarce few that scrutinizes the current audit status of borrowings and cost of borrowing items in various auditing companies in Vietnam

This study aims to analyze and contrast data to offer potential solutions and recommendations for audit firms and policymakers, enhancing the regulation and monitoring of auditing standards for financial statements.

Nguyen Thi Van Anh 3 Class: K22CLCG

- First, Systematize general theoretical basis as a premise for learning about the process of auditing borrowing and cost of borrowing in the financial statement audit

- Second, assess the current status of audit implementation of the auditors at independent auditing firms in Vietnam; point out the similarities and differences that remain

To enhance audit quality across various companies, it is crucial to identify the causes and effects of implementing this procedure on both subjective and objective aspects By analyzing these factors, we can develop targeted recommendations for stakeholders aimed at improving auditing practices.

Research questions

From the issues raised, the research needs to address the following questions:

- Question 1: What are the audit procedures for auditing borrowing and cost of borrowing items in Auditing Firms?

- Question 2: What are the variances and similarities in audit procedures for borrowing and cost of borrowing items between groups of Auditing Firms?

To enhance the implementation of audit procedures for borrowing and cost of borrowing items, auditing firms should prioritize developing comprehensive guidelines that address specific risks associated with these transactions Policymakers are encouraged to establish clear regulatory frameworks that promote transparency and accountability in borrowing practices Additionally, training programs for auditors and related personnel should be implemented to ensure they are well-versed in the latest auditing standards and best practices Collaboration among stakeholders is essential to foster a culture of continuous improvement and adherence to ethical standards in the auditing process.

Object and Range of the study

This article explores the theoretical foundations and practical applications of auditing borrowing and the cost of borrowing in financial statement audits at auditing firms in Vietnam It also references various research documents, scientific articles, and reputable sources from experienced authors and organizations related to this topic in Vietnam.

This research examines the current audit status of borrowing and cost of borrowing items within auditing companies in Vietnam The findings highlight the conditions and practices prior to the study period, providing valuable insights into the evolution of audit processes in this sector.

In 2023, Nguyen Thi Van Anh from Class K22CLCG conducted an interview study involving auditors from both Big 4 and Non-Big 4 auditing firms.

Research methods

The study used several methods such as: a Methods of observation practical on site work

To effectively gather audit evidence, it is essential to directly observe the execution of audit procedures Engaging with auditors and audit assistants at Deloitte Co., Ltd during the auditing of borrowing and cost of borrowing items can provide valuable insights.

- Directly participate in the audit as an audit assistant, performing the audit process of borrowing and cost of borrowing items b Interviewing and gain understanding the data

In the financial statement audit process of various auditing firms in Vietnam, it is essential to design a comprehensive list of questions aimed at auditing assistants This approach facilitates a direct assessment of audit procedures related to borrowing and the associated costs of borrowing By implementing this strategy, auditors can ensure a thorough evaluation of financial practices and enhance the accuracy of their audit outcomes.

- Use note and analysis to take down the main point of the interviewee c Documentary Method (Content Analysis)

- Through selecting working papers of borrowing and cost of borrowing items in a numbers of auditing firms in Vietnam to analyze

- Create a coding framework (audit procedures for borrowing and cost of borrowing items) to analyze the content of the document

- Analyze the working papers and draw conclusions and disscussion audit procedure for borrowing and cost of borrowing items in some auditing firms in Vietnam

THEORETICAL BASIS AND LITERATURE REVIEW

Theoretical basis on audit of borrowing and cost of borrowing in audit of

1.1 Characteristics of Borrowing and Cost of borrowing account in audit of financial statement

1.1.1 The concept and nature of borrowing and cost of borrowing

Borrowing plays a crucial role in contributing to a business's equity In financial statements, borrowing is reflected under the entity's capital in the liabilities section Borrowings are classified based on their terms, with items categorized as either long-term or short-term, depending on whether they exceed or fall within a 12-month period in a typical business cycle.

Borrowing involves financial expenses incurred from loan payments According to the Vietnamese Accounting Standard (VAS 16) and the International Accounting Standard (IAS 23), borrowing expenses encompass various costs associated with obtaining loans.

- Short term/ long term financial expense payable (include overdraft)

- Distribution of discount and premium arising from loans issued bonds;

- The allocation of additional costs related to the crafting process continue to borrow;

According to VAS 16, borrowing costs must be recognized as operating expenses during the normal operating period when incurred, excluding interest expenses directly related to construction in progress and borrowing costs that qualify for capitalization These borrowing costs primarily consist of significant interest expenses from loans payable, which are recorded under financial expenses in the Statement of Profit or Loss.

Loans usually account for a significant proportion of the capital structure of Balance sheet for a number of reasons:

- The repayment term can be flexible in the short-term and long-term direction:

To effectively manage funding, each asset class must be supported by a specific source of capital Short-term assets require financing through short-term capital, while long-term assets should be backed by long-term capital This approach enhances liquidity by facilitating the conversion of assets into cash and optimizing overall capital costs.

1.1.2 Accounting for borrowing and cost of borrowing item

Monitoring loans closely for each lender and repayment term is essential for ensuring timely payments Key documents used to recognize, record, and track loan repayments include the borrowing contract, accommodation bill, debt acknowledgment contract, debit note, credit note, and loan report.

Interest expense, also known as borrowing cost, is documented based on the loan report, which outlines all borrowing details from each lender along with the repayment terms This report is prepared by the client, detailing the total interest payable and the amounts due for repayment in both the short and long term.

For borrowing, accounting treatment to record, and monitor loan item is Account 341 Account 341 - Loans and finance lease liabilities comprise 2 sub- accounts:

Account 3411 - Loans is dedicated to tracking the value and payments of loans taken by enterprises, excluding any loans issued through bonds.

- Account 3412 - Finance lease liabilities: This account records the value of finance lease liabilities and the payment of finance lease liabilities of enterprises

For borrowing cost, interest expense incurred due to loan is recorded in a detail line in account 635: Financial Costs Account 635 does not have the ending balance

Enterprises must meticulously track and document every loan or liability, including the specifics of the loan agreement and the type of loan asset involved For loans or liabilities denominated in foreign currency, accountants are required to closely monitor the currency and adhere to established principles to ensure accurate financial reporting.

- Loans, liabilities in foreign currency must be converted into accounting monetary units in accordance with the actual exchange rate at the arising time

- When paying loans, liabilities in foreign currency , the Debit side of Account

341 shall be entitled to convert according to exchange rates recorded in accounting books in actually specific identification for each object

When preparing financial statements, it is essential to revalue foreign currency loans at the current exchange rates as of the reporting date Typically, companies utilize the selling rate published by the bank where they conduct most of their transactions, specifically at the end of the business cycle on December 31.

Exchange rate fluctuations resulting from foreign currency loans will be recognized as either revenue or expenses in the fiscal year they occur.

For the borrowing cost, mainly incurred by interest expense of loan, the amount incurred was recorded as financial expense

1.1.3 Common mistakes for borrowing and cost of borrowing items

- Borrowing contracts often out of date and stored without appendix for extending duration or agreement to duration extension

- Set of documents for borrowing are not stored in a full

- Individual borrowing contracts are lack of internal reconciliation minutes, or lack of personal information of borrower, …

The debt receipt minutes differ from receipts for money, goods, property, or interest and principal repayments, as they serve distinct purposes in financial transactions.

- Borrowing which dominated in foreign currency: when preparing financial statement, those borrowing with original amount in foreign currency other

Nguyen Thi Van Anh 8 Class: K22CLCG than financial statement currency do not be reevaluated or re evaluated at wrong foreign exchange rate

- Incorrect accounting record at the actual time of loan arising and the recording time in the accounting books, especially at the end of the accounting period

- Disagree between the amount received from the loan with the actual amount received from disbursement documents

- Failure to classify or reclassify short-term debt, long-term debt due according to the repayment plan when preparing and presenting financial statements

- Using loan capital not in accordance with the purpose specified in the contract

Common mistakes for cost of borrowing:

- The entity that is capitalizing interest expense is not conforming with accounting standards

 Misrecording the time at which capitalization begins or the time it ceases to be capitalized

 The entity miscalculates the borrowing cost that is capitalized for the general loan

 Specific loan interest which need to be capitalized but recognized as financial expenses during the year

 Unqualified loan interest which is not met condition to be capitalized but still included in the value of construction in progress

 Unused loan interest do not offset with interest expenses according to regulations

1.1.4 Internal control for borrowing and cost of borrowing items

Internal controls are essential processes that organizations establish to guarantee the accuracy and reliability of their financial reporting By implementing effective internal controls over borrowing, entities can ensure they have adequate funds to meet operational and financial requirements while conducting borrowing activities responsibly and transparently.

Here are some internal controls that can be implemented for borrowing items in an entity:

To ensure effective borrowing management, it is essential to establish clear policies and procedures that outline an approval process for authorizing loans This approach guarantees that all borrowing activities are sanctioned by the appropriate personnel, aligning with the entity's borrowing policies and financial requirements.

Implement a comprehensive documentation and record-keeping system for all borrowing transactions, detailing loan terms, interest rates, fees, and repayment conditions This practice guarantees accurate recording and reporting of these transactions in the entity's financial statements, ensuring transparency and compliance.

To mitigate the risk of errors or fraud in borrowing transactions, it is essential to implement a segregation of duties by dividing the responsibilities for authorizing, recording, and approving these transactions among different personnel This practice prevents any single individual from having complete control over the borrowing process, thereby enhancing overall accountability and security.

Literature review

Debt is a primary source of financing for entities, but creditors often seek protection through covenants Research indicates that violations of these covenants and related fraudulent activities can lead to substantial restructuring and refinancing costs, impede corporate investments, necessitate changes in senior management, and adversely affect shareholders, including reduced payouts.

In Vietnam, several research papers have focused on enhancing the auditing process of specific items within various auditing firms Notable theses include "Improving the Audit of Borrowing Items in the Audit of Financial Statements Performed by EY Vietnam Co., Ltd" by Pham Thuy Linh (2022) and "Auditing of Borrowing and Cost of Borrowing in the Audit of Financial Statements Performed by KPMG Vietnam Co., Ltd" by Pham Ngoc Dung (2022).

Research on audit procedures across various auditing firms in Vietnam, particularly the analysis of differences and commonalities, has been largely neglected in academic literature Notably, two theses have made significant contributions to this area Le Thi Tuyet's 2020 thesis, "Improving Inventory Procedures in Auditing Financial Statements by Independent Auditing Firms in Vietnam," examines inconsistencies in inventory counting methods and proposes improvements Additionally, Nguyen Thi Thanh Hoai's work further explores this critical subject, emphasizing the need for enhanced audit quality in the region.

(2021) examines factors influencing the selection of audit procedures for revenue in various auditing companies

This study seeks to enhance research and improve the audit process by investigating and proposing recommendations aimed at elevating the audit quality of borrowing and cost of borrowing items in financial statements.

Nguyen Thi Van Anh, a student from Class K22CLCG, is conducting a field research study focused on auditing practices within Vietnam's broader audit industry This research aims to provide valuable insights and suggestions to improve the effectiveness and reliability of audits related to borrowing and cost of borrowing items The chosen topic underscores the importance of enhancing auditing standards across various firms in the country.

OF BORROWING AND COST OF BORROWING ITEMS IN DIFFERENT AUDITING COMPANIES IN VIETNAM”

Chapter 1 of the thesis provides a foundational understanding of accounting for borrowing and associated costs, alongside the stages involved in conducting an audit This section aims to offer general insights into the audit process related to the researched topics.

RESEARCH METHODOLOGY

Research procedure

The research design plays a vital role in the overall research process, which is organized into three key stages: (1) Preliminary Research and Field Study, (2) Research Expansion and Content Analysis, and (3) Documentation and Capture of Results Each stage is essential for ensuring a comprehensive and effective research outcome.

Stage (1) of the research process encompasses Preliminary Research and Field Study, focusing on two key tasks: the collection of general data to establish a theoretical framework for auditing borrowing and related costs, and conducting a field study to observe the auditing practices of borrowing and cost items specifically at Deloitte Vietnam Audit Company.

Research entails gathering essential information, fundamental concepts, and legal regulations concerning accounting treatments and audit procedures for borrowing and cost of borrowing This information is sourced from various channels, including working papers, statistics, and legal documents The findings will be organized into a theoretical framework, establishing a robust foundation for auditing practices, particularly in the examination of borrowing and cost of borrowing items This theoretical framework will elucidate the key concepts, principles, and guidelines that inform audit practices in this specific area.

A field study entails the direct observation of audit procedures in real-world environments During an internship at Deloitte Co., Ltd, the author served as an audit assistant, gaining firsthand experience in audit engagements related to borrowing and associated costs This opportunity enabled the author to gather in-depth information on the specific practices utilized, the dynamics between auditors and clients, and the overall audit workflow By employing systematic observation methods, the author meticulously recorded the behaviors and interactions of auditors throughout the audit process, facilitating the collection of empirical data on their task performance.

Nguyen Thi Van Anh 29 Class: K22CLCG apply audit procedures, and address challenges or issues that arise during the audit of borrowing and cost of borrowing items

In the field study, the author meticulously documented observations by taking notes, gathering pertinent documents and artifacts, and conducting interviews with auditors and other key personnel This approach aimed to uncover deeper insights into the rationale behind specific procedures and the various factors that influence decision-making.

Utilizing field study and observation techniques, the author acquires essential firsthand insights into the audit procedures related to borrowing and cost of borrowing items These approaches enhance the understanding of actual practices at Deloitte Co., Ltd and serve to complement other data collection methods, such as interviews and document analysis, thereby reinforcing the overall findings and contributing to a more comprehensive research study.

In Stage (2) of the research, the study broadens its scope to examine various auditing firms in Vietnam, specifically analyzing audit procedures related to borrowing and the cost of borrowing Utilizing non-random sampling methods, eight auditing firms are selected, comprising seven firms in addition to Deloitte Vietnam, and are categorized into Big 4 and non-Big 4 firms Detailed characteristics of these samples will be elaborated on in Chapter X.

In the initial phase, working papers and documents related to the audit procedures for borrowing and cost of borrowing items are gathered and analyzed comparatively This analysis seeks to answer the first research question regarding the audit procedures used by auditing firms in Vietnam The findings highlight the similarities and differences in audit procedures among the sampled companies, thereby addressing the second research question concerning variances in these audit practices.

Nguyen Thi Van Anh 30 Class: K22CLCG procedures for borrowing and cost of borrowing items between groups of auditing firms in Vietnam?"

The writer utilizes their internship experience at Deloitte Co., Ltd to build foundational knowledge for analyzing data This research focuses on the audit procedures of various auditing firms in Vietnam, employing comparative analysis to gain deeper insights.

A formal interview was conducted with employees from various auditing firms in Vietnam, utilizing edited questions to gather data The researcher collected 10 survey samples from eight different companies for further analysis, as detailed in Table 2.1 The interview process was meticulously designed and documented to ensure comprehensive results.

The interview aimed to gather in-depth insights into audit procedures related to borrowing and the associated costs, while also assessing the current status of auditing these items To validate secondary data, the writer conducted brief face-to-face interviews and sought access to the auditor's working papers A set of prepared questions facilitated the ask-and-answer process with interviewees through both online platforms, such as Skype and social media, and in-person meetings for those unable to attend face-to-face discussions.

The research focused on interviewing audit staff responsible for loan and interest expense audit procedures across various auditing firms The author successfully conducted interviews with 10 audit professionals from 8 different companies, gathering valuable insights into the auditing of borrowing costs Notably, for APS Audit Company, the author analyzed their working papers instead of conducting direct interviews In contrast, the case of BDO Vietnam presented unique circumstances that required a different approach.

Nguyen Thi Van Anh 31 Class: K22CLCG encountered challenges in obtaining the working papers due to technological fraud Nonetheless, the planned interview was still carried out as intended

9 Staff 1 APS Audit Co No Yes

10 Staff 1.5 SCS Global Yes Yes

Based on the aim of interview as well as the aim of the research, author designed questions and received feedback from instructors as follow:

Question 1: What are the current audit procedures for auditing borrowing and cost of borrowing items in your Auditing Firm?

Question 2: Do the audit procedures for auditing borrowing and cost of borrowing and work done be presented in the working papers in a timely and true basis?

Question 3: What do you think about the limitations and weaknesses in the audit procedures for auditing borrowing and cost of borrowing items in the audit workflow of your company?

This article focuses on understanding the current status of auditing borrowing and related costs across various companies, drawing insights from the experiences of audit staff who directly conduct the audit procedures on these financial items.

In the third stage of the audit process, documentation and result capture involve summarizing insights gained from document analysis and auditor interviews This summary addresses two key research questions and facilitates discussions and recommendations Specifically, it provides guidance on completing the implementation of audit procedures for borrowing and cost of borrowing items in auditing firms in Vietnam, particularly concerning related parties.

Sample

This study aims to investigate the audit procedures related to borrowing and the cost of borrowing in auditing firms in Vietnam It specifically analyzes two primary groups: the Big Four firms, recognized for their high-quality audits and efficient workflows, and the non-Big Four firms, which tend to have less experience and lower audit quality compared to their Big Four counterparts.

A sample survey was conducted during the research process, involving interviews with 10 individuals from both big 4 audit firms in Vietnam, including KPMG, PwC, Deloitte, and EY, and non-big 4 firms such as AASC, BDO, SCS Global, and APS Audit Company The audit procedures were meticulously analyzed and categorized into two distinct groups: big 4 companies and non-big 4 companies.

The Big Four companies, consisting of Deloitte, PwC (PricewaterhouseCoopers), EY (Ernst & Young), and KPMG, are the world's largest professional services firms They provide a diverse array of services, including audit, consulting, tax, and advisory, to clients across various industries globally Known for their substantial size, revenue, and market share, these firms play a crucial role in the global economy Their esteemed reputation and high-quality work are highly regarded within the business community.

Deloitte Vietnam Audit Company Limited, a member of Deloitte Touche Tohmatsu Limited, is among the largest professional services organizations globally Established in 1991, it offers a range of value-added services in Vietnam, including Tax, Financial Advisory, Enterprise Risk Management, Consulting, Audit, and Professional Training With a dedicated team of experienced professionals, Deloitte Vietnam is recognized for its commitment to high-quality service and its strong reputation for delivering innovative solutions to complex business challenges.

PwC Vietnam, part of the global PwC network, offers a comprehensive array of services such as audit and assurance, tax, legal, consulting, and deals Catering to a diverse clientele that includes multinational corporations, family-owned businesses, and start-ups, PwC Vietnam is committed to delivering high-quality professional services tailored to meet the unique needs of each client.

KPMG Vietnam, part of the global KPMG International network, delivers a comprehensive suite of professional services, including audit, tax, advisory, and risk consulting Serving diverse industries such as financial services, consumer and industrial markets, and technology, media, and telecommunications, KPMG Vietnam is dedicated to meeting the unique needs of its clients.

EY Vietnam is a member firm of EY, one of the world's largest professional services organizations EY Vietnam provides a range of services, including audit and

Nguyen Thi Van Anh, a member of Class K22CLCG, specializes in assurance, tax, advisory, and transaction advisory services She serves a diverse clientele, ranging from local entrepreneurs to multinational corporations Her commitment lies in creating a better working world and assisting clients in overcoming complex business challenges.

2.2.2 Overview of other non-big4 companies:

In this study, non-big4 company is mentioned for group of companies except for Deloitte, KPMG, PwC and EY Vietnam, with 3 representatives: AASC, ASH and SCS Global Companies

AASC Auditing Firm Co., Ltd has experienced substantial growth since its establishment as the Auditing and Accounting Financial Consultancy Service Company of the Ministry of Finance As a member of HLB International, a global network of accountants and consultants, AASC is a leading legal organization in Vietnam specializing in auditing, financial consulting, accounting, taxation, valuation, and various legal services Currently, AASC operates a head office in Hanoi, along with branches in Ho Chi Minh City and Quang Ninh.

BDO Vietnam is a leading professional services firm offering a comprehensive range of assurance, tax, advisory, and outsourcing services tailored to clients in various sectors, including manufacturing, retail, technology, and financial services As a member of BDO International, it leverages extensive global resources and expertise to deliver customized solutions Their skilled team specializes in financial statement audits, tax compliance and planning, risk management, transaction advisory, business consulting, and IT advisory, ensuring high-quality service to meet diverse client needs.

APS Auditing Co., Ltd originated from ASCO Auditing Company Limited - Ha Thanh Branch, which was established in 2017 Operating under the transaction name ASCO., LTD - HATHANH BRANCH, it was registered with business license number 120378649 issued by the Department of Planning.

On August 22, 2017, Hanoi City invested in a company primarily focused on providing accounting, auditing, and tax consulting services to assist businesses in managing their financial records and tax settlements The ASCO Ha Thanh branch is located at 5A, Alley 72/73/92, Quan Nhan Street, Nhan Chinh Ward, Thanh Xuan District, Hanoi, and is legally represented by Mr Tran Xuan Bach As Vietnam's economy increasingly opens up to support small and medium-sized enterprises, the company's Board of Directors has committed to long-term development, leading to the establishment of APS Auditing Company Limited, also known as APSACO or APS The company operates as a one-member limited liability entity and was issued a business license (number 0109311973) by the Hanoi Department of Planning and Investment on August 21, 2020.

SCS Global Audit Company Limited is a Japanese-invested audit and consulting firm that is part of the SCS Global network of accounting and auditing firms The company offers a range of professional services, including Audit & Assurance, Tax & Accounting Advisory, and Investment and Corporate Advisory Services With offices in Hanoi and Ho Chi Minh City, SCS Global provides comprehensive support to its clients in Vietnam.

Chapter 2 provides an overview of the research process undertaken in this paper It begins with a comprehensive review of the background knowledge related to the research topic, supplemented by practical experience gained through direct involvement in auditing the borrowing and cost of borrowing items in an audit FS at Deloitte Vietnam This initial phase sets the foundation for further investigation into the audit procedures for these items in financial statement audits

The research scope is then expanded to investigating other auditing firms, wherein interviews are conducted with auditors and access to their working papers

Nguyen Thi Van Anh, a 36-year-old student from Class K22CLCG, conducted a comprehensive study that involved collecting and analyzing working papers The research included brief interviews and incorporated data from seven additional auditing firms, alongside Deloitte Vietnam, to enhance the findings.

The final stage of the research process focuses on synthesizing collected data and presenting the findings Recommendations are then developed to meet the needs of diverse stakeholders The primary goal is to improve understanding and refine audit procedures related to borrowing and associated costs, ultimately benefiting the auditing profession and all parties involved in financial statement audits.

FINDING AND RESULTS

Survey results on audit procedures for audit of borrowing and cost of

3.1.1 Audit procedure for borrowing items implemented by big 4 companies in Vietnam

The audit procedures for assessing borrowing items employed by the Big Four firms in Vietnam are comprehensive and effective in addressing the associated risks and assertions of debt Through a content analysis of the working papers from these audits, key procedures utilized by the Big Four can be distilled into a structured approach that ensures thorough examination and validation of borrowing items.

- Obtain debt roll forward schedule in loans during the period

- Test of Detail Repayment during the period

- Reevaluate borrowing balance which is denominated in foreign currencies

In detail, content analysis method need to inspect in depth the written document (working papers of borrowing items) in different auditing firms in

Vietnam and summarized audit procedures for borrowing implemented by big 4 companies are as follow: a Obtain debt roll forward schedule in loans during the period

The auditor must reconcile data from the balance sheet, statement of documents, balance, arising numbers, and detailed loan log book to ensure that all figures, including balances and incurred totals, are consistent, particularly focusing on the opening balance.

In the case of a recurring customer, such as a long-standing client of Deloitte Vietnam, the previous year's audited balance (2021) is utilized by the auditor to establish the opening balance for the financial year 2022.

For first-year clients, KTV must gather all supporting documents related to borrowing, including contracts and bank statements, that pertain to the ending balance Additionally, KTV is required to send confirmation of the opening balance to the previous audit firm of the company.

During the year, the auditor must reconcile the balance sheet figures, including total debt and total credit, with the general journal entries to ensure arithmetical accuracy using the formula: Beginning balance + Incurred increase – Incurred decrease = Closing balance Once the reconciliation is completed, the auditor should classify the year's increases and decreases, referring to Figure 3.1: Debt Forward Schedule in the working paper prepared by Deloitte Vietnam for further details.

Figure 3.1: Debt roll forward schedule by Deloitte Vietnam

Source: Working paper implemented by Deloitte Vietnam

To assess the increased balance of the loan, the auditor will analyze the customer's document list, focusing on transactions recorded under Credit account 341, which indicates loan receipt transactions Conversely, to evaluate the decrease in loan volatility, the auditor will examine transactions linked to Debit account 341 and Credit account 112 (Bank deposit) For transactions related to foreign currency loan payments, the auditor will filter entries recorded as Debit account 112/Credit account 515 and Debit account 635/Credit account 112, along with the explanation: “Đánh giá lại số dư cuối kỳ.”

Nguyen Thi Van Anh 38 Class: K22CLCG khoản vay…”,to distinguish it from realized exchange rate differences arising from sales transactions and other

The procedures implemented by PwC Vietnam align closely with those of other Big Four firms, as illustrated in the lead schedule of payables and long-term debt in their working papers (see Figure 3.2) and the movement sheet (see Figure 3.3).

KTV initially created a lead sheet schedule to address the borrowing and cost of borrowing items, ensuring compliance with assertion rights, obligations, cut-off, existence, presentation, and disclosure requirements A detailed leadsheet is illustrated in Figure 2.1, which is part of the working paper prepared by PwC Vietnam Subsequently, it is essential to obtain a movement schedule.

Every transaction was meticulously recorded and subsequently summed to update the movement schedule Utilizing this schedule, KTV can strategically plan the next steps, which may involve testing detail additions and deductions to verify the ending balance or exploring alternatives when confirmation letters are not received.

Figure 3.2: Lead schedule paper implemented by PwC Vietnam

Source: Working paper implemented by PwC Vietnam

Figure 3.3: Working paper implemented by PwC Vietnam

Source: Working paper implemented by PwC Vietnam

At KPMG Vietnam, the audit assistant follows a systematic procedure to ensure accuracy in financial reporting This process involves reconciling the balance sheet figures, the incurred arguments, and the total debt recorded in the general journal The audit assistant verifies arithmetical accuracy using the formula: Beginning balance + Incurred increase – Incurred decrease = Closing balance for the period.

Figure 3.4: Leadsheet and movement of borrowing in KPMG’s working paper

Source: Working paper implemented by KPMG Vietnam b Sampling new amended debt

When auditing borrowing items, if there are new or amended debt agreements, auditors may use sampling techniques to select a sample of transactions for testing

The following are some steps that auditors may take when sampling new or amended debt:

- Obtain an understanding of the new or amended debt agreements and the related terms and conditions

- Identify the population of new or amended debt agreements and determine the appropriate sampling method to use

To effectively test new or amended debt transactions, auditors should choose a representative sample using a sampling method aligned with their professional judgment Factors influencing the sample size and selection method include the population's size and complexity, associated risks, and the required level of assurance.

Conduct a detailed examination of the chosen sample of new or modified debt transactions to verify their accurate recording in the financial statements, ensuring that all related disclosures are both complete and precise.

Evaluate testing results to identify any misstatements or discrepancies that may necessitate further investigation or adjustments Document the sampling process thoroughly, detailing the sampling method employed, the size of the sample, and the outcomes of the testing.

Sampling new amended contracts is a crucial audit procedure for borrowing items across all Big Four firms, including Deloitte Vietnam, KPMG, and EY This method is consistently reflected in the working papers related to borrowing items, highlighting its significance in the auditing process.

At KPMG, KTV requests a comprehensive list of all loans from the client's management, which includes details such as the lender's name, loan amount, interest rate, and relevant terms Auditors thoroughly review the client's loan documents to ensure the completeness and accuracy of the provided information They examine loan agreements, verify the accuracy of interest rates and fees charged by the lender, and check the payment schedule to confirm that the borrower is making timely payments while ensuring correct calculations of interest and principal amounts.

Figure 3.5: Loan summary in working paper of KPMG

Source: Working paper implemented by KPMG Vietnam

Survey results on audit procedures for audit of borrowing and cost of

3.2.1 Audit procedure for borrowing items implemented by non - big 4 companies in Vietnam

This study aimed to identify the characteristics, nature, purpose, and current practices of audit procedures related to borrowing and the cost of borrowing across various audit firms, highlighting the differences among them.

Nguyen Thi Van Anh from Class K22CLCG conducted interviews and gathered working papers from audit assistants at AASC, BDO, SCS Global, and APS Company Limited The findings reveal that the auditing procedures for borrowing items in these non-Big 4 companies currently adhere to specific steps.

- Summarize and Reconcile the balance of short-term, long-term loans

- Reviewing the nature of short-term and long-term loans

- Prepare and send a confirmation letter of short-term and long-term loan

To ensure accuracy, the current procedure involves summarizing and reconciling the balances of short-term and long-term loans for each borrower based on the detailed records It is essential to identify any discrepancies and determine their causes.

The lead sheet serves as a foundation for preparing financial statement notes and internal reports To reconcile the lead sheet with the general ledger, KTV typically follows these steps: first, they obtain copies of both the lead sheet and the general ledger account for borrowing items; next, they trace the lead sheet balances to the general ledger to verify accurate transaction recording; finally, they identify and investigate any discrepancies between the two documents to understand and resolve reconciling items Additionally, KTV reviews the classification and presentation of short-term and long-term loans to ensure the reasonableness of these categorizations as they approach maturity.

KTV meticulously examines the general ledger and the borrowing contract to identify any unusual transactions, conducting detailed tests on these specific entries If any anomalies are found, KTV promptly communicates with the client to resolve the discrepancies An example of this process can be illustrated through the APS Audit Co working paper, as shown in Figure 3.13.

Figure 3.14: Unusual transaction checked by APS Audit Co

Source: Working paper implemented by APS Audit Co

AASC and SCS Global employed a similar approach, where auditors would scrutinize the General Ledger (GL) to identify unusual transactions, subsequently requesting clients to provide supporting documentation for testing purposes Any discrepancies noted during this process were addressed with clients and duly reflected in the working papers, ensuring transparency and accuracy throughout the audit.

Figure 3.15: Unusual transactions checked by AASC

Source: Working paper implemented by AASC

Nguyen Thi Van Anh 54 Class: K22CLCG c Prepare and send a confirmation letter of short-term and long-term loan balance according to the form for the selected balance

For both Big Four and non-Big Four firms, obtaining confirmation from third parties is crucial and serves as effective audit evidence for assessing borrowing and related costs All four audited companies opted to send confirmation letters to the entire population, despite the possibility of not receiving responses.

Figure 3.16: Ending balance confirmation checked by AASC

Source: Working paper implemented by AASC d Complete the working paper

In a recent study involving non-Big 4 companies, KTV emphasized the importance of timely preparation of working papers by audit assistants to ensure a smooth audit process and adherence to deadlines Delays in this preparation can adversely affect the overall audit timeline and compromise the effectiveness of audit procedures It is essential that working papers accurately document the performed audit procedures, the evidence gathered, and the conclusions drawn KTV mandates that the information within these documents is truthful and impartial, accurately reflecting the actual audit work conducted.

Moreover, the working papers include all relevant information, documentation, and analysis related to the audit procedures performed This includes

Nguyen Thi Van Anh from Class K22CLCG has meticulously documented the scope of work, audit tests conducted, and the results obtained, highlighting significant findings and exceptions This thorough documentation offers a clear and comprehensive trail of the audit work performed, facilitating proper review and evaluation.

The audit procedure was meticulously reviewed and evaluated in a step-by-step manner, incorporating various review levels to ensure high-quality outcomes This comprehensive approach guarantees that the implemented audit procedures effectively address all associated risks.

By prioritizing timeliness, truthfulness, and completeness in their working papers, non-Big 4 firms can significantly improve the quality and reliability of their audit procedures, thereby enhancing the credibility and effectiveness of the entire audit process.

3.2.2 Audit procedure for cost of borrowing borrowing items implemented by non - big 4 companies in Vietnam

KTV conducts independent recalculations of accrued interest payable or interest expenses for the audited year by first gathering all relevant interest rate and calculation tables from clients at the financial year's end They reconcile these figures with the balances recorded in detailed books or trial balances, ensuring that the interest rates align with both the calculation tables and the corresponding contracts and supporting documents Finally, KTV utilizes an independent foreign exchange rate to accurately recalculate the accrued interest expense and the actual interest expense incurred during the year.

This procedure was basically the same among those targeted-study companies Detail as in supporting Figure 3.17, 3.18

Figure 3.17 Recalcualtion table of cost of borrowing by AASC

Source: Working paper implemented by AASC Co

Figure 3.18 Recalculation table of cost of borrowing by SCS Global

Source: Working paper implemented by SCS Global

Conclusion on auditing of borrowing and cost of borrowing items in

This study is limited to phase (2) of the audit process, focusing on the differences and similarities in audit procedures between Big Four and non-Big Four companies Specifically, it examines how each group conducts audits related to borrowing and the cost of borrowing.

Overall, it show some similarities in audit procedures between those analyzed companies in 2 groups: big 4 and non - big 4 companies, which can be named as follow:

KTV should create a detailed debt roll forward schedule that summarizes all loan accounts, enabling a clear view of borrowing movements during the period This essential task allows KTV to track changes and fluctuations in balances throughout the year, facilitating subsequent procedures that align with these movements and providing valuable data for analytical analysis.

KTV must gather all valid loan contracts, agreements, and any amended appendices to ensure the accuracy of the information recorded in the accounting books This documentation should encompass details such as repayment terms, repayment schedules, interest rates, and debt covenants.

The translation procedure for balancing foreign currency-denominated debt requires KTV to independently recalculate the original amount to reflect the presenting amount in the financial statement, using the foreign exchange rate as of the year-end date.

All companies, including both Big 4 and non-Big 4 firms, must ensure that their KTV sends out confirmation letters for 100% of the balances that contribute to the ending balance in the financial statements related to borrowing.

This study reveals significant differences in the detailed audit procedures for borrowing between Big 4 and non-Big 4 companies These discrepancies may influence the effectiveness of audit procedures related to debt and the associated costs of debt.

Many non-Big Four audit firms focus solely on verifying the final balance without adequately testing the movements throughout the year This oversight can mask errors that may offset each other, leading to an inaccurate assessment of the audit's effectiveness To enhance audit quality, it is crucial to perform movement testing in conjunction with gathering supporting documents for debts reflected in the ending balance This approach serves as a valuable alternative, especially when confirmation letters from third parties are not received by the end of the audit fieldwork.

The effectiveness of audit procedures can be significantly influenced by the sample size and nature of the samples tested While Big Four firms typically utilize audit software for monetary unit sampling to select representative samples of debt items, smaller companies often rely on scanning and filtering general ledger transactions to identify unusual items for detailed testing Audit software enhances the process by filtering high-value and unusual items, allowing for a more comprehensive and reliable sampling of significant items within the total population, surpassing the effectiveness of traditional selection methods.

Internal control testing is a crucial factor in assessing audit effectiveness When auditors identify and test key controls related to debt items and determine them to be effective, it enhances the reliability of the audit procedures Big Four audit firms typically conduct internal control testing before executing specific audit procedures Depending on the circumstances, auditors may choose to use interviews or other analytical methods to evaluate the effectiveness of internal controls related to the items being audited.

Nguyen Thi Van Anh 59 Class: K22CLCG whether KTV can rely on that control and base from that, KTV decide what next need to be done to audit the items

Debt covenant compliance testing is a critical aspect of auditing, particularly as borrowing contracts become increasingly complex Big Four firms employ various methods to ensure compliance: Deloitte utilizes ratios and contract reviews, PwC relies on a comprehensive list of questions, while EY and KPMG focus primarily on contract reviews and documenting any non-compliance in their working papers In contrast, non-Big Four firms often lack detailed procedures for debt covenant compliance in their audit documentation As the intricacies of borrowing conditions grow, enhancing audit procedures for verifying debt covenant compliance is essential for all audit firms.

Chapter 3 focuses primarily on conducting a content analysis and interview of audit procedure for borrowing and cost of borrowing items implemented by auditing firms in two distinct groups: the big 4 and non-big 4 companies The chapter delves into a detailed analysis of these procedures, highlighting both similarities and differences observed within each group

A comprehensive analysis of the audit practices of both big 4 and non-big 4 firms reveals significant insights into their borrowing strategies and associated costs This comparison highlights the similarities and differences in audit procedures between these two groups, enriching the understanding of auditing practices Ultimately, these findings promote best practices in the auditing profession and provide valuable benefits to the wider business community.

DISCUSSIONS AND RECOMMENDATIONS

Discussion on cause and effect of variances in audit procedure on

of borrowing and cost of borrowing items in big 4 and non - big 4 independent audit companies in Vietnam

4.1.1 Causes of variances in audit procedure on auditing of borrowing and cost of borrowing items in big 4 and non - big 4 companies in Vietnam

Variances in audit procedures for borrowing and cost of borrowing items can arise from several factors, particularly when comparing Big 4 firms with non-Big 4 companies Key contributors to these differences include varying regulatory requirements, differences in client size and complexity, distinct methodologies employed by auditors, and the level of resources available to each firm.

Big 4 firms possess extensive resources and expertise, including highly skilled professionals and advanced technological tools, enabling them to implement comprehensive and sophisticated audit procedures They often have specialized teams dedicated to specific industries or audit areas, such as borrowing and cost of borrowing In contrast, non-Big 4 firms typically operate with limited resources and smaller audit teams, leading to variations in the depth and breadth of their audit processes.

Big 4 firms cater to large, complex clients, including multinational corporations and entities engaged in significant borrowing activities These clients often have intricate financing arrangements, numerous loan agreements, and sophisticated cost of borrowing structures.

Big 4 firms must customize their audit procedures to effectively manage the unique complexities and risks presented by their clients In contrast, non-Big 4 firms, which typically cater to smaller and less intricate clients, can implement more straightforward and standardized audit processes.

Big 4 companies face stringent regulatory oversight and quality control standards due to their significant market presence They adhere to Vietnamese Standards on Auditing and implement robust internal quality control mechanisms to align with the international audit workflows established by the global Big 4 network In contrast, non-Big 4 firms may not encounter the same level of regulatory scrutiny or internal quality controls.

Nguyen Thi Van Anh from Class K22CLCG highlights that companies may function under diverse regulatory frameworks and local auditing workflows, which provide greater flexibility in audit procedures These differences in regulatory requirements and standards can significantly impact the auditing approaches adopted by various firms.

Audit firms possess distinct cultures, values, and policies that influence their auditing methodologies These elements dictate the emphasis on specific audit procedures, the integration of technology and data analytics, the thoroughness of documentation and review processes, and the firm's overall risk tolerance Consequently, these factors lead to variations in how audit procedures are selected and executed, particularly concerning borrowing and cost of borrowing items.

Auditors often adjust their audit procedures to align with the specific expectations and preferences of their clients This includes accommodating unique requirements related to the scope and nature of the audit for borrowing and cost of borrowing items Consequently, auditors may need to customize their approach, leading to variations in audit procedures among different firms.

Big 4 firms offer comprehensive training and education programs for auditors, ensuring continuous professional development and enhancing technical expertise These initiatives focus on cultivating specialized skills and maintaining uniform audit practices across the organization In contrast, non-Big 4 companies often face resource constraints that may lead to variations in the implementation of audit procedures and methodologies.

Variances in audit procedures can arise from various factors, including industry specialization, geographical location, and competition within the auditing profession It is essential to recognize that these causes are not exhaustive, and specific factors may differ from one case to another.

4.1.2 Effects on the variances in audit procedures on auditing of borrowing and cost of borrowing items in big 4 and non - big 4 companies in Vietnam

The variances in audit procedures for auditing borrowing and cost of borrowing items among big 4 companies and non-big 4 companies can have several effects:

Audit quality can vary significantly between Big 4 firms and non-Big 4 firms due to differences in resources and expertise Big 4 companies typically implement more comprehensive and rigorous audit procedures, resulting in higher quality audits In contrast, non-Big 4 firms often face limitations in resources and industry specialization, which can affect the depth and thoroughness of their audit processes.

Risk mitigation is significantly influenced by the variations in audit procedures employed by different firms Big 4 companies typically utilize more advanced risk assessment frameworks, enabling them to identify borrowing-related risks more comprehensively This thorough risk identification fosters the development of effective mitigation strategies and enhances the reliability of financial reporting In contrast, non-Big 4 firms may struggle to recognize and manage all pertinent risks, which could compromise the accuracy and dependability of their financial statements.

Audit procedures play a crucial role in ensuring compliance with relevant regulations and standards There are notable differences in these procedures between Big 4 firms and non-Big 4 companies, which can lead to variations in compliance levels Big 4 firms typically emphasize adherence to standards, resulting in more robust procedures that mitigate the risk of non-compliance In contrast, non-Big 4 companies must prioritize the establishment of appropriate procedures to meet regulatory requirements and uphold auditing standards effectively.

Differences in audit procedures significantly impact business opportunities and market perception for audit firms The Big 4 firms, known for their strong reputation and perceived superior audit quality, often attract more clients and foster greater trust in their services.

Nguyen Thi Van Anh, a student from Class K22CLCG, highlights that larger clients and more complex engagements are often drawn to big four audit firms due to their perceived rigorous audit procedures This perception enhances market confidence in the financial statements they audit In contrast, non-big four firms must showcase their capabilities and the effectiveness of their audit processes to compete for business opportunities and improve their market reputation.

Recommendations for auditors and companies to improve audit

After analyzing the detailed audit procedures of various audit firms, this article highlights the similarities and differences in auditing borrowing and cost of borrowing items To enhance the quality of audits among firms operating in Vietnam, several recommendations have been proposed to minimize these discrepancies.

Standardizing audit procedures for borrowing and cost of borrowing is essential for enhancing consistency across the industry Companies can benefit from adopting effective audit methodologies used by both Big Four and non-Big Four firms, with the Big Four's practices serving as a reliable reference for medium and small audit companies By implementing a cohesive set of standard procedures, organizations can improve their auditing processes and ensure greater accuracy and reliability in financial assessments.

- With audit procedure for borrowing

To ensure the accuracy and fairness of financial records, it is essential to conduct tests on the addition and deduction of borrowings throughout the year This involves selecting a sample and performing detailed tests on all supporting documents to verify the integrity of the information recorded in the accounting books.

As borrowing conditions grow increasingly complex, implementing procedures to verify debt covenants is crucial for auditing borrowing items Small and medium-sized enterprises can adopt practices from Big Four firms, such as utilizing a structured questionnaire like that of PwC or employing flow and ratio analyses as demonstrated by Deloitte, to effectively assess their debt conditions.

- With audit procedure for cost of borrowing

 Audit procedure for cost of borrowing currently did not show much differences in actual implementation between big 4 and non - big4 companies

As borrowing contracts become increasingly complex and transactions related to borrowing costs evolve, audit firms must enhance their research, analysis, and auditing procedures to adapt to these changes in the nature of borrowing costs.

To enhance the quality of audit financial statements, audit firms should prioritize the training and education of their auditors on best practices related to borrowing and cost of borrowing This includes ensuring that all auditors are well-versed in the latest regulations and guidelines Additionally, companies can collaborate with one another and engage with Big Four firms through conferences focused on audit matters, facilitating the sharing of experiences and insights to improve auditing procedures.

To enhance transparency, companies should focus on improving their audit procedures by clearly outlining the steps involved in the audit process and simplifying the presentation of audit results for stakeholders.

Collaborating with policymakers is essential for companies to foster regulations that enhance audit procedures and promote transparency in financial reporting By participating in conferences and forums, businesses can share practical experiences and discuss the complexities of audit borrowing and associated costs This engagement provides policymakers with valuable insights, enabling them to propose effective solutions tailored to the challenges faced in the auditing process.

Policymakers need to implement clearer and standardized audit procedures for evaluating borrowing and related costs This initiative will ensure that all audit firms, irrespective of their size or expertise, follow a consistent set of standards, enhancing the reliability and integrity of the auditing process.

Policymakers should enhance transparency and disclosure requirements for borrowing companies by mandating detailed reporting of their borrowing and interest expenses Additionally, it is essential to require audit reports to provide comprehensive information on the audit procedures conducted, ensuring greater accountability and clarity in financial practices.

Policymakers should enhance support for auditors by offering comprehensive training and guidance to elevate their expertise in auditing borrowing and related costs This initiative can involve organizing workshops, seminars, and training programs, alongside providing access to valuable resources and information on auditing best practices.

To enhance accountability, policymakers should strengthen the oversight and monitoring of audit firms, ensuring compliance with established audit procedures and standards This can be achieved by increasing the frequency of audits on these firms and implementing penalties for those that fail to meet the required standards.

Policymakers should promote collaboration among audit firms to enhance audit quality by facilitating the sharing of best practices This can be achieved by creating forums for information exchange and encouraging joint audits and collaborative initiatives.

To ensure compliance with the latest requirements, it is essential to familiarize yourself with industry standards by gaining a comprehensive understanding of the relevant auditing guidelines related to borrowing and the cost of borrowing items Staying updated with any revisions or updates is crucial for maintaining adherence to these standards.

To establish a solid theoretical foundation for your study, perform a thorough literature review to uncover existing research, best practices, and insights related to auditing borrowing and the cost of borrowing items This process will enable auditors to gain valuable perspectives from previous work in the field.

Implications of the study's findings for audit practice

The study's findings have important implications for audit practice, providing a valuable reference for audit firms in developing and executing audit procedures concerning borrowing and the cost of borrowing Additionally, the results can assist audit firms in pinpointing areas for enhancement in their existing audit processes, especially in identifying discrepancies between the Big 4 firms and their non-Big 4 counterparts.

The study highlights that non-Big 4 audit firms can enhance their procedures related to loan covenants and collateral agreements, which are more thorough in Big 4 firms It emphasizes the need for standardized audit practices for borrowing and cost of borrowing items to reduce discrepancies among firms and elevate audit quality To achieve this, audit firms should enhance auditor training and leverage technology in the audit process Collaboration with policymakers and industry associations is also crucial for developing consistent audit procedures, ultimately improving financial reporting Furthermore, transparency in audit processes and results is vital for building trust and credibility within the industry.

Nguyen Thi Van Anh 67 Class: K22CLCG with stakeholders This can help enhance the perceived value of the audit and encourage greater reliance on audited financial statements

This study offers crucial insights for students in the Accounting and Auditing Faculty and related fields, serving as a valuable resource for their development into audit assistants within Vietnam's auditing firms It provides a clear overview of the audit procedures utilized by various firms, enabling students to understand the essential steps for conducting effective audits in real-world situations Familiarity with these procedures, especially during peak seasons, can significantly improve the performance of audit assistants and positively influence their evaluation outcomes.

Overall, the study's findings can be used to inform and improve audit practice, leading to more accurate and reliable financial statements for stakeholders.

Limitations of the study and directions for future research

The thesis was completed in just two months, which limited the writer's ability to gather a comprehensive and diverse sample for generalizing findings across all independent auditing firms in Vietnam Additionally, the non-random and personal nature of the survey results may have resulted in the omission of certain audit procedures in practical applications The small sample size could lead to exaggerated differences, and while the findings may not accurately represent all firms, they should not be interpreted as definitive comparisons among companies.

Nguyen Thi Van Anh 68 Class: K22CLCG b Confidentiality:

Due to the information confidentiality requirements of the audit company, the author cannot access the entire audit cycle from phase (1) Planning the audit to phase

The research thesis focuses exclusively on phase (2) of the audit process, which involves performing audit procedures to analyze and compare various audit companies Phases (1) and (3) have not been subjected to analytical research Effective audit planning in phase (1) helps clients understand borrowing and associated costs while identifying relevant risks This understanding allows KTV to design and implement subsequent audit procedures In phase (3), the audit concludes with a summary and assessment of all procedures executed, addressing risks related to borrowing and its costs If any deficiencies or fraud are identified, KTV can propose necessary adjustments or opinions regarding the audit findings.

Confidentiality mandates that KTV limit access to sensitive customer information and borrowing details within its working papers This restriction results in a lack of comprehensive insights into the specific borrowing items associated with each customer.

This thesis focuses solely on the audit procedures related to borrowing and cost of borrowing for Big Four firms and four specifically selected non-Big Four audit companies Future research could broaden the scope to include a wider range of audit firms from diverse backgrounds, such as international audit companies, and examine various audit procedures concerning borrowing and cost of borrowing across a larger number of firms.

Future research can leverage comparative analysis of audit procedures across various countries, allowing students to replicate this study in different contexts and compare their findings with those from Vietnam This approach will enhance the understanding of the variations in audit procedures globally.

The analysis of audit procedures significantly influences the quality of financial reporting, presenting a vital area for further research By investigating how varying audit practices affect financial reporting standards, researchers can compare the financial statements of firms audited by the Big Four versus those audited by non-Big Four firms This comparison can focus on key factors such as accuracy, completeness, and reliability, providing valuable insights into the effectiveness of different auditing approaches.

Chapter 4 mainly focus on discussion causes and effects of the differences and similarities in audit practices regarding borrowing and cost of borrowing items among auditing companies in Vietnam Moreover, based on research findings, the writer proposed some recommendations for auditing firms, for policymakers and for related personnel to improve audit qualities among auditing companies.

This thesis investigates the audit procedures for borrowing and cost of borrowing items among audit firms in Vietnam, specifically comparing the Big 4 companies with non-Big 4 firms It is structured into four chapters, offering a comprehensive understanding of the topic.

Chapter 1 serves as an introduction, offering a basic understanding of accounting for borrowing and cost of borrowing items, as well as an overview of the audit process This chapter lays the foundation by providing context and general insights into the audit procedures associated with the researched items

Chapter 2 outlined the research process, starting with a comprehensive review of background knowledge and practical experience gained from auditing borrowing and cost of borrowing items at Deloitte Vietnam The research scope was then expanded to include interviews and access to working papers from seven additional auditing firms in Vietnam

Chapter 3 focused on conducting a content analysis and interviews to examine the audit procedures for borrowing and cost of borrowing items in the big 4 and non- big 4 companies The chapter highlighted both the similarities and variances observed within each group, providing valuable insights into their respective practices

Chapter 4 discussed the causes and effects of the variances and similarities in audit practices among auditing companies in Vietnam The findings of the research were used to propose recommendations for auditing firms and policymakers to improve audit quality within the industry

This thesis enhances the comprehension of audit procedures related to borrowing and cost of borrowing, offering valuable insights for auditing firms, policymakers, and stakeholders to improve the effectiveness and consistency of audit practices in Vietnam It serves as a crucial resource for students, professionals, and researchers focused on auditing and financial statement analysis.

[1] Ministry of Finance (2013) Circular No 200/2014/TT-BTC: Circular on guidelines for accounting policies for enterprise

[2] Institute of Chartered Accountants in England and Wales (2022): Assurance

Luận văn tốt nghiệp của Lê Thị Tuyết (2020) tập trung vào việc hoàn thiện thủ tục kiểm kê hàng tồn kho trong kiểm toán báo cáo tài chính do các công ty kiểm toán độc lập tại Việt Nam thực hiện Nghiên cứu này nhằm nâng cao hiệu quả kiểm toán và đảm bảo tính chính xác của báo cáo tài chính, từ đó góp phần vào sự phát triển bền vững của ngành kiểm toán tại Việt Nam.

Nguyễn Thị Thanh Hoài (2020) trong luận văn tốt nghiệp của mình đã nghiên cứu các yếu tố ảnh hưởng đến việc xác định các thủ tục kiểm toán cho khoản mục doanh thu trong kiểm toán báo cáo tài chính Nghiên cứu này tập trung vào các công ty kiểm toán độc lập tại Việt Nam, nhằm làm rõ quy trình và tiêu chí áp dụng trong kiểm toán doanh thu.

[5] Pham Ngoc Dung (2022) Graduation thesis “Hoàn thiện thủ tục kiểm toán vay và chi phí lãi vay trong kiểm toán báo cáo tài chính tại KPMG Việt Nam”

[6] Nguyen Dinh Anh Tu (2022) Graduation Thesis “Improve the audit of fixed assets in the audit of financial statements performed by Deloitte Vietnam Co., Ltd”

Tiêu đề	A Field Research on Audit of Borrowing and Cost of Borrowing Items in Auditing Companies in Vietnam
Tác giả	Nguyen Thi Van Anh
Người hướng dẫn	Ph.D. Dao Nam Giang
Trường học	Banking Academy
Chuyên ngành	Accounting and Auditing
Thể loại	Graduation Thesis
Năm xuất bản	2023
Thành phố	Hanoi

Định dạng
Số trang	86
Dung lượng	2,67 MB