In the world, accounting services are considered as one of the services with high professionalism and great significance in creating a transparent and efficient business environment. In Vietnam, although auditing activities only really appeared after the transition of economic mechanism, but due to the objective requirements of the economy as well as the encouragement of the state, the audit services industry has developed strongly developed in Vietnam. Up to now, the number of auditing firms has grown significantly, the services provided are constantly diversifying. However, financial auditing is still considered the most important service because the financial statements made by enterprises are the subject of the concern of many people. In the operations of the financial statement audit, auditing the Liabilities item is an important content because it is directly related to the liquidity and therefore also affects the existence of the company. Therefore, auditing the Liabilities item is considered an important part for auditing companies. The Branch of Auditing and Informatics Service Company Limited in Da Nang is one of the most reputable companies in the audit industry. Through my internship at the company, I have grasped a lot of practical knowledge related to auditing of financial statements in general and auditing of Liabilities in particular. This is the basis for me to complete my thesis with the topic: “Auditing of Payable Accounts for Providers by Branch of Auditing and Informatics Service Company Limited in Da Nang (AISC)
THEORETICAL BASIS FOR AUDITING PAYABLE ITEMS
OVERVIEW OF PAYABLE TO SUPPLIER
1.1.1 Contents of the Liabilities to Supplier
An enterprise established and put into production and business operation must ensure a certain amount of capital Capital can be obtained from many different sources: From the business itself or mobilized from outside From there, the enterprise's capital sources include: Equity and Liabilities According to the Vietnamese accounting system, liabilities reflect all debts arising in the course of production and business activities that enterprises must pay creditors to their creditors, including loans and receivables, payables to sellers, to the State, employees and other payables The rational use between liabilities and equity helps the company easily expand scale, increase business efficiency Besides, it also has two sides, if not used correctly, can be a threat, the risk of financial loss to the company, especially insolvency In order to have effective and correct directions, we need to learn more about Account 331- Supplier Liabilities
According to Decision No 165/2002 / QD-BTC of Standard No 01 (Vietnamese Accounting Standards): “Liabilities define the current obligations of the enterprise when the enterprise receives an asset, participating in an undertakes or arises legal obligations.” “Liabilities arising from past transactions and events, such as purchasing unpaid goods, using unpaid services, borrowing, goods warranty commitment, commitment to contractual obligations, must Pay employees, taxes payable, other payables.”
More specifically, the payable Items to Suppliers have a rather important role in the buying-selling cycle Because the purchase process and the checkout process don't happen at the same time Therefore, this is the most basic and most business Therefore, Auditing the Supplier Payable Item is a necessary item that must be done and taken care of
1.1.2 Classification of liabilities to supplier
Liabilities to provider is an item that accounts for a large proportion of the liabilities As presented in the balance sheet, liabilities are divided into short- term liabilities and long-term liabilities Typically, entities rely on the maturity to classify liabilities to the Supplier Specifically:
- Short-term liabilities: Liabilities that the company is obliged to pay for within one year, one cycle or less from the balance sheet date Includes due payables and long-term debts Normally for small and medium companies, most of the liabilities are in short-term liabilities Some short-term liabilities such as short-term borrowings, short-term internal payables, accrued expenses
- Long-term liabilities: That have the maturity of more than one year / one cycle from the balance sheet date This allows the company to purchase the right to installments over many years
More specifically, short-term liabilities are used to finance liquid assets, while long-term liabilities are for fixed assets and long-term investments because companies want to maintain a safe level of liabilities ratio
1.1.3 Account and accounting rules for Liabilities to supplier
Each object for ease of use in accounting is expressed through an accounting account In which, Liabilities to supplier are shown through account
331 - Payable to seller Typically accounts have a Debit or Credit side balance, such as Category 1 and 2 accounts with a Debit closing balance, and Category
3, 4 has a closing balance on the Credit side However, Account 331 is one of a number of special accounts that can have both a Debit and a Credit balance Specifically, the account has a Debit balance in case the buyer makes advance payments to the seller / service provider, and the Credit balance in case the buyer has not paid for the goods to the supplier or other payables,
Under the provisions of Clause 2, Article 51, Circular 200 / TT-BTC of Circular guiding the corporate accounting regime, structure and contents of the account 331 - Payables to sellers are clearly stated as follows:
- Amount paid to sellers of materials, goods, service providers, construction contractors;
- Advances paid to sellers, suppliers, contractors for construction and installation but have not received materials, goods, services, volume of completed construction and installation products handed over;
- mount of money the seller accepts to sale rebates or services delivered under the contract;
- Payment discounts and trade discounts are authorized by the seller to deduct from the liability to the seller;
- The value of materials and goods is shortage and of poor quality when checked and returned to the seller;
- Revaluation of payables to sellers in foreign currencies (if the foreign currency rate falls against VND)
- Adjust the difference between the temporarily calculated price is smaller than the actual price of the received supplies, goods or services, upon receipt of an invoice or official price announcement;
- Revaluation of payables to sellers in foreign currencies (if the foreign currency rate increases against VND)
When making the balance sheet, taking the detailed balance of each object reflected in this account to record two items on the "Assets" side and the " Total liabilities and owners’ equity " side
Under Article 50, Circular 200/2014/TT-BTC of Circular guiding the accounting regime for corporate payables, the accounting principles of Liabilities are recorded as follows:
1 The payable is monitored in detail according to payment terms, original currency and other factors according to the management needs of the enterprise…
2 The classification of payables as trade payables, internal payables, and other payables is implemented according to the principle: a) Payables to suppliers includes payables arising from transactions of purchase of goods, services, assets and seller This includes payables when importing through the trustee (in the import trust transaction); b) Internal payables comprise of payables between the superior and the subordinate which does not have the subsidiary accounting legal status; c) Other payables include non-commercial payables, not related to the transaction of purchase, sale or supply of goods and services:
- Payables related to financial expenses, such as: payable interest payments, dividends and payable profits, accrued financial investment expenses;
- Payables paid for by a third party; Amounts received by the trustee from the related parties for the payment specified in the import and export trust transaction;
- Non-commercial payables such as payables due to borrowings of assets, repayment of fines, compensation, surplus of assets awaiting resolution and payable of social insurance, health insurance, unemployment insurance and non-commercial insurance …
3 When making the financial statements, the accountant shall base on the remaining term of the payables to classify them as long-term or short-term
4 When there is evidence that a loss is likely to occur, the accountant must immediately recognize a liability on the principle of conservatism
5 The accountant must determine that the accounts payable satisfy the definition of the monetary items denominated in foreign currencies (detailed in Account 413 - Exchange rate differences) for re-evaluation at the end of the period financial statements
1.1.4 Documents relating to Liabilities to supplier
• Economic contract between supplier and enterprise
• Contract of sale, purchase, lease of property; the order
• Purchase invoices and value added tax
• Quotation, minutes and receipt of goods
• Detailed book for each supplier
• Minutes of periodic comparison of data between sellers and businesses, between businesses and banks
• Working papers of auditors for the previous year (if any)
• Detail book of payment in foreign currency
1.1.5 Evaluate the impact of supplier's Liabilities
Liability errors or frauds can cause materiality to the financial statements in two aspects as follows:
- Financial situation: important ratios related to the financial situation such as debt ratio, current liquidity ratio, etc so when errors occur in recording, presenting and using Unreasonable coefficients related to liabilities, this can easily cause users to misinterpret the financial situation of the company
OVERVIEW OF AUDITING LIABILITIES TO SUPPLIERS IN
1.2.1 Role of Auditing Liabilities to Supplier
Liabilities to Supplier is the funding source of forming the enterprise's assets This is an item related to other items in the financial statements such as inventory, fixed assets, Moreover, liabilities to suppliers have an important role in the purchase and payment cycle, because this item has an impact on spending fees incurred in the period, affecting the profit of the unit In addition, liabilities to supplier accounts for a large proportion of the total liabilities, an important item that makes up the capital of the unit Therefore, liabilities to suppliers have a direct influence on the financial position and solvency of the company through analyzing indicators such as liability turnover and abnormal fluctuations, There are errors for the same item that materially affect the company's financial statements But for the liabilities to suppliers it is expressed through the measurement ratios in the analysis of the financial statements
- The ratios reflect the financial situation
+ Self-financing ratio = Total owner’s equity / Total liabilities and owners’ equity
If the self-financing ratio of the unit is high, the capital mobilization of the unit will be low, on the contrary, the low self-financing rate proves that the as dependence from external funding sources, this affects the operation of the unit
Thus, the item of liabilities payable by suppliers, when assessed in an untruthful and reasonable manner, will affect other items in the financial statements, causing the report readers incorrectly understand the financial situation of the unit Therefore, it is necessary for an independent side of an auditing company to check and give opinions, comments and assessments of the truthfulness and reasonableness of the financial statements in order to increase the trust and reliability of users of the financial statements This is the reason why it is necessary to audit the Liabilities to suppliers in financial statement auditing
1.2.2 Auditing target of Liabilities to Supplier
From the role of the auditor in the financial statements, it can be inferred that the objective of the audit is to collect and evaluate evidence for the auditor to give an objective opinion on the information to be audited Specifically, Supplier's target of liabilities, auditors collect sufficient evidence and effectiveness to give the most accurate assessment of the financial situation of the enterprise
Assertions are designed to help auditors collect audit evidence about the aspects being checked, including:
• Completeness: debts are recorded and fully reflected in the financial statements and related books This is the most interested goal in the audit process
• Existence: debts must actually happen, so that nothing can be written off Ensure the existence of debt items to pay suppliers
• Accuracy: Liabilities to suppliers are recorded with the correct amount in the book, check the addition of arising amounts, balance, book transfer and financial statements
• Cut-off: Payables must be recognized in the correct period of the transaction incurred
• Right and obligation: to collect evidence to prove whether liabilities are actually the enterprise's obligations on the date of making the balance sheet or not Auditors can check the original arising documents, debt reconciliation records or send confirmation letters
• Presentation and disclosure: the debt items are classified and presented in accordance with Vietnam's auditing regulations and standards Liabilities to suppliers are recorded and properly accounted for each object in detail Because the wrong or mistaken accounting can falsify the nature of the accounting and presentation on the financial statements
1.2.3 Common Mistake Issues with Supplier Liabilities
Liabilities to suppliers is one of the common accounts used in many companies, this is one of the important accounts in the financial statements So that the account often has errors going on Some of the specific errors are listed below:
• Clearing the wrong debt between subjects (this problem usually occurs the most errors)
• Mistakes in arithmetic calculation or recording in incomplete, accurate and reasonable documents
• Transactions are not recorded in the correct period of the transactions that occurred, especially transactions occurring around the closing date of the financial statements
• Liabilities are declared lower than actual or not fully recognized, resulting in increased solvency, leading to inadequate calculation of expenses, deducing profits to be assessed more than actual Auditors should pay attention to real, full recognition of supplier’s liabilities
• Unrealistic liabilities affect financial ratios, especially this is fraudulent public cash withdrawal
• Not enough debt reconciliation records at the end of the period
• Payable are misaligned between accounting books and reconciliation records
• Failure to receive confirmation letter from suppliers, causing difficulties for auditors in confirming whether debts actually exist
• The debts have not been tracked for each supplier, but tracking each object is a part that makes it difficult to check against
• Apply incorrect exchange rates for transactions of foreign currency origin, do not re-evaluate the balance of foreign currency with the exchange rate of banks normally traded at the end of the accounting period
• Applying accounting principles, standards and regimes due to not timely updating.
AUDIT PROCESS OF LIABILITIES ACCOUNT TO SUPPLIERS
To ensure the effectiveness, economics, and effectiveness of each audit, and to obtain sufficient and valid audit evidence on which to base the auditor's conclusions about truthfulness and adequacy reason of the data on the financial statements In general, the audit process is usually done through the three most basic stages Include: Audit planning; audit performance and audit closing stage
Figure 1.1 Auditing process of financial statements according to the audit model program
Audit planning is the first stage that the auditor needs to perform in each audit to create the legal and other conditions necessary for the audit
In the Vietnamese Standard on Auditing 300 on “Auditing planning”, clearly states: “Auditors and audit firms must prepare an audit plan to ensure that the audit is conducted effectively.” And: “The audit plan must be appropriately designed to ensure that material aspects of the audit are covered; detect fraud, risks and potential problems and ensure the audit is completed on time” To fulfill the above objective, an audit plan is usually formulated
Xem xét chấp nhận khách hàng và đánh giá rủi ro hợp đồng [A100]
Tổng hợp kết quả kiểm toán [B410]
Lập hợp đồng kiểm toán và lựa chọn nhóm kiểm toán
Kiểm tra cơ bản tài sản [D100-D800]
Phân tích tổng thể báo cáo tài chính lần cuối [B420]
Tìm hiểu khách hàng và môi trường hoạt động [A300]
Tìm hiểu chính sách kế toán và chu trình kinh doanh quan trọng [A400]
Kiểm tra cơ bản nợ phải trả [E100-E600]
Thư giải trình của Ban Giám đốc và Ban quản trị [B440-B450]
Phân tích sơ bộ báo cáo tài chính [A500]
Kiểm tra cơ bản nguồn vốn chủ sở hữu và khoản mục ngoài bảng CĐKT [F100- F400] Đánh giá chung về hệ thống kiểm soát nội bộ và rủi ro gian lận [A600]
Xác định mức trọng yếu
[A700] và phương pháp chọn mẫu - cỡ mẫu [A800]
Tổng hợp kế hoạch kiểm toán [A900]
QUẢN LÝ CUỘC KIỂM TOÁN
Thư quản lý và các tư vấn khách hàng khác [B200]
XÁC ĐỊNH, ĐÁNH GIÁ VÀ QUẢN LÝ RỦI RO
Soát xét, phê duyệt và phát hành báo cáo [B110] Đánh giá lại mức trọng yếu và phạm vi kiểm toán [A700] -
T ổ n g h ợ p k ết q u ả ki ểm t o án & đ án h g iá c h ất l ư ợ n g T ổ n g h ợ p k ết q u ả ki ểm t o án
Kiểm tra kiểm soát nội bộ
K iể m t ra c ơ b ản b ản g c ân đ ố i kế t o án
Báo cáo tài chính và báo cáo kiểm toán [B300]
Kiểm tra các nội dung khác
Kiểm tra cơ bản báo cáo kết quả hoạt động kinh doanh
Thực hiện kiểm toán Tổng hợp, kết luận và lập báo cáo
L ập k ế h o ạc h v à xá c đ ịn h r ủ i ro L ập v à so át x ét g iấ y tờ l àm v iệ c
Soát xét việc kiểm soát chất lượng cuộc kiểm toán
Figure 1.2: Planning and designing audit methods 1.3.1.1 Prepare for an audit plan
Audit process is started when the auditor receives a client audit request from a certain company However, auditing is a highly competitive industry, so auditors are very cautious in deciding to approve customers so that the risk is lowest, because this is a highly legal related industry Therefore, the auditing company must have a correct view when making a decision a) Assessment of auditing ability
Auditors must evaluate whether accepting a new customer or continuing to audit with the old customer increases the risk of the auditor or harm the auditing company To do that, the auditor needs to consider:
Prepare for an audit plan
Collecting information about the entity being audited
Preliminary assessment of the internal control system
Materiality assessment and audit risk
• The independence of the auditing company
• Integrity of the Board of Directors (Board of Directors) of the business being audited
• The client's accounting system must provide sufficient evidence to prove the economic profession incurred
For new customers, first of all, the auditor needs to find out the reasons for the client's audit invitation, to collect information on aspects such as business areas, financial status, Auditors must increase the information needs to be collected when customers' financial statements will be widely used, especially for joint stock companies listed on the stock market, companies with a lot of debt need to collect information from data banks, newspapers, specialized books and newspapers,…
In the case of an entity that already has a predecessor, the auditor should seek to obtain information that may be useful to the previous auditors, such as information about the integrity of the managers units, disagreements between the two parties (if any), reasons why they do not continue to collaborate with each other, Auditors will have to be very cautious in the cases:
+ Customer does not agree to contact with previous auditors
+ In the past, there were serious disagreements between the two parties, so the previous auditor's answers were limited and they could not provide the necessary information
+ Through the opinion of the predecessor, the auditor has discovered some unusual and material problems With the collected information, the auditor researches and analyzes the entity's financial position, assessing and making a preliminary estimate of the materiality and potential risks of the client's business to decide whether to accept an audit or not If receiving, the auditor needs to confirm that it will not violate the law and professional ethics Auditors should not accept an audit when the independence is not guaranteed or considered incompetent to serve customers
For old customers: Annually, after completing the audit, the auditor needs to update information to reevaluate existing customers to see if they should continue to audit for them or not, the auditor It is also necessary to study whether change the content of the audit engagement, There are cases where the auditor needs to stop auditing for a client, for example when a dispute between a client and the auditor, or there has been a conflict about the audit scope between the parties, or there have been arguments about the audit procedures to be followed:
➢ The auditors perform one of the two forms A110 (accepting new customers) and A120 (accepting and keeping old customers) b) Find out why to invite a client's audit
The reasons for inviting the financial statement audit are: Meeting the annual financial disclosure requirements; serve for business managers; auditing for bank loans; Auditing according to the requirements of superiors or the law so the auditing company needs to determine the audit reasons of the customer and based on production and business activities as well as the financial ability of the company to make reasonable decisions in contracting and designing audit methods c) Selection of an audit team
After considered client acceptability, the firm needs to estimate the complexity of the audit, and then select the appropriate staff to perform the audit This selection is made on a requirement of the number of people, qualifications and technical expertise required and is usually directed by the Board of Directors of the auditing firm d) Signing the audit contract
After deciding to accept the audit for a client, the final step in the preparation phase of an audit plan that the auditor must perform is to sign the audit engagement Before signing the audit contract, the auditing company will have a preliminary discussion and discussion with the client on some key terms of the audit engagement such as: audit purpose and scope, responsibility Responsibilities of the Board of Directors of the client company and the auditor, form of notification of audit results, time of conducting the audit, bases for calculation of audit fees and forms of payment,…
If the client company and the auditor both agree to the terms of the audit engagement, the two parties will sign the audit contract This is a formal agreement between the auditing company and a client on the performance of the audit and other related services And at this time, the auditing company becomes the official audit subject of the client company
➢ The auditor is presented in the working papers according to the A200 form
1.3.1.2 Collecting information about the entity being audited
After signing the audit engagement, the auditor begins to make a general audit plan Accordingly, to ensure the quality of the audit and achieve the objectives set for the audit, the auditor must have a complete understanding of the customer on a very wide range, covering many aspects as follows:
- Have a general understanding of the economy such as the current state of the economy, government policies, and inflation…
- Understanding of the entity's environment and areas of operation, such as market conditions and competition, characteristics of the business line, accounting standards, regimes as well as other regulations of the entity industry- related laws…
ACTUAL COMPANY AUDITING PAYABLE ITEMS
Brief introduction of Branch of Auditing and Informatics Service
Branch of Auditing and Informatics Service Company Limited of Ho Chi Minh City in Da Nang was established in 1994 with the abbreviated name AISC (Auditing Computing Service Company., Ltd), this is a member of the international accounting and auditing organization Inpact Asia Pacific The company provides audit, valuation, tax consulting, accounting, services Currently, the company has a head office operating in Ho Chi Minh City and has two branches operating in Hanoi and Da Nang with two representative offices in Can Tho and Hai Phong to best serve and respond to customers across the region…
Number of employees: from 100 - 200 employees
Head office: No 142 Nguyen Thi Minh Khai - Ho Chi Minh City
Email: info@aisc.com.vn
Webside: http://www.aisc.com.vn
History and development of Branch of Auditing and Informatics
Ho Chi Minh City Auditing and Informatics Services Company was established in 1994, is one of the first independent auditing firms with large- scale organizations operating in the field of independent and private auditing financial and accounting consulting and informatics In November 2007, the People's Committee of Ho Chi Minh City approved the transformation of Ho Chi Minh City Auditing and Informatics Services to Ho Chi Minh City Auditing and Informatics Services
On June 19, 2000, according to Decision No 51/2000 / QD-UBCK2 of the Chairman of the State Securities Commission, AISC was the first independent auditing company to allow auditing of securities issuers and traders…
From 2009 up to now, AISC has become a member of Vietnam Association of Certified Public Accountants (VACPA) Furthermore, AISC is one of the first independent auditing firms to be authorized by the State Bank to audit credit institutions and commercial banks in Vietnam
More specifically, over the years of construction and development, AISC has built a team of highly qualified staff trained in many countries around the world such as Vietnam, UK, Belgium, with many ants knowledge and experience in the fields of Auditing, Informatics, Finance - Auditing and DB Management Therefore, AISC's customers are in almost all fields such as Post Office, Service, Construction, Banking, Trade…
Characteristics of business activities in Branch of Auditing and
Branch of Auditing and Informatics Service Company Limited of Ho Chi Minh city in Da Nang is operated based on 3 main characteristics of people, knowledge and services to best meet the needs of customers The AISC is built with the principles of independence and compliance with the provisions of the law In addition, the company always focuses on professional ethics principles, constantly improving service enhancement, ensuring that services deliver to meet customers' expectations Therefore, AISC always creates trust and reputation for customers
Specifically, AISC has outstanding features that make a deep impression on other auditing firms As the quality of services that AISC brings with high professionalism, quality to create trust for customers, the evidence is shown through, AISC has more than 1000 customers trusting to use the services that the company provides In addition, the cost for an audit is average but the quality is optimal, this is a condition that many customers trust AISC to choose Therefore, AISC is also in a position not less than many other competitors, standing in the top 10 leading auditing firms in Vietnam
Specifically, the products and services that the company offers include:
• Audit of cost estimates and works settlement
• Asset value appraisal and joint venture capital contribution
The Management's organization of Branch of Auditing and
Informatics Service Company Limited of Ho Chi Minh City in Da Nang
ADMINISTRATIVE OFFICES DA NANG BRANCH
ACCOUNTING DEPARTMENT HA NOI BRANCH
REPRESENTATIVE OFFICE IN CAN THO
REPRESENTATIVE OFFICE IN HAI PHONG
Figure 2.1 Organizational structure of AISC
Director: is the person with the highest authority in the company, representing the executive company in managing the company under the one- head regime The director is the person who directly directs the departments and divisions of the company The director is responsible for managing, building development strategies, making investment plans for enterprise development The director of the company is responsible for the operations of the company, and is in charge of all operations of the company The person who makes the final decision in the meetings to discuss the technological innovation, the proposal of investment opinion on a business field Having the task of reporting to state agencies on the results of the company's production and business activities in the period
Enterprise audit departments: are responsible for auditing financial statements at the request of customers
Construction Auditing Department: auditing estimates and finalization of capital construction works, making audit reports for construction enterprises Branches and representative offices are branches and representative offices that operate independently and have their own markets The branch managers are accountable to the director for the decisions and the performance of the branch
Figure 2.2 Organizational chart of Da Nang branch
The branch director board is the representative for the staff collective in a branch and is responsible to the Board of Directors of AISC for all operations of the branch in accordance with the law, regime and policy of the state on company rate A branch manager represents a branch in all activities inside and outside the branch of the branch he manages
Each department in the branch has a manager, deputy, team leader, auditors, technicians, and audit assistants The professional departments perform their functions according to their names For the convenience of management, when signing an economic contract, the board of directors often selects the appropriate staff for the requirements of the job in each specific contract to assign tasks
AISC branch in Da Nang provides the following services to customers:
- Auditing: Auditing financial statements, auditing estimates and settling basic construction works, determining the value of enterprises for equitization, appraising the value of assets and capital contribution to joint ventures…
- Financial accounting consulting service: Guide businesses to apply the accounting - finance - statistics regimes prescribed by the state, investment consulting, tax consultancy and management
- Informatics service: Consulting on the selection of informatics equipment and providing informatics software in the field of accounting and business administration
The principle of operation of the Branch is independence, financial autonomy, objectivity, integrity, subject to the inspection and control of State authorities in accordance with the law The branch is responsible before the law for the truthfulness, accuracy and confidentiality of the data and documents checked or provided by the branch to the enterprises
The operation of the Branch according to the market mechanism is both the basis and the object of operation The branch is responsible for profitable business, preserving and developing the capital With reasonable price, reasonable service, high quality of service, AISC Da Nang Branch has become increasingly prestigious and achieved business results.
THE AUDIT PROCESS OF PAYABLE ITEMS TO THE SUPPLIER
IS PERFORMED BY BRANCH OF AUDITING AND INFORMATICS SERVICE COMPANY LIMITED OF HO CHI MINH CITY IN DA NANG
In the process of conducting the audit, AISC applies the audit program issued by the Vietnam Association of Certified Public Accountants (VACPA) in Decision No 1089 / QD-VACPA dated October 1, 2010
For the purpose of learning about the audit process for the supplier’s Liabilities item at AISC Ho Chi Minh City Auditing and Information Services Co., Ltd., the following is the audit process for the actual AISC's Liabilities item application for ABC Joint Stock Company (ABC Company for short)
2.2.1.1 Review client acceptance and contract risk assessment
This is the first step of AISC's work performed in each audit, the client inquiry process helps the auditor in charge to get an overview of the customer's business performance, policies and applicable company rules; At the same time, it is also the basis for the auditor to identify potential risks, control risks and to schedule and scope of audit procedures The collection of customer company information in each audit depends on customers
Customer risk assessment: Answering questions as well as learning basic information to help auditors and auditing firms evaluate the risk level of the contract is high, low or medium For ABC company, after understanding the relevant issues, the auditor and the audit firm evaluate the risk level of the contract as average, as a basis for making a conclusion that accepting maintenance customer
➢ Customer acceptance review and contract risk assessment according to form A120 - Appendix 1
2.2.1.2 Establishing an audit contract and selecting an audit team
❖ Prepare personnel for the audit
After reviewing the contract, finding out and accepting customers The company conducts scheduled personnel needed for the audit The preparation of personnel for the audit was performed to ensure compliance with the Vietnamese Standards on Auditing and to ensure that the audit was carried out in the most effective way
❖ Audit contract and audit appointment letter
When deciding to accept the audit, and preparing human resources for the audit, AISC directly meets the client, negotiates and makes a contract
➢ Audit contract is presented in form A210 - Appendix 2
❖ Letter to customers about the audit plan
Letter to customers prepared by AISC and sent to ABC company for the purpose of informing customers about audit plans
➢ Customer letter is shown in form A230 - Appendix 3
❖ List of documents to be provided by customers
Before conducting the audit, AISC will send customers a list of documents that need to be provided by customers to serve the audit; ensure adequate documentation is provided to facilitate a smooth audit; create conditions for auditors to easily learn and test quickly in the audit time
➢ The list to be provided by customers is presented in form A240 -
❖ Commitment to the independence of the audit team members
➢ The work is shown in form A260 - Appendix 5
❖ Communicate with the Board of Directors about an audit plan
Auditors may discuss some issues about the audit plan with management of the audited entity in order to facilitate the implementation and management of the audit
➢ The work is described in form A290 - Appendix 6
2.2.1.3 Find out customers and operating environment
Before entering the work of the audit process, auditors always have to find out about customers to evaluate whether or not to receive customers Both to ensure that the company can meet the criteria set out to ensure low risk and improve credibility of the audit firm
➢ Finding out about customers and operating environment in ABC Company is done according to form A310 - Appendix 7
2.2.1.4 Preliminary analysis of financial statements
This is an important step that is required to analyze before proceeding with audit planning Specifically, compare the balance of the current year's supplier liabilities against the previous year to analyze the volatility and calculate the financial ratios related to the supplier’s liabilities Through the analysis of these indicators, the auditor can assess the volatility situation, point out unusual fluctuations, errors, and frauds that are critical to the supplier's liabilities…
➢ Preliminary analysis of financial statements is presented in form A510
2.2.1.5 General assessment of internal control system
The auditor collects information about the internal control system by: performing the inspection technique from beginning to end, interviewing the manager, supervising staff and other employees, conducting factory tours and activities of the unit, examining documents and books The aspects assessed by the auditor include: Control environment, risk assessment process, information systems, control activities, monitoring of controls
The general assessment of the internal control system is presented on form A610, with the questionnaire designed to facilitate the auditor to work more effectively in the pressure of time
Depending on the type of activity as well as the scale or judgment of the auditor, to choose which criteria to use to determine the materiality, such as through profit before tax, net revenue, equity or assets However, when using any criteria, the auditor needs to have a justification for using that criterion Through the analysis of financial indicators to assess risks or professional judgment of auditors, thereby determining the overall materiality level, detailed materiality level, critical error threshold, acceptable materiality level
➢ Determine materiality as shown on form A710
2.2.1.7 Determine the sampling method and sample size
The goal of determining the sampling method and sample size is to evaluate the business performance of Company ABC, thereby making a preliminary conclusion about the risk level of the audit areas and shaping the key audit area
The sampling method is non-statistical The method chosen depends on the professional judgment of the auditor and on a case-by-case basis to be most effective and ensure that sufficient appropriate audit evidence is obtained Sample Distance: The degree of assurance required from the sample is determined based on the results of the auditor's risk assessment for each respective item It is necessary to connect with the data analyzed through the steps performed above From there, give the appropriate level of assurance
After doing all the above work, the auditor will aggregate it into form A910 "Synthesize the audit plan" in order to give out the general situation of the client company and based on that for the members to participate Auditors capture the content of the work to be performed
The objective of the audit program is to collect evidence to ensure that the assertions on the financial statements are consistent with Vietnam's audit regulations and standards Supplier’s liabilities must be real, accurately, fully recorded and evaluated and presented in accordance with the applicable financial statement preparation and presentation template
For each conclusion or risk assessment discovered by the auditor during the audit, the chief auditor always requires that it is imperative to gather evidence to support the arguments that are argued The collected documents are required to ensure that the criteria are set, both as evidence for the review and as valid evidence in court
When completing the audit plan document and being sent back to each auditor, the auditor reads and gives comments on questions, to agree and proceed to perform the audit
➢ Summary of audit plan is made according to form A910
➢ Develop an audit program for the Accounts Payable Item to be performed by the auditor on form E230
Tên khách hàng: CTY CỔ PHẦN ABC Tên Ngày
Chương trình kiểm toán - các khoản phải trả ngắn hạn và dài hạn
Kiểm tra các nguyên tắc kế toán áp dụng nhất quán với năm trước và phù hợp với quy định của chuẩn mực và chế độ kế toán hiện hành
SOME SOLUTIONS ABOUT THE AUDITING PROCESS ON
COMMENTS ON THE AUDITING OF LIABILITIES TO
During my internship at AISC Auditing Company, I created favorable conditions for me to directly participate in the audits Through the process of practical contact, I have partly consolidated my learned knowledge and accumulated more experience for myself, at the same time, I have the following comments:
In general, when studying and working at the Company, I find that the quality of audit is always AISC's top concern During the implementation process, the auditors always coordinate with each other to work effectively
Before conducting an audit, the planning is always carefully prepared and built a specific plan Depending on the size and workload of the client, the number of participating auditors is appropriately assigned In addition, based on the nature of each profession of the customer, the auditor often chooses jobs for each auditor In case the customer is a former customer, there is at least one auditor who participated in the audit at the previous year and continues to participate in the current year This helps auditors waste time in understanding customer information, status, making inquiries about customers and the audit process easier
In addition, before performing the audit at the client, all auditors are conducted to learn about the previous year's records to both understand the situation and understand the key points to note to create an effective and quality audit
In addition, the company set up a quite complete and detailed questionnaire for the assessment of the internal control system Moreover, each business is different, the unit always proactively and flexibly adjusts accordingly by adding or removing unnecessary tests but still bringing high efficiency while saving time and costs for audits
In particular, before performing audits at customers, the company always develops a specific plan such as number of auditors involved, preparation time, as well as the time documents customers have to provide The company always receives necessary documents such as the customer's financial statements, in order to be able to preliminarily evaluate the operation of the unit to have the right direction, partly to save time and reduce the risk when performing audits at customers
The procedures are always set up carefully by the AISC company, but depending on the actual environment at the customer, the auditor can modify and adjust the procedures in the audit process to suit the conditions present Working according to plans, complying with the policies and regulations of Vietnam Auditing Standards but not rigid in the model but always showing flexibility and creativity in the working process
In addition, on the team of auditors, through the process of formation and development, AISC Company has had a team of experienced staff and professional working style Auditors regularly update, research documents, new circulars in accounting and auditing, always seek to learn to improve their professional qualifications Auditors always have the opportunity to interact with many different types of businesses, thereby accumulating a lot of experience and improving the quality of audits In addition, the company always creates favorable conditions for its employees to participate in training courses and exams to get certificates
Like other auditing companies, at AISC, the recording of working papers is specified clearly, scientifically according to the prescribed reference and strictly implemented The working parts are clearly referenced to documents and related acts Important documents and documents are stored and carefully preserved in audit records The sort order is from general to detailed The paper arrangement works scientifically and references to help the reviewer and user easily find out and track the problems that the auditor gives in the record
For liabilities to suppliers, this is the most common item appearing in all types of enterprises In addition, this item is of high materiality and high level of risk Therefore, this is a rather important part of the outcome of the audit process For that reason, auditors often build a standard for this item very clearly and in detail Usually it is based on common goals associated with specific objectives that are represented in sufficient evidence to be gathered with high legal validity An accurate assessment of the item helps to reduce the risk that may be encountered and to draw an objective, honest and reasonable audit conclusion through the assessment of material aspects
This is the last step to the end of the audit program The chief auditor synthesizes the opinions and results of the actions performed by the auditor This work is always carefully checked to point out the critical flaws that the unit has encountered Steps are performed objectively and in compliance with standards by experienced and highly qualified auditors
In addition, after the financial statements are officially released Auditors always keep track of events after the issue date, consider whether there will be a significant impact on the financial statements that the auditor has issued or not, in order to promptly adjust specifically the debt claims of each customer overdue debts… directly affects the amount payable to suppliers
Through the audit process at ABC company, I noticed that there are disadvantages in the audit process for the supplier’s liabilities of AISC Company:
- The company is applying a questionnaire to evaluate the internal control system according to the sample audit program, the questionnaire is not detailed for each type of enterprise
- For the item Liabilities to suppliers, AISC Company has just analyzed the outstanding balances over the years on the financial statements, did not go into the analysis of criteria for each industry or field, operating market.
SOME SOLUTIONS TO COMPLETE THE AUDIT PROCESS OF
Through researching and studying the process and method of auditing the item Liabilities to sellers at AISC Auditing Company, I found that this item was focused on implementing by the Company However, there are shortcomings, I would like to give some recommendations on the direction and solutions to complete the accounts payable for sellers as follows:
❖ Recommendation on evaluation of internal control system for liabilities to seller
Payables audits often take a large amount of time, so if an effective, well- investigated internal control structure can significantly reduce audit costs For customers who have audited the previous years, the control implementation is usually ignored unless there are events occurring during the year related to the internal control system The time constraints in the audit of the internal control system will be partially overcome if the AISC and the client side agree to perform the preliminary audit during a period other than the audit season This is a good way for auditors, as this time does not require as urgently as in audit
❖ Recommendations for determining materiality and risks
The company has developed a materiality assessment program conducted by its experienced auditors, often the auditor's chairman However, this method is more for reference, the auditor determines the materiality based on the judgment of the auditor through experience and comparison, comparison during the audit process This can increase the audit risk because when there are small mistakes occurring, the auditor has no basis to determine whether the combined small errors have a material impact on the financial statements or not At the company today, most small mistakes are corrected, which takes a lot of time and unnecessary costs To be able to judge and apply materiality requires auditors to have a close and deep understanding of the materiality, thereby reducing audit risk
❖ Recommendations for an effective audit program
Auditing program that the company is using for different items, including related items such as revenue - receivables, purchases - payments thus the role of the sample audit program is for support purposes only It is necessary to have specific instructions to help auditors coordinate each other to compare and compare
AISC's customers are very diverse and rich in size and type of business, the payables audit program also needs to have the differences, so it is very necessary to design audit programs for specific each type of business
Auditors need to have an understanding of the characteristics of the customer's business, especially the purchase and payment cycle in order to use the most flexible audit procedures
Along with the rapid development of global information technology, the application of information technology to management has become popular and popular Especially in the field of accounting, computer and machine accounting software have been applied by many businesses to record arising transactions and prepare financial statements When conducting audits of customers who apply machine accounting software, auditors often encounter difficulties with technical software This greatly affects the quality of audit results and sometimes auditors have to strengthen additional audit procedures to minimize risks AISC should invest additional costs to research and build appropriate audit software It is possible to hire experts in the field of setting up the supporting audit software and consulting to help the company have the most suitable software Currently, the major auditing firms have their own audit software, so the company can link or cooperate with these auditing firms to learn from the experience of performing audits on computers and applying the software their audit At the same time, the company should regularly send employees to attend training courses on skills to use audit software and other informatics techniques to support the audit work
Clients of AISC operate in many different fields, each with its own characteristics, so applying an audit program will reduce the effectiveness of the audit even though the auditor has had audit experience in many areas different areas Therefore, in the audit process the company should develop an audit program for each field The redesign of the audit program to suit the present time as well as more suitable for each type of business to improve the quality of the audit
Regularly organize a training course on observation skills to improve the judgment of new employees, helping them to contact and better understand the meaning of controlled test
❖ Recommendation on analytical procedures in the audit of Payable items to the seller:
In the process of performing the audit of accounts payable to the seller, the implementation of analytical procedures has not been effective, the working papers have not shown all the procedures that the auditor has done Auditors should apply more thorough analysis procedures so that the audit of Liabilities costs Auditors should perform both trend analysis and rate analysis to be able to see the fluctuation of the seller's payables as well as related criteria Besides, based on the industry indicators announced by state agencies, auditors can learn and analyze effectively
For customers of medium and large scale Auditors may combine basic testing and analytical procedures, but care should be taken to segregate underlying testing so that they maximize their role in providing audit evidence
➢ Ending of the stage audit
To get a complete report, the company should:
❖ Strengthening the review of audit records: by increasing review with all items on the financial statements However, depending on the characteristics of each customer, each item on the financial statements has different materiality, so auditors need to consider to judge how many% of the working papers of each item
❖ Strengthen inspection of operations arising after the accounting year: Auditors combine many audit procedures such as: interview, analysis, comparison, to detect supplier’s liabilities This helps auditors check the timeliness and existence of the supplier’s liabilities
In order to update the latest information sources and foster more professional knowledge for each auditor, the company creates conditions for auditors to participate in professional training sessions or study to get international certificates related to audit profession
Liabilities to suppliers are an extremely important item in evaluating a company's business performance Therefore, verifying the accuracy and truthfulness of information is an indispensable requirement of the person wishing to use the unit's financial statements
During his internship at the Company, was allowed to participate in auditing at a number of customers I have known and understood better about the audit process for supplier's Liabilities, which is a highly liquid item and shows the financial position of the unit From the actual process in the unit, I have partly learned how to prepare the audit program for the client unit, how to plan for each step In addition, when being audited with auditors in the company, I have drawn a lot of experience from working style to how to handle difficulties at work Through what I observed and participated in, I raised a few personal opinions to help the audit process of supplier's Liabilities to be done in the most complete and effective way to provide financial statements to the client
1 Ministry of Finance, General Standard, Decision No 165/2002 / QD-BTC, Ha Noi, 2002
2 Ministry of Finance, Decision No 143/2001 / QD-BTC, Risk assessment and internal control, Ha Noi, 2011
3 Ministry of Finance, Circular 214/2012 / TT-BTC, Audit planning, Ha Noi,
4 Ministry of Finance, Circular 200/2014 / TT-BTC, Guiding the accounting regime for enterprises, Ha Noi, 2014
5 Assoc Prof PhD Phan Thanh Hai - PhD Ho Tuan Vu, "Basic Auditing
6 Thesis of the previous courses
7 Webside: http://www.aisc.com.vn
Appendix 1 – A120: Accept old customer retention and risk assessment of contract
Appendix 3 – A230: Letter to customers about the audit plan
Appendix 4 – A240: List of documents provided by customers
Appendix 5 – A260: Commitment to engagement team member independence Appendix 6 – A290: Discussing with the Board of Directors about the audit plan Appendix 7 – A310: Find out customers and operating environment
Appendix 8 – B410: Summary of audit results
Appendix 9 – B140: Forming an audit opinion
Appendix 10 – B420: Overall analysis of final financial statements
Appendix 11 – B440: Explanatory letter from the Board of Directors
Appendix 12 – E220: Notes to financial statement information
Appendix 13 – E243: Analytical check for accounts payable
Appendix 14 – E244: Collect a summary of liability details
Appendix 15 – E245: Review the ledger, check the arising documents
Appendix 16 – E247: Send confirmation letter and replacement procedure
Appendix 20: Statements of cash flows
Appendix 21: Notes to financial statements
Tên khách hàng: CTY CỔ PHẦN ABC Tên Ngày
Ngày khóa sổ: 31/12/2020 Người thực hiện 1/14/2021
Nội dung: Thông tin thuyết minh báo cáo tài chính Người soát xét 1
1 Thông tin phục vụ thuyết minh báo cáo tài chính
Giá trị Dự phòng Giá trị Dự phòng
Nhà cung cấp trong nước 605.526.000 - - -
Giá trị Số có khả năng trả nợ Giá trị Số có khả năng trả nợ PHẢI TRẢ NGƯỜI BÁN
Nhà cung cấp trong nước 2.362.090.165 2.362.090.165 497.958.000 497.958.000
Nhà cung cấp nước ngoài
2 Giao dịch trọng yếu với các bên liên quan
Mối quan hệ Tính chất giao dịch Nội dung Giá trị (VNĐ)
Phát sinh tăng 160.146.011 Phát sinh giảm 160.146.011
Phát sinh tăng 15.691.752.450 Phát sinh giảm 15.691.752.450
3 Thông tin phục vụ thuyết minh công cụ tài chính:
Cuối kỳ Đầu kỳ Cuối kỳ Đầu kỳ
Công ty CP Kết Cấu Thép Đại
Công ty TNHH Tư vấn Kiến trúc
& Xây dựng Gia Sinh An
Công ty Cổ phần Nhựa Bao bì Ngân Hạnh
Công ty cổ phần hóa chất
Cổ đông Khoản phải trả
Công ty CP Nhựa Bình Minh
Nhựa Bình Minh Miền Bắc
Công ty con của cổ đông lớn
Tên khách hàng: CTY CỔ PHẦN ABC Tên Ngày
Ngày khóa sổ: 31/12/2020 Người thực hiện 1/14/2021
Nội dung: Thông tin thuyết minh báo cáo tài chính Người soát xét 1
1 Thông tin phục vụ thuyết minh báo cáo tài chính
Giá trị Dự phòng Giá trị Dự phòng
Nhà cung cấp trong nước 605.526.000 - - -
Giá trị Số có khả năng trả nợ Giá trị Số có khả năng trả nợ PHẢI TRẢ NGƯỜI BÁN
Nhà cung cấp trong nước 2.362.090.165 2.362.090.165 497.958.000 497.958.000
Nhà cung cấp nước ngoài
2 Giao dịch trọng yếu với các bên liên quan
Mối quan hệ Tính chất giao dịch Nội dung Giá trị (VNĐ)
Phát sinh tăng 160.146.011 Phát sinh giảm 160.146.011
Phát sinh tăng 15.691.752.450 Phát sinh giảm 15.691.752.450
3 Thông tin phục vụ thuyết minh công cụ tài chính:
Cuối kỳ Đầu kỳ Cuối kỳ Đầu kỳ
Kết luận:Số liệu rõ ràng phục vụ thuyết minh BCTC, phục vụ báo cáo lưu chuyển tiền tệ
Công ty CP Kết Cấu Thép Đại
Công ty TNHH Tư vấn Kiến trúc
& Xây dựng Gia Sinh An
Công ty Cổ phần Nhựa Bao bì Ngân Hạnh
Công ty cổ phần hóa chất
Cổ đông Khoản phải trả
Công ty CP Nhựa Bình Minh
Nhựa Bình Minh Miền Bắc
Công ty con của cổ đông lớn
Tên khách hàng: CTY CỔ PHẦN ABC Tên Ngày
Ngày khóa sổ: 31/12/2020 Người thực hiện 1/14/2021
Người soát xét 1 Người soát xét 2 Người soát xét 3
Mục tiêu: Đạt được giải trình hợp lý về các chỉ tiêu phân tích khoản phải trả (Cơ sở dẫn liệu: đầy đủ và chính xác)
Nguồn gốc số liệu: Sổ chi tiết tài khoản 331, báo cáo tài chính
Nội dung Cuối kỳ Đầu kỳ Chênh lệch Ref
331N - Trả trước cho người bán 605.526.000 - 605.526.000 0%
Tổng nợ phải trả ngắn hạn (CĐKT) 35.353.464.962 2.293.913.405 33.059.551.557 1441,19% Tổng nợ phải trả dài hạn (CĐKT) - - - 0,00%
Phải trả người bán/Tổng NPT dài hạn 0,00% 0,00% 0,00%
Phải trả người bán/Tổng NPT ngắn hạn 6,68% 21,71% 5,64%
Cuối kỳ Đầu kỳ này Đầu kỳ trước Chênh lệch Ref
Kết luận: Đạt được giải trình hợp lý về biến động các chỉ tiêu phân tích các khoản phải trả
Số ngày thanh toán bình quân cuối kỳ tăng so với đầu kỳ, do cuối năm đơn vị nhập thêm NVL phục vụ sản xuất kinh doanh và đồng thời giá vốn năm nay tăng tương ứng doanh thu tăng
Nội dung: Kiểm tra phân tích đối với khoản phải trả
Số ngày thanh toán bình quân
Doanh số mua hàng thường niên=(GVHB+HTK cuối kỳ-HTK đầu kỳ)
Vòng quay các khoản phải trả=Doanh số mua hàng thường niên/Bình quân các khoản phải trả