Subject and scope of the thesis- Research subject: The process of auditing NCA items in the audit offinancial statements.- Research scope: + Spatial range: The process of auditing NCA it
MINISTRY OF FINANCE ACADEMY OF FINANCE - - HÀ NGỌC HUYỀN CQ57/22.03CLC GRADUATION THESIS TOPIC IMPROVING THE AUDIT PROCESS OF ACCOUNT NON- CURRENT ASSET IN THE AUDIT OF FINANIAL STATEMENT PERFORMED BY UHY AUDITING AND CONSULTING CO., LTD Major : Auditing Code : 22 Mentors : Assoc Prof Ph.D Thinh Van Vinh Ph.D Dang Thi Huong Ha Noi – 2023 Academy of Finance Graduation Thesis THE PLEDGE “I hereby declare that this is my own research work and that the data and results stated in the thesis or graduation project are truthful and derived from the actual situation of the internship unit.” Thesis author Ha Ngoc Huyen Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis TABLE OF CONTENTS THE PLEDGE i TABLE OF CONTENTS ii LIST OF ABBREVIATIONS vi LIST OF DIAGRAMS vii LIST OF TABLES .viii INTRODUCTION CHAPTER BASIC THEORETICAL ISSUES ABOUT PROCESS OF AUDITING NON- CURRENT ASSETS IN FINANCIAL STATEMENTS AUDIT PERFORMED BY INDEPENDENT AUDIT 1.1 GENERAL OVERVIEWS OF NON-CURRENT ASSET ITEMS IN AUDIT OF FINANCIAL STATEMENTS .4 1.1.1 Definition of Non-current assets .4 1.1.2 Classification of non-current assets 1.1.3 Management for non-current asset 1.1.4 Characteristics of non-current assets affect the audit of financial statements 1.1.5 Internal control over non-current assets at the audited entity 10 1.2 Overview of auditing non-current asset in financial statement audit 14 1.2.1 The meaning of audit of non-current asset items in audit of financial statements 14 1.2.2 Objectives of auditing non-current asset items .15 1.2.3 Basis for auditing non-current assets 16 1.2.4 Common errors during the audit of non-current assets 17 Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis 1.2.5 Survey of internal control over non-current assets in the financial statement audit 19 1.3 The audit process of auditing Non-current assets items in the audit of financial statement 23 1.3.1 The audit planning 23 1.3.2 Audit implementing 33 1.3.3 Audit finalization and reporting 39 CONCLUSION CHAPTER .41 CHAPTER 42 ACTUAL SITUATION OF THE AUDIT PROCESS OF NON- CURRENT ASSETS IN THE AUDIT OF FINANCIAL STATEMENTS PERFORMED BY UHY AUDITING AND CONSULTING CO., LTD 42 2.1 GENERAL INTRODUCTION ABOUT AUDIT AND CONSULTING COMPANY UHY 42 2.1.1 History of establishment and development of UHY Auditing and Consulting Co., Ltd 42 2.1.2 Organizational and management characteristics, operational structure of UHY Auditing and Consulting Co., Ltd 45 2.1.3 Business areas and characteristics of the company's business activities 49 2.1.4 General audit process in auditing financial statements performed by UHY Auditing and Consulting Co., Ltd 53 2.1.5 Quality control an audit 55 2.1.6 Organize audit files .57 2.2 ACTUAL SUTUATION OF THE AUDIT PROCESS OF NON- CURRENT ASSETS IN THE AUDIT OF FINANCIAL STATEMENT PERFORMED BY UHY AUDITING AND CONSULTING COMPANY LIMITED .59 Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis 2.2.1 Overview of the audit of financial statements at XYZ Joint Stock Company .60 2.2.2 Actual solutions of the audit process of non-current assets in the independent audit of financial statements performed by UHY Auditing and Consulting Co., Ltd 67 2.3 GENERAL ASSESSMENT OF THE PROCESS OF AUDITING NON-CURRENT ASSET ITEMS 137 2.3.1 The advantages 137 2.3.2 Limitations 139 2.3.3 Cause of the limitations .141 CONCLUSION CHAPTER .143 CHAPTER 144 SOME RECOMMENDATIONS TO IMPROVE THE PROCESS OF AUDITING NON-CURRENT ASSETS IN THE INDEPENDENT AUDIT OF FINANCIAL STATEMENTS PERFORMED BY UHY AUDITING AND CONSULTING CO., LTD 144 3.1 DEVELOPMENT ORIENTATION OF AUDIT AND CONSULTING COMPANY UHY 144 3.2 NECESSARY TO PERFECT THE NON-CURRENT ASSET AUDIT PROCESS 144 3.3 PRINCIPLES AND REQUIREMENTS FOR COMPETING THE NON-CURRENT ASSET AUDIT PROCESS 146 3.3.1 Perfection Principle .146 3.3.2 Complete request 146 3.4 SOME SOLUTIONS TO IMPROVE THE PROCESS AND METHODS OF AUDITING NON-CURRENT ASSETS IN FINANCIAL STATEMENTS AUDIT BY UHY AUDITING AND CONSULTING CO., LTD 147 Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis 3.4.1 During the planning phase .147 3.4.2 During the audit 149 3.4.3 In the stage of summarizing the audit results, closing and preparing the audit report 152 3.5 CONDITIONS FOR IMPLEMENTING SOLUTIONS 153 3.5.1 On the side of State agencies 153 3.5.2 Towards the Professional Association 153 3.5.3 On the side of UHY Auditing and Consulting Co., Ltd and auditor .153 3.5.4 On the side of the audited client .154 CONCLUSION OF CHAPTER 155 CONCLUSION 156 LIST OF REFERENCES 157 Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis BOD LIST OF ABBREVIATIONS BS Board of Directors COGS Balance sheet CR Cost of gold sold CRA Control risk FS Combined Risk Assessment IC Financial Statements ICS Internal control IR Internal control system MP Inherent risk NCA Monetary precision PM Non-current assets Planning materiality Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis LIST OF DIAGRAMS Diagram 2.1: Organizational structure of UHY Vietnam .47 Diagram 2.2: The main services of the company 51 Diagram 2.3: Audit process by Auditing and Consulting Company Limited UHY implement 54 Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis LIST OF TABLES Table 1.1 Control activities and test of controls 12 Table 2.1: Reference symbols of audit administrative sections 58 Table 2.2: Acceptance, retention of old customers and evaluation of contract risks .61 Table 2.3: Understanding customers and operating environments .68 Table 2.4: Understanding accounting policies and key business cycles .73 Table 2.5 Internal control Preliminary Assessment Questionnaire for XYZ 78 Table 2.6: Preliminary analysis of financial statements 81 Table 2.7: Risk assessment of NCA 83 Table 2.8: Determining the level of materiality 85 Table 2.9: Summarizing audit results 86 Table 2.10: Set up a non-current asset audit program 89 Table 2.11: Test kill check check Contents ministry for with clause entry NCA .99 Table 2.12 Survey questionnaire on internal control system 101 Table 2.13 Analytical procedures .103 Table 2.14 Summary, compare data 107 Table 2.15 Reciprocal analysis of non-current assets 111 Table 2.16 Reciprocal analysis of Wear and Tear Non-current assets 115 Table 2.17 Test of detail Opening Balance 118 Table 2.18 Inventory of NCA 119 Table 2.19 Test of detail increase of Tangible Non-current assets 121 Table 2.20: Check the reasonableness of depreciation expenses 125 Table 2.21 Test of details, calculate and record depreciation of NCA in the period 127 Table 2.22 Check for correctness .132 Table 2.23 Give general comments about the account .134 Table 2.24 Audit meeting minutes .136 Ha Ngoc Huyen CQ57/22.03CLC Academy of Finance Graduation Thesis INTRODUCTION The urgency of the topic Auditing activity in the world has a history of more than 100 years, but in Viet Nam, this activity only appeared in the early 90s Enterprises that want to develop well need to improve management quality in which accounting plays an important and decisive role Auditing always goes hand in hand and is a continuation of accounting activities If accountants are responsible for organizing the collection, processing and provision of information, the audit is the confirmation of the truthfulness and fairness of the financial statements then proposing to improve management processes and effectively serve those who need to use accounting information Auditing of Non-current asset (NCA) plays a very important role in the production and business process of an enterprise Moreover, the NCA item on the balance sheet usually accounts for a large proportion, so errors in this item often have a material impact on the financial statements of the enterprise Errors in NCA can affect many other items on the financial statements Therefore, the audit of NCA is often one of the important parts of the audit of financial statements Aware of the importance of this item audit, I went deep into the audit of NCA in the financial statements audit by UHY Auditing and Consulting Co., Ltd (UHY) In order to effectively audit this item, UHY has developed a rigorous audit process On the basis of the audit program that has been built, all work is done seriously and closely supervised, contributing to minimizing possible errors and improving the quality of audit activities However, I realize that there are still certain limitations in the process of auditing NCA by UHY Therefore, I have chosen the topic: I"mproving the process of auditing non-current asset in the audit of financial statements performed by UHY Auditing and Consulting Co., Ltd"to carry out my graduation thesis The main objective of the thesis Ha Ngoc Huyen CQ57/22.03CLC