Improving the audit of tangible fixed assets in financial statement audits performed by ha thanh audit company limited

BANKING ACADEMY OF VIETNAM FACULTY OF ACCOUNTING AND AUDITING ---o0o---- GRADUATION THESIS Topic: IMPROVING THE AUDIT OF TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS PERFORMED B

BANKING ACADEMY OF VIETNAM FACULTY OF ACCOUNTING AND AUDITING

-o0o

GRADUATION THESIS Topic:

IMPROVING THE AUDIT OF TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS PERFORMED BY

HA THANH AUDIT COMPANY LIMITED

Student name : Nguyen Thi Bang An Student code : 23A4020514

Major : Accounting – Auditing

Instructors: : Assoc Prof Dr Le Thi Thu Ha

Hanoi, May 2024

DECLARATION

I hereby declare that this thesis is an original report of my own experience, and has been written myself; therefore, the research contents in this graduation thesis are honest, and have not been published under any other forms nor submitted at a different place

The data that was used in the tables for analysis, explaining and evaluating are collected by the author from multiple sources, which are disclosed legibly in the reference section

Additionally, the thesis is also supported logically by citing a number of opinions, judgments, and data from other authors, agencies and organizations, in which the sources are clearly stated

In the case where any plagiarism is found, I will take full responsibility for the content of my thesis The Banking Academy of Vietnam is not related to the copyright violations caused by the author during the process (if any)

Hanoi, April 2024 Author

Nguyen Thi Bang An

THANK YOU

I would like to express my deepest appreciation to the instrustors at Banking Academy, who have always dedicately teaching, imparting the essence of accounting and auditing, as well as related skills needed to not only successfully complete the internship, but also prepare myself in the job market During the thesis writing process, I would like to dedicate my sincere thanks to Assoc Prof Dr Le Thi Thu Ha for always helping me and leading me to the completion

I want to send my greatest gratitude to the members of the Auditing Department of Ha Thanh Audit Company Limited for guiding me on how to apply the knowledge learned in university in a proactive and creative way, pointing out my shortcomings in the actual audit process, and creating the best possible conditions for

me to develop my own abilities

In conclude, with a boundless respect and gratitude, I’m grateful and wish for all the teachers of the Banking Academy along with the seniors, juniors, colleagues

in Ha Thanh Audit Company Limited to be healthy and to achieve more brilliant successes in their career

TABLE OF CONTENTS

DECLARATION i

THANK YOU ii

LIST OF ABBREVIATIONS vi

LIST OF TABLES, DIAGRAMS vii

INTRODUCTION viii

1 The necessity of the topic 1

2 Literature review 2

3 The objective of the study 4

4 Research object and scope 4

5 Research questions 5

6 Research methodologies 5

7 Overall structure of the graduation thesis 5

CHAPTER I THEORETICAL BASIS OF THE AUDIT OF TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS PERFORMED BY INDEPENDENT AUDITORS 6

1.1 Overview of fixed assets 6

1.1.1.The concept and characteristic of tangible fixed assets 6

1.1.2 Accounting for tangible fixed assets 9

1.1.3 Risks of fraud or errors relating to tangible fixed assets 15

1.1.4 Internal control for tangible fixed assets 16

1.2 Overview of the audit of tangible fixed asset in financial statement audits 17 1.2.1 The necessity of auditing tangible fixed assets 17

1.2.2 The objectives of auditing tangible fixed asset 18

1.2.3 The basis for auditing tangible fixed assets 19

1.3 The process of auditing tangible fixed asets in financial statement audits 20 1.3.1 Audit planning 20

1.3.2 Audit fieldwork 25

1.2.3 Audit review and finalization 28

CONCLUSION OF CHAPTER I 30

CHAPTER II THE PRACTICE OF AUDITING TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS PERFORMED BY HA THANH COMPANY LIMITED 31

2.1 General overview of Ha Thanh Audit Company Limited 31

2.1.1 The process of formation and development 31

2.1.2 Characteristics of business activities 31

2.1.3 Organization management apparatus 32

2.1.4 General audit process that was performed in Ha Thanh Audit Company Limited 32

2.1.5 Audit quality control of Ha Thanh Audit Company Limited 34

2.2 The practice of the audit of tangible fixed assets in financial statement audits performed by Ha Thanh Audit Company Limited 36

2.2.1 The audit process of tangible fixed assets in financial statement audits performed by Ha Thanh Audit Company Limited 36

2.2.2 The audit process of tangible fixed assets in an financial statement audit performed by Ha Thanh Audit Company Limited at a client 44

2.3 Evaluation of the tangible fixed asset audit process in financial statement audits conducted by Ha Thanh Audit Company Limited 67

2.3.1 Strengths 67

2.3.2 Shortcomings 69

2.3.3 Reasons 72

CONCLUSION FOR CHAPTER II 73

CHAPTER III IMPROVING AUDIT OF TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS PERFORMED BY HA THANH AUDIT COMPANY LIMITED 74

3.1 Development orientation of Ha Thanh Audit Company Limited and the necessity for improving the audit process of tangible fixed assets in financial statements audits 74

3.1.1 Development orientation of Ha Thanh Audit Company Limited 74

3.1.2 The necessity for improving the audit process of tangible fixed assets in financial statements audits 74

3.2 Recommendations to improve the audit of tangible fixed assets in financial statement audits performed by Ha Thanh Audit Company Limited 75

3.2.1 During the audit planning stage 75

3.2.2 During the audit implementation phase 77

3.2.2.1 Test of controls 77

3.2.3 In the finalishing stage 79

3.3 Factors that affect the improvements of the audit process of tangible fixed assets item in auditing financial statements at Ha Thanh Audit Company Limited 80

3.3.1 Recommendations to the government and competent agencies 80

3.3.2 Recommendations to the accounting and auditing associations 80

3.3.3 Recommendations to the company 81

3.3.4 Recommendations to auditors 81

3.3.5 Recommendations to the clients 81

CONCLUSION FOR CHAPTER III 82

CONCLUSION 83

REFERENCE 84

LIST OF ABBREVIATIONS

Ori cost Original cost (Acquisition cost)

LIST OF DIAGRAMS

Diagram 1.1 Accounting for increased fixed assets from outside purchases 12

Diagram 1.2 Accounting for the increase in fixed assets due to completed

Diagram 2.1 Management apparatus in Ha Thanh Audit Company Limited 32

Diagram 2.2 General audit process in Ha Thanh Audit Company Limited 33

Diagram 2.3 Audit quality control of Ha Thanh Audit Company Limited 34

Diagram 2.4 Risk assessment of Ha Thanh Audit Company Limited 37

LIST OF TABLES

Table 2.1 Audit Strategy based on the overall risk assessment 38

Table 2.2 Ha Thanh Audit Co Ltd Materiality Assessment Table 39

Table 2.3 Ha Thanh’s internal control research on ABC Co Ltd 46

Table 2.4 Ha Thanh Audit Co Ltd’s materiality selection for ABC Co

Table 2.5 Ha Thanh audit program for ABC Company Limited 51

Table 2.6 Ha Thanh’s FA internal control research on ABC Co Ltd 54

Table 2.7 Example of counting fixed assets report in D733 56

Table 2.8 Example of recording fixed assets counting report in

Table 2.9 Balance of accounts of fixed assets before and after the

Table 2.12 Working papers on analysing the change 61

Table 2.15 Working papers on the opening balance of acc dep 63

Table 2.16 Test of details of the decrease of constructions in progress

Table 2.17 Test of details of the increase of fixed assets due to

Table 2.18 Test of details of the disposal of ABC Company Limited 64

Table 2.19 Sample of recalculation of fixed assets depreciation

Table 2.20 Check the calculation and allocation of costs in the period 65

Table 3.1 Reference of materiality correction factor 78

INTRODUCTION

1 The necessity of the topic

Even though it has been 2 years since the peak of the global epidemic

COVID-19, some enterprises still haven’t able to reclaime what was lost during those times Furthurmore, with the rising wave of automatic, as well as other technology trends, and utmost the unstable political situation at the moment, though the enterprises in Vietnam haven’t taken effect from those directly, but it’s necessary to prepare themselves in case of one of the formentioned situation take a wrong turn

In order to enhance the enterprises’ competitiveness, operational effeciency, stability as well as improve the management quality, auditing is an essential need for the business Nowsaday, auditing has become a specialized field, a “lighthouse” that shows the enterprises the hidden risk under the business flows, and guides them to their compromising destination In Vietnam, the beginning of independant auditing activity in Vietnam started by the month of May 1991, where two auditing firms was first established Throughout the 30 years journey, witnessing the ups and downs of the economic flucuations, audit activities have then been recognized by the society as

an indispensable service, protecting the honesty and rationality of the financial statements With that responsibility put in hand, the auditors then work and issue the audit report – which could be said as a trustworthy reflection of the business activities,

in order to let the users to be able to make their accurate decisions, along with improve the overall of the Vietnam’s economic picture

Among the audited items during a job, the fixed assets of an enterprise acts as

a respresentative of the business’s internal strength, which means, by looking at the report in the fixed assets, the users will get a grasp of how the production works, their capacity, their scientific development, their economics position and so on In addition, fixed assets play a key role in determining a sustainable and long term development

of the enterprises In reality, in the asset structure of a business, fixed assets always account for a large proportion, which means the ability to effectively holding and managing fixed assets is not only maintain a sustainable production, but also allow the business entity to expand their scale of operations As the result, in order to show

a promising business potential, thereby attracting investment funds, some data relating to the fixed assets may have been altered, for example frauds such as: exaggerating asset values, understating depreciation costs of fixed assets, With the truth that transactions related to fixed assets are of high value, once a fraud takes

place in this audit units, it might affect the entity, as well as the investment thoughts

of the users

Taking all of the previous mentioned into consideration, along with the months spending as an intership in Ha Thanh Audit Company Limited, the author decide to opt for “Improving the audit of fixed assets in financial statement audits performed

by Ha Thanh Audit Company Limited” as the topic of my graduation thesis

2 Literature review

In an era defined by rapid globalization, technological innovation, and unprecedented global challenges, both naturally and artificially, the importance of studying a company’s economic conditions from its financial statements has never been more pertinent In 2020s, the new decaded where a bright potential economic development was promised, was marked by the influence of factors ranging from the aftermath of COVID-19 pandemic Even in the current flow of the market, there’re still companies that hasn’t heal completely from the economic consequence it brought

to In another development, the political and economic situation of several countries trading with Vietnam is showing signs of heating up again Combining the factors as mentioned above, and other elements, the importance of the audit industry, a reliable and solid support for users to refer to and develop a stable economic industry, is more consolidated than ever Every single item shown on the financial statements is being audited so the users can assess the most trustful and objective view in regard to the economic status of a company, therefore decide the correct financial decisions Among these items, especially in whose industry is producing, the fixed assets item can greatly affected by the economic environments, as well as easily affect the financial statements if any material misstatements found

Realizing the importance of fixed asset, over the past many years, auditing firms have continuously made efforts and perfected issues related to the audit process

of this item Every year, this issue is also mentioned a lot in research projects, both international and dosmestic, from the firms themselves as well as the researchers

In 2022, a research named “Audit Of Fixed Assets Of The Enterprise:

Organizational and Methodological Aspect” carried by Chuchkevych, Pylypenko,

Bunda, has explored the significance of fixed assets within a company, delving into the complications of organizing and auditing them By using the methodological method, the authors had emphasized the importance of application of scientific methods such as analysis, synthesis, generalization, and induction in auditing fixed

assets On the other hand, since the approach is methodological method, the researchs

is lack of concrete evidences, without focusing on a specific industry nor clients Showing the same limitations, a research carried by Klychova et al in 2017,

“Developing an audit system for business activities with fixed assets as a tool to

improve the efficiency of social activities of enterprises” had developed pragmatic

suggestions in regard to use the fixed asset audits as a tool that can improve the company’s performance Using a systematic approach with deductions and comparisions, based on the collected audit evidence, the authors have not only shown how a fixed asset affect the enterprises, but also given a more detailed analytical procedures in fixed asset audit, which Ha Thanh Audit Co Ltd has not reached

During the research process, the author also encountered with some of the research regarding to the changes in the accounting standards that would take place

in a few more years The theory comes from “Improving accounting for tangible fixed

assets in Vietnamese enterprises in the context of international integration” (Nguyen

Thi Thu Lien, 2009) and “Evaluate the differences between Vietnamese Accounting

Standards (VAS) and the International Financial Reporting Standards (IFRS) that impact the audit process of auditing fixed assets item in financial statements audit”

(Nguyen Khanh Duy Anh, 2021) has give me a boarden mindset, as well as understanding about the significant changes that would come when Vietnam applied IFRS compulsorily

Simultaneously, as the fixed assets audit topic is no longer a distinctive topic, the number of studies done by the universary students as their thesis are considerably

large “Audit process of fixed assets items and fixed assets depreciation cost in

financial statement audit in Global Auditing And Financial Consultancy Company Limited” (Le Duc Khoa, 2019) has highlighted the theory and current situation in the

process of auditing fixed assets items performed by Global Auditing And Financial Consultancy Company Limited The thesis first provided general theories about fixed assets and the audit process for this item, then relied on internship experience at the unit to make objective assessments Sharing the same pattern, but different in auditing firms, as well as the depth of the topic, work of scientific researchs related to this

topic, such as: “Improving auditing tangible fixed assets in financial statement audits

performed by Ersnt & Young Vietnam Company Limited” (Hoang Dinh Thanh, 2021),

“Audit of tangible fixed assets in financial statement audit performed by CPA Vietnam

Auditing Company Limited” (Nguyen Ngoc Diep, 2022), “Improving the audit of tangible fixed assets in financial statement audits performed by UHY Auditing and

Consulting Company Limited” (Nguyen Quynh Anh, 2022), “Enhancing the process

of Auditing Fixed assets in Auditing financial statements implemented by SCS Global Audit Company Limited” (Nguyen Huy Dinh, 2023), Regardless the local Vietnam

firm or international auditing firm, the process of auditing fixed assets all have a certain level of perfection, but there are still many shortcomings, whose solutions was recommended in these thesis

In conclusion, although the strengths and weaknesses and solutions have been given for each unit in the thesis, the current situation still calls for other solutions to improve these procedures, as such, the author hope to be able to inherit and promote previous studies

3 The objective of the study

The objective of the thesis includes 3 parts, corresponding to the 3 major headings in the thesis:

First, the author will systemize the basic theory in regarding to the tangible

fixed assets audit process in financial statement audits performed by the independent auditors

Second, the author will present the general audit process in tangible fixed

assets and demonstrate the practical analysis of auditing the fixed assets in financial statement audits performed by Ha Thanh Audit Company Limited, thereby evaluate the firm’s strengths, limitations and causes

Third, on the basis of the discovered limitations and identified related causes,

the author will suggest some recommendations to improve the audit process of tangible fixed asets items in the audit of financial statements carrying on by Ha Thanh Audit Company Limited

4 Research object and scope

- Reseach object: the thesis will focus on the theoretical basis and practical

application of auditing the tangible fixed assets items in financial statement audits performed by Ha Thanh Audit Company Limited

- Scope of the study: The tangible fixed asset audit process performed by Ha

Thanh Audit Company Limited, and the practice of auditing fixed assets at a specific client, naming ABC Company Limited in the fiscal year of 2023

5 Research questions

The thesis will focus on answering three main questions:

- What are the general theoretical basis related to the tangible fixed assets item, and how an independent financial statement audit relating to tangible fixed assets works?

- How is the practice of tangible fixed assets audit performed by Ha Thanh Audit Company Limited in overall and in ABC Company Limited in particular? What are their achievements and limitations?

- In order to improve the auditing of tangible fixed assets of Ha Thanh Audit Company Limited, what recommendations should be made for both the company and the related factors?

6 Research methodologies

- Theoretical research methods: Methods of analyzing and synthesizing

theories, comparing and generalizing the problem by collecting the theories, regulations in regard to fixed assets audit, along with the secondary and primary on auditing fixed assets performed by Ha Thanh Audit Company Limited

- Practical research methods: observations and document analysis method

using the references from the firm’s archives and pratical experince in conducting the audit of fixed assets at ABC Company Limited

7 Overall structure of the graduation thesis

In addition to the introduction, conclusion, list of references, the structure of the thesis consists 3 main chapters:

Chapter I Theoretical basis of the audit of tangible fixed assets in the financial statement audit performed by independent auditors

Chapter II The practice of the audit of tangible fixed assets in the financial statement audit performed by Ha Thanh Audit Company Limited

Chapter III Improving audit of tangible fixed assets in financial statement audits performed by Ha Thanh Audit Company Limited

CHAPTER I THEORETICAL BASIS OF THE AUDIT OF TANGIBLE FIXED ASSETS IN

FINANCIAL STATEMENT AUDITS PERFORMED BY INDEPENDENT AUDITORS 1.1 Overview of tangible fixed assets

Fixed assets, escpecially tangible fixed assets, can be considered as the back bone of the company When the third parties take a look into the them, they can determine whether the business is working properly or not, based on which assets the company is holding As the result, it is needed to understand the importance of the fixed assets, the parts it play, as well as the correct treatment for fixed assets in order

to review it as objective as possible during an audit of financial statements

1.1.1 The concept and characteristic of tangible fixed assets

1.1.1.1 The concept of fixed assets

In common knowledge, the fixed assets is defined as assets which are purchased for long-term use and are not likely to be converted quickly into cash, such

as land, buildings, and equipment This definition is quite close to the definition by the people whose major is in the economic field, which is: Fixed assets are the main instrucments of labor, a type of assets has great value, with a greater than one year or

a business cycle of use, rotation and recovery period According to the Vietnam Law, the fixed assets are presented on the balance sheet in ‘Section B Long term assets, Item II Fixed assets’ include: tangible fixed assets, financial lease fixed assets, and intangible fixed assets

The fixed assets are pursuanted to the International Financial Reporting Standards (IFRS) on tangible fixed assets “Property, plant and equipment” (IAS 16), intangible fixed assets “Intangible asset) and fixed assets finance lease “Leases” (IFRS 16), along with the Vietnamese Accounting Standards (VAS) on tangible fixed assets (VAS 03), intangible fixed assets (VAS 04) and leases (VAS 06) Currently, the common standards that are applied in the Vietnamese companies, as well as the auditing firm in Vietnam is VAS

According to the Circular 45/2014/TT-BTC issued on April 25th 2014, the fixed assets are divided into two main groups, which named tangible fixed assets and intangible fixed assets

- Tangible fixed assets:

Based on VAS 03 regarding the tangible assets: “Tangible fixed asets are assets

in physical forms which are possessed by the enterprises for use in producions and business activities in conformity with the recognition critiriaa of tangible fixed assets.”

In accordance to the latest document on tangible asets, Circular BTC issued on April 25th, 2014 stated: “Tangible assets are the main means of labor that have a physical form that meets the standards of fixed assets, participate in more than 1 business cycles, but still retain their original physical form, such as buildings, architectural objects, machinery, equipment, means of transport, ”

45/2014/TT-In the forementioned document, in order to be recognised as a tangible fixed assets, the asset must fulfilled the 4 following criterias at the same time:

+ Certainty of future economic benefits from using that asset

+ The acquisition cost of the asset must be determined reliably

+ Estimated usage time is over 1 year

+ The value corresponds with the current regulations In respond to the Circular 45/2014/TT-BTC issued on April 25th, 2014 by the Ministry of Finance, Clause 1c, Article 3: “The historical cost of assets must be determined reliably and has a minimum value of 30.000.000 VND (thirty million VND)

In accordance with Point a, Clause 1, Article 6 of Circular 45/2014/TT-BTC, the tangible fixed assets are classified as follows:

+ 1: Housings, architectual objects

+ 2: Machinery and equipment

+ 3: Means of transport, transmission equipment

+ 4: Management equipment and tools

+ 5: Perennial garden, domestic animals for labour or products

+ 6: Other types of tangible fixed assets

- Intangible fixed assets:

As stated in VAS 04, intangible fixed assets are “Assets that have no physical form, but the value of which can be determined and are held and used by the enterprises in either their production, business, service provision or leased to other subjects in conformity with the recognition criteria of intangible assets.”

The criterias that must be fulfilled in order to be recognised as an intangible fixed assets is the same as that of tangible fixed assets

- Leased fixed assets:

Other than two forementioned types, during an practical audit, the auditors may also encounter with leased fixed assets

As VAS 06 “Leases” stated: “Finance leased fixed assets are fixed assets that have been transferred by the lessor to the lessee, with most of the benefits and risks associated with ownership of the asset; the ownership of the property can be transferred at the end of the lease term.”

1.1.1.2 The role of tangible fixed assets

Fixed assets in overall, especially tangible fixed assets, are an item of great value, often accounting for a significant proportion of total assets on the Balance Sheet Information related to fixed assets indicators includes information on original price, accumulated depreciation value, and fixed assets In addition, depreciation costs of fixed assets will be calculated as reasonable costs and allocated to corresponding cost items reflected on the business statement The proportion of fixed assets in total assets depends on the nature of each type of business, the specifics of the industry, and the potential of the business For manufacturing enterprises, the value of this item can account for more than 50% of the total assets, for example the enterprises work in heavy industries

However, auditing fixed assets usually does not take much time, because:

- The quantity of fixed assets is usually low, but each object often has great value

- The number of transactions increasing/decreasing fixed assets during the year

is relatively small considering other items

- The issue of closing books at the end of the year is not as complicated as that

of short-term assets because the possibility of errors in recording fixed asset transactions between periods is usually not high

Fixed assets need to be reflected on financial statements at net value, that is, its remaining value However, accounting standards and regulations also require the original price and accumulated depreciation value to be reflected simultaneously Therefore, the process of auditing fixed assets items is associated with checking depreciation costs

Fixed assets’ depreciation costs have some outstanding characteristics compared to other types of costs:

- First, it is an accounting estimate instead of an actual cost incurred with

issued invoices and accompanying documents It essentially depends on three factors: original price, estimated liquidation value and useful life of the asset Original price

is an objective factor, whereas liquidation value and useful life are based on the company's estimate, so the audit of depreciation costs is essentially a recheck of the business's accounting estimates, recalculating based on available asset information to see if the depreciation level up to the present time has been achieved correct and reasonable or not

- Second, the depreciation cost of fixed assets is the systematic allocation of

the original price after deducting the estimated liquidation value, so in the end, depreciation costs are also influenced by the depreciation method that the enterprise uses Therefore, auditing the depreciation expense item also has the nature of checking how the accounting method is applied in the enterprise

1.1.2 Accounting for tangible fixed assets

- Required documents:

According to Circular 200/2014/TT-BTC- Guidance on corporate accounting regime to monitor fluctuations in quantity, quality and value of fixed assets To closely monitor the use, liquidation and major repairs of fixed assets, accountants can use the following documents:

+ Fixed asset receipt report (Form No 01 – Fixed assets)

+ Minutes of liquidation of fixed assets (Form No 02 – Fixed assets)

+ Handover report of fixed assets for completed major repairs (Form No 03 – Fixed assets)

+ Minutes of re-evaluation of fixed assets (Form No 04 – Fixed assets) + Fixed assets amounts on hand record (Form No 05 – Fixed assets)

- Fixed assets depreciation calculation and allocation table (Form No 06 – Fixed assets)

These documents are for reference only and are not required Depending on the type and scale of the enterprise, the completeness and complexity of the system

of accounting documents on fixed assets used may vary

- Related account:

+ Account 211 – Tangible fixed assets: This account is used to reflect the

current value and fluctuations of all tangible fixed assets of the enterprise at their acquisition cost Account 211 has 6 level 2 accounts

Account 2111 - Houses, architectural objects

Account 2112 - Machinery and equipment

Account 2113 - Means of transport and transmission

Account 2114 - Management equipment and tools

Account 2115 - Perennial crops, working animals and products

Account 2118 - Other fixed assets: Reflects the value of other types of fixed

assets not yet reflected in the above accounts

+ Account 214 – Depreciation of fixed assets: Reflects the increase and

decrease in depreciation value and accumulated depreciation value of fixed assets and investment real estate (investment real estate) during use due to depreciation depreciation of fixed assets, investment real estate and other increases and decreases

in depreciation of fixed assets and investment real estate Account 214 has 4 level 2 accounts:

Account 2141 - Depreciation of tangible fixed assets

Account 2142 - Depreciation of finance lease fixed assets

Account 2143 - Depreciation of intangible fixed assets

Account 2147 - Depreciation of investment real estate

+ Account 241: Reflects the costs of implementing capital construction

investment projects Due to the relationship between this account and the fixed assets, the auditors in charge of fixed assets are often found to be responsible for this account Account 241 has 3 level 2 accounts:

Account 2411 - Fixed assets prior to commissioning

Account 2412 - Construction works

Account 2413 - Major repairs of fixed assets

- Fixed asset accounting method:

Account 211 - Tangible fixed assets: According to Clause 3, Article 35,

Circular 200/2014 on “Guidelines for corporate accounting regime” issued by the Ministry of Finance:

- In case of recording an increase in fixed assets:

+ Accounting for increased fixed assets from outside purchases:

In which, the acquisition cost of fixed assets:

According to Article 5, VAS 03 on "Tangible fixed assets" and Article 6, VAS

04 on "Intangible fixed assets": The original price can be understand as the total costs that an enterprise spends to gain the fixed asset under its ownership, up to the time the asset is put into a ready-to-use state

s

+

Taxes &

fees (excluding the refundable taxes)

+

Direct costs (the costs needed for the FA to

be to-use)

ready-+ Other expenses (if reasonable)

Diagram 1.1 Accounting for increased fixed assets from outside purchases

(Source: Thien Ung Accounting Circular 200 Ministry of Finance)

+ Accounting for the increase in fixed assets due to completed constructions

in progress:

Diagram 1.2 Accounting for the increase in fixed assets due to completed

constructions in progress

(Source: Thien Ung Accounting Circular 200 Ministry of Finance)

- Disposal and sale of fixed assets:

Diagram 1.3 Disposal and sale of fixed assets

(Source: Thien Ung Accounting Circular 200 Ministry of Finance)

+ Fixed asset count detect excess:

Diagram 1.4 Fixed asset count detect excess

(Source: Thien Ung Accounting Circular 200 Ministry of Finance)

+ Fixed asset count to detect shortages:

Diagram 1.5 Fixed asset count to detect shortages

(Source: Thien Ung Accounting Circular 200 Ministry of Finance)

Account 214 - Depreciation of fixed assets: According to Clause 3, Article

38, Circular 200/2014 on "Guidelines for corporate accounting regime" issued by

the Ministry of Finance:

- Depreciation of fixed assets:

According to Article 5, VAS 03 on "Tangible fixed assets", "Depreciation of fixed assets is the systematic allocation of the depreciable value of tangible fixed assets throughout the useful life of the fixed asset"

According to Article 32, VAS 03 on "Tangible fixed assets", there are "Three methods of depreciation of tangible fixed assets, including: straight-line depreciation method; reducing balance depreciation method; Depreciation method based on product quantity.”

Diagram 1.6 Depreciation of fixed assets

(Source: Thien Ung Accounting Circular 200 Ministry of Finance)

1.1.3 Risks of fraud or errors relating to tangible fixed assets

Existence

Not conducting physical count, not monitoring the status of unused fixed assets, waiting for disposal, or damaged

The actual amounts on hand of fixed assets is no longer present

Actual fixed asset count discovered that fixed assets are houses and structures that no longer exist but haven’t been demolished, machinery and equipment, equipment and furniture have been disposed but

on the asset book are still monitored and depreciated if there is any remaining value

Machine A was broken and removed, but in the accounting books it is still recorded and calculated for monthly depreciation

Completeness

Fixed assets are ready for use but have not been recorded in the accounting books

No decrease in fixed assets is recorded when liquidating and selling during the period Expenditures for upgrading fixed assets are eligible for recording

an increase in original price but are not recorded as increasing in original price

Machine A is equipped with improved equipment, helping

to increase the machine's operating efficiency many times compared to before the

renovation, but the company does not record this change

in its original price

Right and Obligation

Operating lease assets are recorded as fixed assets of the Company

Fixed assets are vehicles owned

by individuals but are reflected in the Company's accounting books

The car owned by

Mr A personally is tracked and

recorded by the company as a fixed asset of the

depreciation period does not match the useful life of the asset Customer deduction does not match the date of putting into use

or liquidation date; therefore the eduction from liquidated fixed assets does not match

Upgrade fixed assets but do not recalculate the depreciation period

The company does not record the original price at the correct exchange rate but records it at the commonly recorded exchange rate (not the

average exchange rate)

1.1.4 Internal control for tangible fixed assets

Effectiveness

The department that manages and uses fixed assets must be separate from the department that records and accounts for fixed assets

The set of records on fixed assets is real and guaranteed to be fully archived

Completeness

Each fixed asset is separately tracked by a complete set of documents and records from purchase, put into use until liquidation

Fixed assets are guaranteed to be fully monitored, managed and accounted for

Rights and obligations

Fixed assets are owned, managed and accounted for

by the enterprise, recorded on the accounting balance sheet, non-owned assets are tracked separately

Accuracy

All documents related to the purchase, sale and liquidation of fixed assets are fully gathered and stored in the accounting department to manage and collect the original price, calculate depreciation, record revenue and expenses fees, of activities related to assets

Timeliness Recording and accounting are guaranteed to be

timely, as soon as transactions arise

Classification and

presentation

Enterprises have specific and detailed regulations for the classification of fixed assets to suit management requirements

Regulations on the order of recording accounting transactions related to fixed assets from detailed books to general books

1.2 Overview of the audit of tangible fixed asset in financial statement

audits

1.2.1 The necessity of auditing tangible fixed assets

Auditing fixed assets is indispensable for businesses to maintain accurate financial records and ensure accountability and transparency Fixed assets, such as property, equipment, and machinery, constitute a considerable portion of a

company's assets and play a crucial role in its operations and long-term success Audits of fixed assets helps the companies verify their existence, condition, and value, mitigating the risk of errors, fraud, and misappropriation Furthermore,

auditing fixed assets is essential for compliance with regulatory requirements and financial reporting standards, fostering trust among stakeholders and enhancing the organization's reputation By conducting comprehensive audits of fixed assets, businesses can safeguard their financial integrity, improve decision-making

processes, and demonstrate their commitment to sound corporate governance

practices

1.2.2 The objectives of auditing tangible fixed asset

Based on Vietnamese Auditing Standard No 200, the goal of auditing the fixed assets item is about the auditor collects all appropriate evidence, thereby providing confirmation about the reliability of the related financial information At the same time, it also provides relevant document information as a reference when auditing other related operations To achieve such general goals, auditors must achieve specific goals regarding fixed assets The specific goal regarding fixed assets is that the auditor must collect sufficient evidence to prove that the databases related to economic operations and fixed asset account balances are honest and reasonable, reflect the true economic nature and are appropriate compatible with the business characteristics of the enterprise

- In regard to the transactions:

+ Occurrence: Transactions directly related to the process of changing the

amount of fixed assets recorded in the books represent the number of fixed assets transactions during the period The operation of transferring fixed assets has recorded

a book representing the number of fixed assets transferred from one place to another

or from one place to another

+ Completeness: All transactions of purchasing, transferring and liquidating

and selling fixed assets that occurred during the period have been reflected in the books and financial statements

+ Accuracy: Transactions of increase, decrease, and transfer of fixed assets

during the period are all recorded with the correct value, correct accounting, and the cumulative amount and transfer are correct

+ Timeliness: All transactions related to fixed assets are recorded on time, on

an accrual basis

+ Classification: Fixed assets are recorded and tracked on the correct

accounting account

- In regard to the balances:

+ Existence: Fixed assets reflected on the accounting balance sheet actually

exist

+ Completeness: All existing fixed assets at the date of establishment of the

Board of Directors have been fully presented on the Board of Directors

+ Rights and obligations: Enterprises have ownership and control rights

related to fixed assets

+ Valuation and allocation: Fixed assets are recorded at appropriate values on

the basis of current (or accepted) accounting standards and regimes, changes in valuation and allocation are properly recorded and fully explained

1.2.3 The basis for auditing tangible fixed assets

Existence

Assets that do not actually exist in the business or have been sold to another party

Completeness

Assets purchased or liquidated during the year have been fully recorded in the enterprise's books

Valuation

Assets have been recorded at their correct value equal to acquisition cost minus accumulated depreciation Change in assets are also recorded accurately

Rights and obligations

The enterprise has rights to the assets purchased and the assets are recorded

at the end of the fiscal year

Classification and understandability Assets were recorded in the correct

accounts, costs that did not qualify for

capitalization were accounted for as expenses

Presentation and disclosure

Information related to original price, new purchase, liquidation, depreciation period and depreciated value of assets have been fully disclosed in accordance with current standards

1.3 The process of auditing tangible fixed asets in financial statement audits

The process of auditing fixed assets items in auditing financial statements is divided into 3 main stages as follows: audit planning stage, audit fieldwork stage and audit review and finalization stage

1.3.1 Audit planning

1.3.1.1 Objectives

- To collect sufficient and appropriate audit evidence to minimum the risk if taken the contract

- Ensure the cost of the audit is reasonable

- Avoid potential misunderstandings between the goal of an audit with the goal the clients want to achieve

1.3.1.2 Steps in audit planning stage

The main focus in these stage can be separated into 3 main activities: Review client acceptance, risk assessment & materiality, objective assesment in regard to the financial statements so that the team leader can create an audit plan

Review client acceptance

- Step 1: Make a decision to accept the customer

+ Evaluate the industry: do human resources, finance, and capacity meet the

risk identification of the audited unit, report release time, by assess the following criterias: Contract risks related to each specific audit contract (auditors need to properly assess contract risks to have appropriate solutions); whether the professional capacity of the audit team guaranteed or not (knownledge in regarding to the industry, experience, time and resources needed to complete the job); ability to comply with professional standards and professional ethics (the auditors must always be

responsible for complying with professional standards and professional ethics; therefore the issue that often must be carefully considered and evaluated is the independence of the auditor during the job)

+ Evaluating the audited unit: The essence of this work is to consider whether

to accept a new customer or continue auditing an old customer, for instance, if accepting this job, would the reputation and image of the auditing company be affect

or not

+ Reasons why customers need to perform an audit: Determine if: the clients

have the desire to improve and develop the organizational structure, reassess accounting activities, and internal control or the clients want to be listed, and attract

investment capital, There are also the clients who are required to be audited because

how its financial information affects the economy, such as listed companies,

commercial banks, FDIs

+ Investigate the clients: During this step, the auditors thoroughly check 3

main problems that might affect the audit opinion: 1) Material issues: Auditing firms need to consider significant issues that arise with the fixed asset item in the current

or previous year's audit and how they effects on maintaining customer relationships; 2) Consider the integrity of the client's management: Cooperation in handling related issues, attitude and perspective in identifying and reporting on complex accounting issues that involve fixed assets, attitudes and perspectives on risk management and maintaining internal control of the enterprise; 3) Review the completeness of accounting records: papers, vouchers, books,

+ Create an initial audit plan: The decision to accept a client is usually made

by senior leaders of the audit unit After consider and develop terms when performing

an audit: terms must be clear, time for sending draft audit report, time for communication with the client unit, the leaders will then develop an preliminary strategy for the audit: estimate human resources (number of people, level, .), consider whether it is necessary to hire experts,

Step 2: Researching clients’ field

Auditors understands the nature of the client's business activities in terms of State regulatory policies regarding the unit's business lines, establishment time, fields and types of activities, organizational structure as well as system accounting system and internal control system

- Understand clearly the production and business process

- Describe the document circulation process of basic activities

- Understand corporate governance and evaluate management policies

- Customer's business goals and development strategies

- Measure and evaluate customer performance

From the characteristics of the business environment in general and especially the internal characteristics of the enterprise itself, when conducting an audit of fixed assets, the auditor can determine that the enterprise's fixed assets usually include: What types of assets, what are their characteristics and properties, from there, identify the associated risks, abnormalities in the process of buying, liquidating, selling and monitoring fixed assets, to have reasonable approach

Risk assessment & materiality and objective assesment in regard to the financial statements are often go together during audit planning

- Step 3: Assess risks arise from operating

- Understanding of the characteristics of customers' business activities: consider business risks, risks of related parties (using loan capital to invest in fixed assets will be affected by interest rates; transactions buying/selling of fixed assets)

- Evaluate the effectiveness of customer management, risk control, and information disclosure processes: fixed asset management process

- Business strategy and external environmental factors: expansion or contraction of production affects fixed asset management; Factors such as epidemics, natural disasters, etc

- Step 4: Preliminary analysis

The auditor performs preliminary analysis of the financial statements to note the characteristics of the unit that the auditor does not know and assess the risk of material errors in the financial statements From there, determine the scope and corresponding audit procedures in the following stages

Auditors can perform preliminary analysis of financial statements by learning about how to measure and evaluate operating results to note the risk of material errors

in financial statements or not In addition, auditors can detect unusual fluctuations to identify risks of errors in financial statements through understanding measurement criteria and evaluating customer performance

- Step 5: Research internal control and assess control risk

During the audit process, auditors need to collect information:

+ When purchasing fixed assets, there is adequate planning and estimation, and the difference between the actual purchase price and the estimated price is fully approved When deciding to liquidate fixed assets, a liquidation council is established, minutes are drawn up and the liquidation decision is approved by the council

+ Is the depreciation method used consistent with current accounting standards and regimes, and is it applied consistently between accounting periods? If any change

in depreciation method, it is necessary to consider whether that change is consistent with the benefits that fixed assets bring to the business

+ Does the customer comply with regulations on management, use and depreciation of fixed assets according to Circular 45/2014 issued by the Ministry of Finance? auditors collects and reviews depreciation policies regarding estimated useful life or depreciation method, whether the depreciation period for assets with useful life complies with the depreciation time frame according to the Circular 45 or not

The auditor will evaluate the effectiveness of internal control by evaluating three principles: the principle of assignment of responsibilities, the principle of non-concurrent responsibilities, and the principle of authorization and approval whether

or not they are guaranteed for the fixed assets item

+ If the control risk level is not high and the auditor considers it possible to reduce control risk to a lower level Auditors will conduct necessary control tests

+ If the control level is assessed at a high level and it is considered unlikely that it can be reduced in practice, the auditor does not perform control tests but must immediately conduct basic tests at a reasonable level

- Step 6: Risk assessment, Materiality

Normally, auditors establish materiality levels by estimating based on indicators of profit, revenue, total assets for the entire financial statement Then, the body makes an initial estimate of the severity of problems on the financial statement, specifically the problem of fixed assets

Based on the severity level determined for the entire financial statement and the division of each item area, the auditors evaluates the possibility of serious errors:

- Assess potential risk (IR) of fixed assets

+ Accounts with large balances are often considered to have higher IR than accounts with small balances The value of fixed assets in the total assets of the entity changes accordingly depending on each industry and type of activity However, in all cases, fixed assets reflect the situation in technical facilities and equipment in general and machinery and equipment in particular and are often of great value

+ In the accounting for fixed assets, there are many accounting estimates such as: estimating the depreciation period, estimating the fair value of construction in progress Potential risks are often assessed as risk because the entry into this problem depends on the understanding of its nature, the theory involved, the experience and the judgment of the responsible person

+ During the financial year, customers may have new purchases, liquidation and sale of fixed assets These irregular economic operations are more likely to have errors than operations that occur every day due to the customer's lack of experience

in accounting

- Detection risk assessment (DR) of fixed assets problems: On the basis of identifying potential risks, control risks and desired audit risks (АR), detection risk (DR) is calculated

Audit model:

DR=AR/(IR x CR)

- Step 7: Collect information to assess the possibility of fraud:

+ Pay attention to issues of special personal interest

+ Recording and tracking operations related to fixed assets

+ Consider approval authority

Planning audit program

- Step 8: Planning audit program

The overall audit strategy is the basic directions and general approach

A specific audit program must be designed for the audit The audit program is

a detailed estimate of the work to be performed, completion time and expected personnel Auditors will also have to prepare necessary documents and information The audit program for fixed assets items is designed based on the specific activities

of each unit and the sample audit program to make the audit work most effective and appropriate

1.3.2 Audit fieldwork

1.3.2.1 Test of control

When investigating internal control, the auditor expects that the controls designed by the audited unit operate effectively to prevent and detect the repair of material misstatement; besides, if only performing basic tests, it is not possible to provide enough appropriate audit evidence at the database level, so the auditor first conducts tests of controls

Tests of controls are audit procedures designed to evaluate the effectiveness of controls in preventing or detecting and correcting material misstatements at the assertion level

Auditors can apply one or a combination of methods to conduct control testing including: checking documents and records; observe; interview; and re-implement the control procedure

After performing control tests and making a professional judgment about whether the effectiveness of internal control is high, medium or low, the auditor will reassess the control risk level of the fixed asset item and depreciation costs When re-evaluating, the auditor needs to identify the weaknesses of internal control for the fixed asset item to expand the substantive tests and at the same time identify the strengths of the internal control to reduce the scope of the substantive tests to suit the needs of the audit

1.3.2.2 Analytical procedures

Analytical procedures help detect unusual correspondences, evaluate the appropriateness of the structure of fixed assets to the total assets of the enterprise, the level of increase or decrease between years in order to localize the key areas of operations from there, then the auditor will be able to find errors on this item of the client Besides, the auditors also determines the continuous operation of the client company through specific analysis of the unit's production and business activities If analytical procedures are well applied, auditors can minimize the scale of detailed inspection procedures Usually auditors use the following 3 methods:

- Assess reasonableness: Compare the fixed asset investment plan with the

actual increase in the period, accrued repair costs compared with actual costs

- Horizontal analysis (Trend analysis) by comparing the values of the same

indicator on the financial statements For the fixed assets section, the auditor can

compare this year's data with last year's data to see unusual fluctuations in fixed assets, depreciation between accounting periods, fixed asset repair costs and determine the cause of those fluctuations At the same time, auditors can compare customer data with industry figures in the same period

- Vertical analysis (Ratio analysis) is based on comparing the correlation ratios

of indicators and items on the financial statements For fixed assets, auditors can calculate a number of ratios such as the rate of return on fixed assets to see the ability

to recover investment capital in fixed assets; ratio between the value of fixed assets and total assets; or the ratio of fixed assets to equity

1.3.2.3 Test of details

This is always the last step in the audit implementation stage because of some limitations such as cost and time However, it is very necessary and must always be carried out because it provides highly reliable direct audit evidence, showing the specific cause of errors due to fraud or error

- Physical fixed assets count and compare amounts on hand with accounting

books

Auditors witnesses the actual amounts on hand of fixed assets at the end of the period and conducts a sampling or checks all of the customer's fixed assets to ensure the basis for the existence of fixed assets In case of not being able to participate in the fixed asset count at the end of the main year , the auditor can observe the assets

at the audit date, prepare a check and compare to determine the actual fixed assets at the date of preparation of the financial statements For fixed assets sent to a third party, the auditor often sends a confirmation letter

- Check transaction details

+ Check transactions about increase fixed assets (if any)

Increase due to purchase of fixed assets: auditors checks documents such as:

quotations, contracts, contract liquidation, fixed asset delivery and receipt records, bills of lading for imported fixed assets, fixed asset count records, investment plans approved assets consultation to find out the cause of the difference

Increase in the form of financial leased fixed assets: The auditor checks

whether the recording of the original price of leased fixed assets is consistent with the standards and guidance on asset leasing standards; check the appropriate allocation of finance lease costs to the correct accounting period; check whether the

depreciation of finance lease fixed assets is consistent with the depreciation policy of assets of the same type owned by the enterprise

Fixed assets formed from the completion of construction in progress: The

auditor can request the unit to prepare a list of construction in progress works arising during the year and check and select a detailed sample of increased construction in progress works through reviewing documents including: approved investment plan for the year, collection and recording of construction in progress costs for each project; check and select a sample of a number of projects; compare the final settlement with the collected construction costs in progress and check the handling of differences compared to the final settlement; list the completed capital construction projects and record increases in fixed assets during the period; consider the settlement value of completed projects in the year approved by competent authorities

+ Check fixed asset reduction transactions (if any)

The auditors checks the journal entry recording the reduction in the original price of fixed assets, reviews the liquidation and sale documents and recalculates the income/expenses of the liquidation and sale operations

+ Check the fixed assets depreciation costs and allocate fixed asset

depreciation costs:

The auditors collects the depreciation spreadsheet and recalculates the total accumulated depreciation for the year and compares it with the unit's records; consider the appropriateness of the starting time for depreciation and allocation to ensure the compatibility between revenue and expenses as well as the usage status of the asset; check the cessation of depreciation and reduction of accumulated depreciation due to liquidation and sale of fixed assets; consider the reasonableness and consistency in depreciation allocation criteria for assets shared by departments in the enterprise: general production costs, management costs, sales costs; compare the amount of depreciation of fixed assets with the depreciation expense recorded on the corresponding expense account; check and compare the accumulated depreciation value on the fixed asset summary sheet with the account ledger

- Check account balance:

+ Check details of the beginning balance of fixed assets

For old customers, having ensured that the balance of fixed assets at the beginning of the year is accurate (matching the balance at the end of the previous

year), the auditor does not need to carry out detailed checking procedures with the beginning balance of the fixed assets item

For first-year audit clients, with data audited the previous year by another auditing company to ensure the principle of prudence, the auditor carries out additional procedures to ensure the accuracy of the opening balance The ending balance of the previous year is also the beginning balance of this year

+ Cut-off:

The auditor collects a detailed list of fixed assets at the end of the period to confirm that these fixed assets are eligible to be recorded as fixed assets in the fiscal year, then check the transactions at the beginning of the following year to see if there are any fixed assets recorded in the fiscal year but the unit records them in the following year

1.2.3 Audit review and finalization

1.2.3.1 Review the assertions in related to performance

- Reassess the going concern assumption

Continuous operation is the basic assumption used when preparing an enterprise's financial statements according to the requirements of VAS 01 - General Standards and VAS 21 - Presentation of financial statements If this assumption is violated, the financial statements need to be prepared on a different basis and the enterprise needs to disclose this assumption Due to the requirements of accounting standards, auditors need to consider the assumption of continuous operations that businesses have used in preparing financial statements

- Analyze financial statements

To evaluate the synchronization and authenticity of the collected financial information, especially the audit data of the fixed assets item on the financial statements Any unusual discrepancies of this information compared to unit data, planned data, previous year's data, industry average data, financial information and non-financial information need to be analyzed and clarified; thus, the auditor can identify departments that need to collect additional audit evidence at the same time, helping to limit shortcomings or one-sidedness of audit procedures applied to each individual department

1.3.2.2 Synthesize audit results

Summary of fixed asset audit results is presented in the form of a "Summary

of audit results" Include:

- Conclusion on audit objectives: The auditor clearly states the conclusion on whether or not the audit objective of the fixed asset item has been achieved or not

- Recommendations on adjusting entries and explanations that need to be supplemented on the financial statements, clearly stating the reason for the adjustment and the amount of adjustment

- Issues that need to continue to be monitored in the following audit related to the fixed asset item

1.2.3.3 Review and control quality

After the procedures established in the sample audit program are completed, the assistant auditor is responsible for sending it back to the audit team leader, then

to the audit manager to review all accounting records related to the administrative sections The people in charge will be the final reviewer of all working papers of an audit The auditor performing the administrative part must explain properly to the review levels if any issues of note appear or are not clearly presented in the working papers

1.2.3.4 Issuing the audit report

Before issuing the audit report, the academic audit firm agrees on the audit results with the client In the meeting, the auditors presents the detected errors and asks the customer to make adjustments or give appropriate explanations

After performing the review of the audit and receiving approval from the reviewer of the information and issues stated in the draft audit report and financial statements, the auditor will proceed to issue the audit report

After releasing the audit report, the auditor can prepare and issue a management letter to advise clients about the shortcomings of the audited unit In the letter, the auditor analyzes and discusses the client's existing problems and proposes solutions to help the client further improve control procedures as well as fixed asset management and accounting policies

CONCLUSION OF CHAPTER I

Chapter 1 aims to present the general theoretical basis of the fixed asset auditing process in financial statement auditing through an overview of concepts and basic characteristics of fixed assets, the position of fixed asset items on financial statements, as well as issues related to materiality for fixed assets within the entity by relying on the Circular 200/2014-TT-BTC and Circular 45/2013-TT-BTC Based on that, the author outlines the basic content of the fixed asset auditing process in financial statement auditing, which sets the stage for a thorough exploration of this procedure at Ha Thanh Auditing Company Limited, where we will delve into the intricacies and nuances of the auditing process with the aid of specific case

CHAPTER II THE PRACTICE OF AUDITING TANGIBLE FIXED ASSETS IN

FINANCIAL STATEMENT AUDITS PERFORMED BY HA THANH

COMPANY LIMITED 2.1 General overview of Ha Thanh Audit Company Limited

Ha Thanh Company Limited is a local professional services firm in Hanoi, Vietnam Although the firm scale is not large comparing to others in the industry, it renowned for its commitment to excellence and integrity in financial services Established with a vision to provide top-notch audit, assurance, and related services,

Ha Thanh Audit has steadily built a strong presence in the Vietnamese market since its inception

Led by a team of experienced professionals and certified auditors, Ha Thanh Audit Company Limited offers a comprehensive range of services tailored to meet their target clients From financial statement audits and compliance reviews to risk management and internal control assessments, the firm ensures that its clients receive accurate, reliable, and timely insights to make informed business decisions

2.1.1 The process of formation and development

General information about Ha Thanh Auditing Company Limited:

- Full name: Công ty TNHH Kiểm toán Hà Thành - Ha Thanh Auditing Company Limited

- Abbreviated name: Ha Thanh Audit Co., Ltd

- Type of business: Non-state LLC with 2 or more members

Business registration: Ha Thanh Auditing Company Limited has been granted Business Registration Certificate No 010661**** by the Department of Planning and Investment of Hanoi City, 6th change on June 17th 2020, and currently operating

on the Certificate of Qualification for Auditing Services Business No.223/KDKT issued by the Ministry of Finance on December 31st 2020

2.1.2 Characteristics of business activities

Ha Thanh’s development goal is to become one of the leading auditing companies in Vietnam providing valuable specialized services to customers with professional working methods, scientific work approach and expertise by using the extensive understanding of business fields in Vietnam's economy and legal regulations