INTRODUCTION The need of the subject Objectives Research method Scope and method Structure CHAPTER 1: THEORETICAL BASIS ABOUT COLLECTION METHOD OF AUDIT EVIDENCE RELATED TO CA
Content and characteristics
Cash is a current asset for businesses that represents value directly, encompassing cash on hand, bank deposits, and funds held with financial institutions, as well as cash that is in transit.
The fund's cash assets comprise Vietnam Dong, foreign currencies, gold, silver, and gems stored securely within the enterprise After conducting a physical cash count, the enterprise will reconcile the cash account balance and make necessary adjustments to ensure accuracy.
Bank deposits in Vietnam encompass various forms of currency, including Vietnam Dong, foreign currencies, and precious metals like gold and silver, which are held at financial institutions The account's closing balance is determined by the enterprise after reconciling it with the bank statement at the end of the reporting period Additionally, cash in transit refers to the enterprise's funds, whether in Vietnamese or foreign currency, that have been deposited into the bank or state treasury but have yet to receive confirmation or a statement from the bank.
Cash and cash equivalents, listed first among current assets on the balance sheet, are the most vulnerable to loss or embezzlement within a business Sophisticated fraud techniques can evade internal controls, necessitating auditors to apply their experience and expertise in implementing specialized audit procedures to identify fraud and errors promptly As the primary medium for business transactions, cash influences various critical components such as liabilities, wages, income, and expenses Additionally, the volume of cash transactions often exceeds those in other accounts, increasing the likelihood of undetected errors by auditors.
Each currency has different characteristics, which affects the management characteristics for them and the internal control and collation process In the
2 process of production and business, currencies are both used to meet the needs of paying debts of the enterprise or purchasing materials and goods for production
Cash capital is a key indicator of a business's immediate solvency and is integral to working capital The fluctuations in cash levels, along with economic transactions related to cash collection and expenditure, demonstrate the efficiency with which businesses manage their cash flow.
Accounting principle and Objective of auditing cash accounts
In accounting, the primary monetary unit is the Vietnam Dong, utilized for recording transactions and presenting financial statements If an enterprise primarily conducts its business in foreign currencies, it may choose to use that currency for accounting purposes However, when preparing financial statements in a foreign currency, the enterprise must convert these statements into Vietnam Dong for submission to state management agencies.
1.1.2.2 Objective of auditing cash accounts
Existence The balance of cash items on the financial statements exists
Rights The entity holds or controls the right to cash items that are recorded
Completeness All amounts are fully recorded
Valuation and allocation The amounts are shown in the financial statements, and the related adjustments have been evaluated and recorded in accordance with the current accounting standards and regime
Accuracy - Cash account details match with the balance on the ledger
- The calculations related to the cash account are all numerically correct
Presentation and disclosure The presented and disclosed amounts are veritable, belong to the enterprise, complete, easily understood, and correctly classified
Auditors focus on the existence, completeness, and evaluation of financial statements to mitigate risks such as businesses overstating cash balances to obscure their true financial condition or failing to fully record revenues Additionally, auditors pay close attention to the accurate assessment of exchange rate differences at the end of the reporting period, ensuring these differences are properly recorded in the relevant accounts.
Internal control with cash items
1.1.3.1 The possibility of fraud and error with the cash items
Cash items are crucial in financial statement audits as they are closely tied to a company's core business activities and are essential for assessing solvency A low cash balance indicates potential financial difficulties, while an excessively high balance suggests inefficient asset utilization and lack of profitability Additionally, cash transactions are numerous and varied, increasing the risk of misconduct Errors associated with cash items can significantly impact other areas of the business, highlighting the importance of accurate cash management and oversight Common mistakes related to cash items include
- The cash presented on the books of account is unreal
- The collusion between accountants, cashiers, and individuals participating in the payment service to forge receipts, pay cash to defraud, or reduce revenues to embezzle cash of businesses
- A loss may occur due to the prefix storage, or management conditions
- Cash collected from customers but not promptly deposited into the cash
4 fund or deposited in a bank deposit account but used for personal purposes leads to the reduction of efficiency of the company's use of capital
- For foreign currencies, incorrectly recording exchange rates when converting at the end of the period or handling foreign currency differences is incorrect
- Recording the arising amounts between bank accounts is incorrect, or insufficient recognition of interest on bank deposits
- Transferring cash is not on time for personal gain
To mitigate the risks of fraud and errors associated with cash transactions, implementing a robust internal control system is essential for prevention, detection, and correction While the internal control mechanisms for cash may vary across companies based on their unique business characteristics and circumstances, they must adhere to fundamental principles to ensure effectiveness.
- Personnel involved in cash management operations must have fully professional qualifications and integrity
- Ensuring the principle of "Non-concurrently"
- Focusing on revenue and expenditure (limit the number of people holding cash)
- Timely and fully record the amount collected and making payment at the fund or bank within the day
- Comparing daily cash data between accountant and cashier, physical cash count at weekend or end of the month (an entity with a large amount of cash balance)
- Implementing most transactions through the bank
1.1.3.3 Internal control with collecting cash activities
For sales with immediate cash collection
- Sequencing number the receipts are an essential rule in most the cases
- Separating the responsibilities between cash collectors, cash monitors, and bank deposits
- All receipts that have been collected must be marked to avoid duplication of collection
- It is vital to check the calculation of the total on the invoice before preparing the receipt
For the case of giving customer credit term
- It is necessary to make a list of receivables by age group for programming and collection assignment, and debt collection is usually assigned to the department with responsibilities
- Separating the functions of selling, collecting cash and tracking debts to avoid embezzlement of collected cash
- Sending the debt collection notices to customers regularly
To ensure proper debt collection from customers, all cash collected must be promptly deposited into the designated fund If payments are made directly to the bank, the business must obtain a credit notice or bank statement as proof of the actual cash deposit This practice helps to prevent fraud, embezzlement, or the misuse of funds for personal purposes.
1.1.3.4 Internal control with cash spending
- Thoroughly apply the principles of authorization and approval in spending cash
- Payment checks and the cheques must be sequence number consecutive order, signed by the director or authorized person and chief accountant
- Minimizing the use of petty cash in payment
- When making payment, it is necessary to compare accompanying documents: purchase request form, order, seller's invoice, goods receipt notes
Regularly reconciling deposits with bank statements and ensuring cash accounting aligns with the treasurer's records is essential Additionally, it is crucial to reconcile the accounting balance with the liabilities recorded in the ledger, supported by a tracking table for accuracy.
Theoretical about collecting audit evidences concerning cash account
Definition of audit evidence
Auditing Standard (VSA) 500 defines "Audit Evidence" as all documents and information gathered by the auditor during the audit process This evidence is crucial for the auditor to draw conclusions and ultimately form their audit opinion.
Auditing evidence is crucial for substantiating the auditor's report, as highlighted by audit standards According to VSA 500, auditors are required to design and implement tailored audit procedures to gather sufficient and appropriate evidence for each unique situation This emphasis on the importance of audit evidence underscores its role in forming a reliable auditor's opinion.
Evidence discovered and exploited by auditors
- Evidence obtained by physical cash count, inventories, fixed assets, tools, and instruments
- Evidence obtained by observing the implementation of internal control activities of the customer
- Evidence obtained through interviewing employees in the client company
- Evidence obtained through recalculating the tables and spreadsheets of the business
- Evidence obtained through analyzing and reviewing data to detect unusual transactions in the audit activities
- Confirmation letter and Representation letter provided by the third party at the request of the auditor (customers, suppliers, banks with business transactions with the audited entity)
- Documents and reports provided by the outside party related to the auditor's business activities for the auditor are necessary to form the audit opinion (tax report)
Evidence provided by the entity
- Financial statement prepared by the entity
- Accounting vouchers and documents provided by the business according to the request of the auditor
1.2.2.2 Classified by the form of expression
During the audit process, evidence gathered from the physical count of tangible assets is crucial This includes both the inventory counts conducted by the entity and the independent physical reports prepared by the auditor These procedures ensure the accuracy and reliability of the asset valuation, contributing to the overall integrity of the financial statements.
Representing the auditor evidence collected through providing documents of related parties at the request of auditors
- Vouchers, accounting documents, representation letters of the entity
- The documentation is provided by a third party
Auditors frequently conduct interviews with employees to gain insights into the business environment and internal control systems; however, this method may lack convincing evidence This approach is commonly used during the initial phase of an audit to develop a comprehensive understanding of the audited entity's performance.
1.2.3 Some special audit evidence to be collected
Auditors often lack comprehensive knowledge of all social areas, prompting them to rely on expert opinions, particularly during project appraisals To ensure that these expert insights qualify as valid audit evidence, auditors must evaluate the materiality, risk, and complexity associated with the relevant items.
While the persuasiveness of evidence may be limited, representation letters can still serve as valuable audit evidence They provide insights into management's future decisions, aiding auditors in assessing the entity's going concern assumption.
Related parties are defined as individuals or entities that possess the ability to direct, control, or significantly influence another party during the formulation of executive or financial decisions.
Evidence of related parties includes documents and exhibits that demonstrate equity contributions, capital transfers to associated entities, or delivery contracts for products from the parent company.
The internal auditor plays a crucial role in addressing the needs and interests of the organization, utilizing this document to establish trust in the outcomes of their work when there is sufficient evidence to support its reliability.
Audit evidence wants to be the basis for the auditor's opinion must satisfy specific standards These are requirements of audit evidence including appropriate and sufficient
Paragraph 8 VSA 500 states: "The auditor must obtain sufficient appropriate audit evidence for each of his or her auditor's opinion Completeness and accuracy go hand-in-hand and apply to audit evidence obtained from the test of
9 control and substantial procedures "Sufficient" is the standard representing the amount of audit evidence "Appropriate" is a standard representing the quality, reliability of audit evidence "
Appropriate to audit evidence is related to two factors: reliability and fitness with audit objectives
The reliability of audit evidence depends on a number of factors:
Origin (inside or outside of the entity): ranked in descending order of audit evidence reliability
- Evidence which is provided directly by the outside to the auditor such as confirmation letter of debt of customers, suppliers, confirmation of deposit balance of the bank
- Evidence prepared by the outside but stored in the entity, such as supplier invoices, bank statements
- Evidence issued by the customer's company itself and circulated out of the entity then returned to the entity, e.g., accreditation
- Evidence is also issued by the business and is only circulated within the entity, e.g., material receipt notes, sale invoices
Type of audit evidence: also ranked in descending order of the reliability of audit evidence
- Physical evidence (when doing physical count) and knowledge of auditors about the audited entity
Internal control system: The department has adequate internal control procedure, then the audit evidence related to the accounting documents and control procedures of that department will be more reliable
Combination of types of audit evidence
Evidence from different sources and leads to the same conclusion is more convincing than evidence obtained from a single source
In contrast, when evidence found from many different sources gives conflicting results, the auditor should now consider the issue carefully and consider using additional audit procedures to verify certainty
Appropriate with the audit’s objective
For audit evidence to be deemed appropriate, it must not only be reliable but also align with the specific audit objectives and assertions that the auditor seeks to verify Even if a piece of audit evidence is highly reliable, its inconsistency with the audit objectives necessitates careful consideration.
The requirement for audit evidence is crucial for auditors to formulate their opinions during an audit, relying heavily on the professional judgment of the auditor to determine the necessary amount of evidence needed.
In each audit engagement, the amount of audit evidence gathered was not the same This difference is due to factors that affect the auditors' professional judgment
The significance of the audited object directly correlates with the volume of required audit evidence The primary goal of a financial statement audit is to ensure that the statements are presented fairly and accurately in all material respects Consequently, auditors must leverage their professional qualifications and judgment to identify errors that could materially affect the financial statements.
For accounting objects with high inherent or control risk, auditors must gather a greater amount of audit evidence It is important to note that due to the inherent limitations of audits, the evidence collected is intended to support a convincing audit opinion rather than provide absolute assurance.
1.2.5 Methods of capturing audit evidence related to cash items
Paragraph 2 of the VSA 500 mentions some of the evidence collection methods that auditors can apply Each method of obtaining audit evidence will provide different types of evidence with different reliability, and each method has its advantages and limitations Therefore, in many cases, the auditor needs to coordinate different methods to achieve the audit objectives In collecting audit evidence related to cash items, the author only mentions some of the methods related to this item
Some special audit evidence to be collected
Auditors often rely on expert opinions, especially in areas like project appraisal, due to their limited knowledge of specific social sectors For an expert's insights to be deemed valid audit evidence, auditors must evaluate the materiality, risk, and complexity associated with the subject matter.
While the persuasive power of evidence may be limited, representation letters can serve as valuable audit evidence in certain situations They provide insights into management's future decisions, aiding auditors in assessing the entity's going concern assumption.
Related parties are defined as entities where one party can direct, control, or significantly influence the other in making executive or financial decisions.
Evidence of related parties includes documents and exhibits that demonstrate equity contributions, capital transfers to associated entities, or delivery contracts for products from the parent company.
The internal auditor is dedicated to fulfilling the needs and interests of the organization, utilizing this document to establish trust in the internal auditor's work results when credible evidence is available.
Standard with audit evidence
Audit evidence wants to be the basis for the auditor's opinion must satisfy specific standards These are requirements of audit evidence including appropriate and sufficient
Paragraph 8 VSA 500 states: "The auditor must obtain sufficient appropriate audit evidence for each of his or her auditor's opinion Completeness and accuracy go hand-in-hand and apply to audit evidence obtained from the test of
9 control and substantial procedures "Sufficient" is the standard representing the amount of audit evidence "Appropriate" is a standard representing the quality, reliability of audit evidence "
Appropriate to audit evidence is related to two factors: reliability and fitness with audit objectives
The reliability of audit evidence depends on a number of factors:
Origin (inside or outside of the entity): ranked in descending order of audit evidence reliability
- Evidence which is provided directly by the outside to the auditor such as confirmation letter of debt of customers, suppliers, confirmation of deposit balance of the bank
- Evidence prepared by the outside but stored in the entity, such as supplier invoices, bank statements
- Evidence issued by the customer's company itself and circulated out of the entity then returned to the entity, e.g., accreditation
- Evidence is also issued by the business and is only circulated within the entity, e.g., material receipt notes, sale invoices
Type of audit evidence: also ranked in descending order of the reliability of audit evidence
- Physical evidence (when doing physical count) and knowledge of auditors about the audited entity
Internal control system: The department has adequate internal control procedure, then the audit evidence related to the accounting documents and control procedures of that department will be more reliable
Combination of types of audit evidence
Evidence from different sources and leads to the same conclusion is more convincing than evidence obtained from a single source
In contrast, when evidence found from many different sources gives conflicting results, the auditor should now consider the issue carefully and consider using additional audit procedures to verify certainty
Appropriate with the audit’s objective
To ensure the appropriateness of audit evidence, it is essential that it aligns with the audit objectives and the specific assertions the auditor aims to verify Even highly reliable audit evidence may be deemed inadequate if it does not correspond with these objectives, highlighting the need for careful consideration in the audit process.
The requirement for audit evidence is crucial for auditors to formulate their opinions during an audit, primarily relying on the auditor's professional judgment to determine the necessary amount of evidence.
In each audit engagement, the amount of audit evidence gathered was not the same This difference is due to factors that affect the auditors' professional judgment
The importance of the audited object directly correlates with the volume of audit evidence needed A financial statement audit aims to ensure that the statements are presented truthfully and fairly in all material respects Consequently, auditors must leverage their professional expertise and judgment to identify errors that could significantly affect the financial statements.
For accounting objects identified with high inherent or control risk, auditors must gather a greater amount of audit evidence Due to the inherent limitations of the audit process, the evidence collected is sufficient to support the auditor's opinion but does not guarantee an absolute conclusion.
Methods of capturing audit evidence related to cash items
Paragraph 2 of the VSA 500 mentions some of the evidence collection methods that auditors can apply Each method of obtaining audit evidence will provide different types of evidence with different reliability, and each method has its advantages and limitations Therefore, in many cases, the auditor needs to coordinate different methods to achieve the audit objectives In collecting audit evidence related to cash items, the author only mentions some of the methods related to this item
The examination of documents, accounting books, financial statements, and related materials—whether in paper, electronic format, or as in-kind assets like cash—yields audit evidence with varying levels of reliability This reliability is influenced by the content and origin of the evidence, as well as the effectiveness of internal controls governing document management Auditors typically employ two types of tests to assess this evidence.
Auditors observe the company's physical cash count at the end of the accounting period or on the audit date If needed, they can request an additional physical count on the date of the audit report.
Reviewing and analyzing last year's audit records, particularly the internal control system, is essential for identifying issues related to inventory management This process helps determine whether the company has implemented effective measures to mitigate risks such as loss, theft, fire, and embezzlement, especially in cases where excess cash is present A preliminary assessment of these measures' effectiveness is crucial for ensuring financial security and operational integrity.
- Reviewing the company's physical count plan is reasonable and then discussing with the enterprise management about the auditor's adjustments
The physical count planning helps auditors arrange personnel to participate in
12 physical count the inventory more rationally and effectively
During the physical inventory count, auditors refrain from counting cash themselves and instead observe the company's procedures If errors are identified, auditors document them in working papers and request corrections in the physical cash count Key points for auditors to consider while witnessing the inventory include accuracy and adherence to established protocols.
- Check whether the team's physical count has the full range of members as in the decision
- Observing whether the counting team is complying with the original plan
- Interviewing the business about the deposits received, collateral (if any) from other entities
The auditor mandates that the cashier, acting on behalf of the company, sign the physical cash count to verify the actual cash amount at the conclusion of the counting process To ensure the integrity of the cash results, auditors retain either the original or a copy of the physical cash count, preventing any post-count adjustments by the entity.
- Auditors evaluate the physical count process of the customer, synthesize the issues that need attention in the auditor's working papers
It is essential to inform the responsible party about discrepancies identified by the auditor during the company's physical inventory count This involves investigating the underlying causes of these issues and verifying how the differences between the actual inventory results and the company's accounting records are addressed.
Advantages: The audit evidence is reliable about the existence of assets because of directly involved by auditors
Disadvantages: Failure to meet the rights and obligations of the entity
The checking documents' technique is reviewing, checking, and reconcile papers, documents, vouchers, and books available at the company to meet audit
Auditors focus on key objectives during the audit process, beginning with an understanding of the business environment through the review of essential documents such as the Establishment License, Board of Directors meeting minutes, and audited financial statements They assess the entity's internal control system, which is crucial for preventing, detecting, and correcting errors Particular attention is given to control processes related to the company's core revenue and expenditure activities, including purchase approvals, sales reviews, and cash salary payments Consequently, auditors require the entity to provide documentation that demonstrates the implementation of control procedures across all relevant departments.
Auditors enhance the reliability of audit evidence by incorporating observation and interview procedures, checking original documents against the unit's accounting data to ensure the existence and completeness of cash items Depending on their objectives, auditors approach the audit process differently; for verifying existing cash items, they compare recorded transactions with original documents such as invoices and bank statements Conversely, to ensure comprehensive recording of revenues and expenditures, auditors first examine original documents before reconciling them with accounting data.
Advantages: The implementation is relatively convenient and easy since the documents are often available and has a low cost
The reliability of a document is heavily influenced by its source, particularly its independence from the entity that produced it Additionally, documents may be subject to alterations or forgery by their providers, compromising their objectivity Therefore, it is essential to conduct inspections and verifications through alternative methods to ensure accuracy and trustworthiness.
Auditors will often combine these two methods with document inspection to increase the convincing of audit evidence about the operating environment and internal control processes
The auditor evaluates the company's regulatory documents and observes personnel involved in specific processes, like purchase-payment, to assess control procedures However, this snapshot approach may not reflect ongoing accuracy, necessitating further investigation Therefore, auditors conduct interviews with key personnel, including directors and accountants, to understand the company's revenue sources, expenditures, fund balances, and internal control systems Prior to these interviews, auditors prepare a structured plan with a questionnaire focused on internal control procedures, while ensuring objectivity to draw valid conclusions from the gathered information.
Advantages: Combining these two methods helps the auditor gain helpful feedback to confirm the auditor's opinion
One significant disadvantage is the low reliability of evidence, as it primarily involves employees from the client company, leading to a lack of objectivity Additionally, the quality of the evidence is heavily influenced by the qualifications and understanding of the interviewees.
Confirmation is the process of obtaining third-party banking information to validate the accuracy of details questioned by the auditor This involves sending letters to all banks associated with the entity, including those with zero balances The auditor may send the entity's signed confirmation letter directly to the third party for verification, with the response returned to the auditor This process not only confirms account balances but also ensures the integrity of financial information.
15 account, the auditor may request to confirm other information and services of interest:
- The interest rates on bank deposits have interest
- The pledge, mortgage, or other bank arrangements such as opening letters of credit
- Limiting the use of cash
Requesting the bank to confirm the above information can help the auditor detect transactions with the bank, but the entity has not fully declared
Confirmation letters need to be satisfied
- The auditor prepares content of confirmation letter
- Auditors choose the subjects to send letters
- Confirmation letters need to be monitored by the auditor
- The confirmation letter must be sent directly to the auditing company
Besides, the auditor should consider the collusion between customers and third parties
Advantage: This method is applied in almost audits engagements and the evidence obtained is highly reliable
Disadvantage: The implementation costs are quite higher than the other and the scope of application is relatively limited, especially when the audited company is large-scale, multinational
1.2.5.4 Re-evaluating the exchange rates The calculation technique is the process in which an auditor checks the arithmetic accuracy of the calculation and recognition of arising economic transactions Testing of calculations including recalculation of sales invoices, the addition of general ledger and bank statement, checking of exchange rate application, determination and accounting of realized exchange rate differences / not yet implemented for transactions arising in the period and closing balance According to Circular No 200/2014 / TTBTC, the entity applies the bank's buying rate where the company opens a foreign currency account at the date of
16 making the financial statements as the exchange rate at the end of the period Advantages: providing evidence with the highest level of confidence in term of arithmetic
Disadvantages: calculations and allocations are sometimes too complicated, time-consuming, especially for large customer companies, diversified business types, the huge cash in and out
Analytical procedures involve evaluating relationships between financial and non-financial information to assess the reasonableness of account balances These procedures are essential in obtaining valid audit evidence and can be categorized into three types: reasonableness checks, trend analysis, and rate analysis.
Reasonableness checks often include the following basic steps:
- Comparison between actual data with data planned and estimated
- Comparing between the company's targets with the industry average
- Implementing the research of the relationship between financial information and non-financial information
COMPANY’S OVERVIEW
History and development of RSM Vietnam
RSM Vietnam, established in July 2001, is a premier mid-tier accounting and advisory firm and has been a member of RSM International Group since 2012 Focused on providing high-quality, specialized services, RSM Vietnam aims to be the optimal choice for businesses seeking development The firm supports clients in reaching their goals through comprehensive audit, tax consulting, and outsourcing services.
RSM Vietnam is a leading auditing firm with over 300 professional staff, specializing in serving mid to large public-listed, multinational, and private companies across various industries Established by certified auditors and consultants, the firm has been a key player in the audit and consulting sector since its inception in Vietnam With offices in Ho Chi Minh City, Hanoi, and Da Nang, RSM Vietnam boasts a skilled workforce, including more than 30 employees holding a CPA degree from the Ministry of Finance Recognized by the Vietnam Association of Certified Public Accountants (VACPA), RSM Vietnam ranks among the top eight auditing firms in the country.
International transaction name RSM VIETNAM AUDITING &
Short transaction name RSM VIETNAM
Legal representative Mr Dang Xuan Canh
Address 140 Nguyen Van Thu, District 1, HCMC
Email Contact_hcm@rsm.com.vn
Website https://www.rsm.global/vietnam/vi Logo
Table 1: The information of RSM Company
The organizational structures of RSM Vietnam
Table 2: The organization structure of the Company
Business areas
RSM delivers exceptional client experiences by integrating innovative solutions to business challenges Their team of highly qualified auditors offers practical and tailored advice on operational models, ensuring adherence to strict service quality and professional standards RSM's comprehensive services encompass independent audits, internal audits for both listed and unlisted companies, audit investigations, and specialized advisory services, all aimed at providing partners with optimal value.
RSM prioritizes service quality to address the significant tax concerns of businesses Our experienced tax consultants maintain strong relationships with tax authorities, ensuring effective communication and support We continuously update our knowledge of current tax laws, enabling us to provide solutions that help clients comply with regulations and plan their taxes effectively to meet business objectives Additionally, we assist clients in minimizing tax impacts arising from misunderstandings of regulations.
Finding a business partner or navigating the complexities of buying, selling, or restructuring a business is crucial for organizations of all sizes At RSM, we prioritize service quality to enhance your business performance Our team of experienced sales consultants offers tailored advice to help you comply with tax regulations and develop effective tax planning strategies before, during, and after transactions We also provide guidance to minimize tax impacts, ensuring you fully understand the regulations With these advantages, RSM has successfully supported numerous businesses in executing sales and restructuring deals, including capital sourcing and post-merger advisory services, to help you achieve your business goals.
2.3.4 Associated transaction price determination service
RSM excels in coordinating global and domestic expert networks to accurately determine market prices, enabling businesses to meet market valuation requirements consistently Their in-house specialists work alongside international tax teams to enhance the financial and commercial frameworks of multinational corporations With a strong focus on transactional and industry-specific market pricing, RSM provides comprehensive expertise to navigate complex valuation challenges.
RSM prioritizes service quality to enhance business performance and deliver the best accounting and human resource services By utilizing advanced techniques and approaches from both Vietnam and around the world, RSM, supported by a team of experienced consultants, offers comprehensive accounting and human resource solutions This enables clients to concentrate on achieving their business goals effectively.
RSM will evaluate the skills and effectiveness of the company's Internal Audit Department by aligning them with the Internal Auditing Policy, stakeholder expectations, and industry best practices This assessment will lead to the development of tailored training content, ensuring that all personnel in the Internal Audit Division receive appropriate general or in-depth training to enhance their capabilities.
RSM's Performance Quality Review Service enhances the quality of the Internal Audit Division by providing objective and independent assessments, ensuring compliance with relevant standards and fostering operational improvements.
RSM recognizes the critical importance of business establishment, strategic planning, growth management, and information security We prioritize service quality to enhance your business performance Our experienced Enterprise Consultants utilize advanced techniques and global best practices to deliver a comprehensive range of high-quality all-in-one business consulting solutions We are dedicated to helping our diverse clients achieve their business goals effectively.
IT consulting teams help businesses navigate challenges by implementing modern technology solutions tailored to their needs They focus on planning, designing, and operating new systems while addressing technology issues and cybersecurity risks Their efforts enhance operational efficiency, improve security measures, ensure compliance with regulatory requirements, and promote business continuity.
Mission, Vision and Strategy of company in the future
Vission: The vision of RSM is to be the first-choice advisor to global middle-market leaders.
RSM Vietnam strives to be a valuable business partner by delivering innovative solutions that enhance performance in both local and global markets Committed to providing professional services that adhere to international quality standards, RSM tailors its offerings to meet the unique business environment of Vietnam.
At RSM, the four key tenets of strategy allow us to fulfill our purpose and achieve a vision that aligns with our core values:
Bring great customer experience - RSM Client Experience
Focus on middle market - Middle Market
Empower a staff full of enthusiasm - Passionate Teams
Build community trust in RSM - Communities brand
General audit process at RSM
RSM GAM (Global Audit Manual) is an essential audit software within the RSM International framework, providing a solid theoretical foundation for RSM auditors in the auditing of financial statements It incorporates International Auditing Standards and RSM Auditing Software, ensuring compliance with global norms Regularly updated and revised by RSM International, the program maintains its relevance and effectiveness While RSM foreign member companies and staff may utilize additional instructions and procedures, they must still comply with the requirements set forth in the RSM GAM.
RSM GAM 330 is divided into 4 phases as follows:
( Source: RSM GAM ) Table 3: RSM GAM
Below is the detail process of RSM from the period of accepting the customer to publishing the audit report
Acceptance Pre Plan Plan Fieldwork Completetion
ANALYSING AUDIT PROCESS OF CASH AT RSM
Audit approaches of collecting audit evidence about the cash items general
3.1.1 In the process of understanding the customer
An effective audit plan is essential for addressing key components of the audit, detecting fraud, identifying threats, and mitigating potential issues while ensuring timely completion At RSM, the audit plan is typically developed through five structured work steps to achieve these objectives.
At RSM Vietnam, every element of the financial statements undergoes a tailored process designed to minimize risks Consequently, the audit team is required to implement an audit program that aligns with RSM International's standard model during the planning phase for cash This entails adhering to specific procedures to ensure accuracy and compliance.
Prepare for an audit plan
Collect information about the entity being audited
Comprehensive audit planning and audit program
Evaluating the ability to sign audit contracts
RSM prioritizes understanding its customers' strategies and aspirations, recognizing that each business, regardless of industry, possesses unique characteristics and cultures that influence their perceptions and risk tolerance This customer-centric approach begins with a thorough assessment of existing and potential clients, ensuring that professional ethics are upheld as a foundational element before entering into an audit contract.
Also, learning about customers and their needs helps auditors assess the level of contract risk and build an appropriate audit process
The implementation of customer assessment and inquiry is always done by highly experienced and professional auditors
For existing customers, assessing their needs is straightforward, as RSM utilizes data from the previous fiscal year while also incorporating updates on organizational changes, human resources, capital ownership, and business scale This information serves as a foundation for determining whether to renew contracts or cease services.
RSM prioritizes understanding new customers by engaging in detailed discussions about their motivations for choosing RSM, their business sector, financial situation, and capital structure.
- After understanding and assessing the customer and the level of audit risk, if accepting, RSM will sign the audit contract with the customer and select the
Auditors gather critical information about an entity's business environment, focusing on key revenue sources like sales and service income, as well as expenditures such as supplier payments and salaries While initial evaluations of clients occur during the audit plan preparation, these assessments are preliminary and aim to facilitate contract signing Once the contract is finalized, RSM delves deeper into gathering customer-related information to identify potential risks in the audit process, ultimately leading to the development of a tailored and effective audit plan.
- For old customers: use information collected in the previous fiscal year and collect changes (if any) in the current year to set up a suitable audit program
- For new customers: necessary information to collect such as:
Analysis plays a crucial role in auditing, as it involves comparing various pieces of information to evaluate relationships and trends Primarily focused on financial statements, this analysis enables auditors to identify unusual transactions and events that may indicate issues with cash items Consequently, these insights assist auditors in planning the subsequent audit procedures effectively.
Learning about internal control system, determining materiality, assessing audit risk
In the process of auditing the financial statements, the auditor must evaluate the
28 internal control system because a perfectly designed internal control system cannot prevent or detect any possible mistakes because there are always disadvantages as:
- The internal control system is often considered in the relationship between costs and benefits
- Internal control system only provides control procedures for transactions arising inside the enterprise, ignoring transactions arising outside the enterprise
- The internal control procedures over time are often outdated easily
- Internal control system is easy to disable by administrators
The auditor's assessment of the internal control system's design and effectiveness reveals its capacity to mitigate or exacerbate risks This evaluation is crucial in determining whether the system effectively prevents risks or potentially increases them.
To learn and evaluate the client's internal control system, RSM uses the following methods:
- Based on the entity's prior audit experience (if any)
- Interview related people such as management board, supervisor
- Observe the actual operation of the internal control activities
During the initial audit, the auditor evaluates the effectiveness of the company's internal control system in preventing, detecting, and correcting errors This process involves documenting information through reports and questionnaires The auditor assesses whether the internal control system is implemented as designed by interviewing key personnel, including the unit's director, chief accountant, and head of internal audit, while also reviewing relevant documents to gauge the system's practical effectiveness.
Evaluating the internal control system is generally more straightforward for long-standing customers compared to new clients This is due to the inherent factors within the business's internal control framework Auditors will review the current fiscal year's system and use this information as a basis to discuss any changes made throughout the year, while also monitoring the rectification of previous errors.
Auditors evaluate the preparation of financial statements by analyzing the initial findings and reviewing the unit's internal control system, focusing on key aspects that impact financial reporting accuracy.
- The impact of new policies on accounting, auditing, tax
- The qualifications of the accountant
The auditor will leverage their expertise to draw inferences and evaluate risks associated with the unit, focusing on two primary types of risks that require assessment.
The increasing number of cash accounts poses a significant risk, as errors in cash-related transactions tend to outnumber mistakes in other account types This heightened potential for mistakes underscores the importance of diligent oversight in cash management to mitigate financial discrepancies.
Control risk is evaluated by the auditor based on their understanding of the client's internal control system related to cash management A robust internal control system indicates low control risk, while weaknesses in the system suggest a higher control risk.
Auditors, through their research, observe that the customer is expanding its branches, leading to increased revenue and expenditure activities The company has implemented appropriate control procedures, and the review of the internal control system reveals no abnormal signs in cash-related operations Consequently, the auditor assesses the internal control system as effective and proceeds to design and perform further evaluations.
30 control tests to check the effectiveness in operating the above control procedures
Illustrate methods of collecting evidence is independent audit firm applies to
According to Circular No 200/2014/TT-BTC, businesses must utilize the buying rate of the bank where they maintain their foreign currency account when preparing financial statements at the end of the reporting period.
8 Comparing with the other relevant audit procedures to check the accuracy and compliance with the data
Cash-related transactions are related to many different business cycles, this leads to the impact of mistakes from one item to another in the arising economic transactions
In the cash audit procedures, auditors systematically compare cash items with related audit elements, including customer receivables, supplier payables, tax obligations, employee payables, salary deductions, selling expenses, administrative costs, and various income and expenses.
9 Evaluation of presentation and disclosure of relevant information cash
Auditors assess the presentation of cash items in the financial statements, specifically focusing on cash and cash equivalents in the Balance Sheet They conclude that the company has adhered to regulations regarding the full disclosure of cash savings, bank deposits, and cash in transit Following a thorough examination of the opening and closing balances, auditors verify the reliability of the data during the testing of disclosures.
1 Evaluate classification of accounts as cash and cash equivalents under the applicable financial reporting framework
2 Evaluate the classification and presentation of cash overdraft balances in accordance with the financial reporting framework
3.2 Illustration of the audit process for cash applied by RSM to the client A
Company A, a limited liability entity specializing in hair care cosmetics, has maintained a long-term relationship with RSM, ensuring that all pertinent company information—including general regulations and accounting standards—is securely stored in the audit file on RSM's public server This arrangement facilitates efficient audit planning and the signing process.
39 the contract, and selecting the audit team are done faster and easier by the company
Ownership form: Limited Liability Company
The charter capital in accordance with the Investment Certificate of company A is 41.197.000.000 VND ( equivalent to 2.080.000 USD )
Business areas: The company is operating in the field of manufacturing cosmetics, soaps, detergents, polishes and sanitary preparations
The business lines under the company's business registration certificate are
- Cosmetics, soaps, detergents, polishes and sanitary preparations
Manufacturing of cosmetics and personal care products
Manufacturing of soap, detergents, polishes and toilet preparations
Manufacturing of perfumed blends for the manufacture of perfumes or foods;
- Production of civil electrical appliances
- Selling other household appliances such as:
Perfumes, cosmetics and sanitary products
Wholesale of household electrical appliances, electric lamps and lighting sets
Wholesale of chemicals (except chemicals in table 1 according to the international convention), packaging in the field of cosmetic production
The Company’s normal operating cycle is carried out for a time period of 12 months
3.2.1.2 Basis of preparing financial statements
Accounting standards and regimes which applied:
The accompanying financial statements, expressed in Vietnamese Dong (VND), are prepared in accordance with Vietnamese Accounting Standards, Vietnamese Corporate Accounting System and prevailing accounting regulations in Vietnam
The form of accounting records applied in the Company is the General Journal
Annual accounting period: The Company's annual accounting period starts from
January 1 st and ends on the 31 st December
Monetary unit in accounting: The currency unit used in the company's accounting records is the VND
A Company is a customer audited by an independent consulting audit firm RSM in the previous year Through preliminary interviews with the Board of
Directors, it is known that in 2020, the company changed the director and chief accountant position
Auditors have determined, through observation, interviewing techniques, and research on last year's audit documents, that the internal control system remains unchanged from the previous year.
• For the sales - collection cycle
The business aspect is mainly related to the cycle:
The sales department conducts inventory checks to ensure the availability of hair care and household electrical products for customers Upon verifying the required quantity, they deliver the goods and issue three copies of the invoice: one for the customer, one for the sales department, and one for the accounting department to record the revenue.
To effectively manage sales returns, sales discounts, and trade discounts, the enterprise establishes clear policies and designates an independent accountant The receivable and sales departments are tasked with receiving and submitting these items for approval to the chief accountant for consideration of deductions.
When a buyer returns goods, the accountant responsible for monitoring deductions will review the buyer's invoice, which must clearly indicate the reasons for the return, such as improper specifications, quality issues, and the quantity and value of the returned items, along with the corresponding invoice number The accountant will then issue an invoice reflecting the commercial and sales discounts, specifying the adjusted invoice.
Payments made by customers were not recorded promptly
The cash sales department must be independent with the accountant who following the account receivables
Clients' advances must be tracked and compared by an individual independent of the accounts receivable people
A bank balance check is prepared monthly by someone independent of the bank accountant
Periodically, it is necessary to reconcile the detailed record of customers' accounts receivable with the accounts receivable on the ledger
Deductions were not recognized on time
Sales returns must be recorded and reflected in the returns receipt, and must be matched against the customer's deduction Differences should be investigated
Proceeds from sales may be lost or embezzlement before being recognized
Customers are encouraged to request a receipt from the payee
Cash collection, transfer, and cash transactions are closely monitored
• For the buying-spending cycle
The business aspect is mainly related to the cycle:
The primary items acquired include raw materials for hair care product manufacturing and components for household electrical goods, such as bottles, jars, chemicals, and plastics Additionally, machinery and equipment are sourced for both production and resale to external clients Purchases are made both domestically and through imports, with a significant focus on machinery and equipment The company maintains a fixed list of suppliers, and the purchasing manager is responsible for selecting the appropriate supplier for each acquisition.
42 review manager; in case of finding a new supplier, bidding clearance
When goods are needed for production, the warehouse department initiates a purchase order to the purchasing department Upon receiving a customer order, the sales manager evaluates its validity and seeks director approval for supplier selection Upon receipt of goods, both the warehouse and purchasing departments collaborate to verify quality and compliance, signing the delivery record with the shipper The warehouse then issues an inventory receipt and a stock release note Finally, the supplier's invoice is forwarded from the sales department to the accounting department for recording goods, liabilities, and related amounts.
Payments to suppliers may be counterfeit, recorded more than once
Independent comparison of the total amount paid by the cheques and the total book payment amount
Payments are numbered in sequence
All payments must be fully documented and approved by an authorized person
• For the salary payment cycle:
Effective personnel recruitment requires the involvement of the recruitment department, ensuring that all employee information is accurately recorded and accompanied by signed labor contracts Monthly, the administrative organization department compiles a summary timesheet from each department to calculate salaries and deductions, which are then submitted to the director for approval Once approved, the payroll is forwarded to the accountant for cost allocation and account management before being handed over to the cashier for employee salary disbursement.
When processing salaries, the cashier generates two receipts, one for the employee and one for the accounting department If salaries are paid via bank transfer, the accounting department prepares a payment order for the director's approval, which is then sent to the bank along with the salary sheet Each month, the accounting department reconciles the bank statements to ensure accuracy in salary payments.
Salary expenses are paid to people who are not bogus, or who have left
Having policies and procedures for recruiting, transferring and terminating labor contracts
Making timesheets and be approved by authorized authorities Wage costs are inadequately and properly identified and recorded
An independent division reviews compliance with labor laws and personal income tax regulations Following this, auditors prepare a questionnaire to assess the effectiveness of the entity's internal control system and adherence to established procedures by staff They conduct surveys and interviews with key personnel, including directors, chief accountants, fund accountants, and cashiers, to gather their findings.
1 Does the company divide responsibilities between the cashier and accountant?
2 Does the company divide responsibilities between selling and collecting cash?
3 Do the receipt and payment notes are numbered continuously before using?
4 Does the cashier check the reason of a receipt or check before collecting or disbursing cash?
5 Is there a physical cash count of funds at the end of the day?
6 Is the difference between accounting data and physical cash count of fund handled?
7 Is there any periodically test and compare the total of the collection diary with amount recorded on the cash account, receivables from customers, sales, and service provision?
8 Is there any periodically test and compare the total amount of the payment diary with the amount recorded on the cash account, payable to the seller?
9 Periodically, there is a comparison between the detailed monitoring table of customers' receivables with the receivable accounts receivable on the ledger or not?
10 Is there any policies about cash fund?
11 Are the applied accounting principles consistent with the previous year and consistent with the provisions of the current accounting standards and regimes?
12 Is there an examination of the presentation of cash and cash equivalents on the financial statements?
The auditor's evaluation of the gathered audit evidence indicated that Company A's internal control system for cash management is effective Consequently, the auditor determined the control risk for cash items to be low, leading to the design and execution of control tests to assess the effectiveness of the internal control procedures.
RSM Company selects total revenue as the basis for calculating materiality due to its significance for shareholders, who prioritize the company's business performance As a publicly listed entity, Company A's auditors focus on revenue to determine operational materiality, ensuring transparency and accountability in financial reporting.
From the above assessments, the auditor found that the overall audit risk is low, so the criticality of implementing
OM (calculated automatically in ORB) = 886.392.006
PM= 75%*OMf4.500.000 Clearly trivial threshold=5%*OM= 44.300.00
COMMENTS AND INDIVIDUALS OPINION FOR AUDIT
Reviewing the audit process at RSM company Benefits and drawbacks of the
- RSM always has young, experienced, dynamic and creative staff
The company's Board of Directors is highly qualified, holding auditing practice certifications and demonstrating strong professional ethics and leadership They consistently establish goals, visions, and strategies to drive company growth while implementing policies that motivate employees to achieve these objectives Leadership at all levels prioritizes the professional development of staff by regularly organizing seminars and training sessions focused on management skills Furthermore, the company enhances team spirit and professional qualifications through regular outdoor activities and celebrations.
RSM Vietnam's auditing procedures are standardized to meet the requirements of RSM International and are tailored to align with the Vietnam Association of Auditing Practicing (VSCPA) This ensures that their audit program effectively accommodates various business models in Vietnam Throughout the audit process, auditors engage in reciprocal comparisons with colleagues to verify information and meticulously check for errors In the planning phase, auditors conduct multiple procedures to analyze the internal control system and interview company representatives, gaining a comprehensive understanding of business operations This focus on identifying potential risks and developing solutions not only saves time but also enhances the reliability of the audit evidence collected.
In 2021, the company implemented several enhancements to its operating procedures, aiming to provide a more comprehensive and detailed framework that addresses previous shortcomings Additionally, the audit procedures were tailored to be both suitable and flexible, allowing each RSM auditor to adapt their approach based on individual circumstances.
Selecting appropriate audit procedures based on personal experience can enhance both the company's benefits and the auditor's skills, fostering creativity However, it is essential to ensure the completeness of the audit cycle while achieving the established audit objectives.
In the RSM cycle, materiality is determined during the audit preparation stage by assessing total assets, total revenue, and total profit before tax, with a fixed percentage applied This materiality should remain unchanged throughout the audit process However, risks may arise if the auditor gains insights into the client company’s specific risks and nature during the audit period Relying on the auditor's subjective assessment at this stage to define materiality can be unreasonable, as misjudging materiality could compromise the entire audit, diverting focus away from critical areas and potentially overlooking significant corporate risks.
Evaluating the internal control system stage
During the evaluation of Company A's internal control system, auditors conducted interviews with the Board of Directors and the chief accountant to assess changes in business performance, particularly regarding revenue and expenditure While the auditors performed adequately, they overlooked a thorough understanding of the client's internal control system, assuming continuity based on previous audits and interviews This assumption lacks credibility, as insights from company interviews can be unconvincing Furthermore, the absence of a comparative analysis, which is crucial for the audit process, hindered subsequent auditors from gathering essential information effectively.
56 directly investigating close customers or record auditing records for men later Therefore, this evidence is not appreciated
The stage of the audit
RSM's audit process is designed to accommodate a diverse range of businesses, making it challenging for less experienced auditors to select the appropriate procedures Without sufficient professional experience, these auditors may struggle to identify the most effective audit methods, potentially leading to inefficiencies and less reliable evidence.
Opinion
The company's cash audit process is conducted meticulously and adheres to Vietnam's auditing standards Nevertheless, the author offers several recommendations to enhance corporate audit procedures.
In the audit of customer A, the auditor did not thoroughly examine the company's internal control system, relying instead on last year's audit and preliminary interviews with the chief accountant, which led to the incorrect assumption that no changes had occurred This approach is flawed, as evidence gathered from interviews can often lack credibility To enhance the audit process, it is essential for the company to prioritize a deeper understanding of the internal control systems of existing clients By analyzing previous audit records and conducting observations and interviews with the Board of Directors and chief accountants, auditors should clearly illustrate their findings using flowcharts or narrative boards This will enable auditors to better identify the strengths and weaknesses of the internal control system and, combined with tailored questionnaires for each audit area, provide a more accurate assessment of operational effectiveness.
The company currently serves several small and medium-sized clients, resulting in an inadequate internal control system that often attracts auditor criticism for its unreliability Auditors frequently bypass control tests, opting for substantive tests or integrating control tests into substantive assessments While medium-sized companies like Company A may not face significant issues with control system evaluations, more complex internal control structures risk financial misstatements if overlooked It is essential for the company to prioritize control tests as they assess their internal control systems As client interest in robust internal controls grows, designing and implementing effective control tests will become a crucial necessity Investing in professional auditor training for this process is vital, as conducting control tests not only refines substantive testing but also equips auditors to provide valuable insights on internal control weaknesses and financial management errors to client companies.
At RSM, auditors participate in the physical count of cash funds during the audit process, but this is often limited to a few clients due to time and cost constraints For Company A, the auditor only collected the physical cash count on the audit date, which confirmed the company's adherence to established procedures and regulations To enhance reliability and effectiveness, the company should consider strengthening its cash counting practices or conducting an extraordinary cash fund count.
In recent years, independent auditing has played a crucial role in enhancing the country's economic development by fostering a reliable investment environment and ensuring the credibility of economic information systems RSM Vietnam auditing company has continually refined its audit processes, solidifying its position and enhancing its reputation in the audit services market To improve audit quality, RSM adheres to the accounting and auditing standards set by the Ministry of Finance while striving for high efficiency in its operations My internship experience provided valuable insights into the actual audit process, particularly the auditing of cash items, highlighting their significance in financial statement audits This thesis presents an overview of my learnings and observations regarding the cash item audit conducted by RSM Vietnam.
- Summarizing the basic theory, rationale for auditing the cash operations from there to serve as the foundation for the analysis and application in the practical process
- Accessing the audit process of cash items at customers of the Auditing Company Limited and RSM consulting Vietnam, from which to draw general comments on the process
The report process faces several shortcomings due to constraints in practice time, theoretical knowledge, and practical experience I aim to enhance my understanding and address these deficiencies in the future Through this report, I seek to identify areas for improvement.
I extend my heartfelt gratitude to Ms Tran Thanh Thuy Ngoc and the team at RSM Vietnam Auditing and Consulting Co., Ltd., as well as my colleagues in professional division 2A, for their unwavering support and assistance throughout the preparation of this report.
1 Working paper of Cash- Policies Summary
2 Working paper of testing the expenditure transactions
3 Bank Reconciliation: Test deposits in transit
5 Calculating OM, PM through audit system ( RSM GAM )
6 Comparing cash book with general ledger
7 Working paper of exchange rates:
Address: xxx, xxx Ward, District xxx, Ho Chi Minh City
Ngân hàng thương mại cổ phần Việt Nam A Địa chỉ : 123 Nguyen Dinh Chieu Phone:
Ref.: Confirmation for audit purposes
For the financial year ended 31 December 2020
As auditors for your customer, we request that you provide information regarding their accounts at your bank as of the specified date, without establishing any contractual relationship with us This includes details for items 2, 4, and 10 for the current accounting year Please indicate any factors that may affect the completeness of your response; if there are none, please state "NONE."
It is understood that any replies given are in strict confidence
BANK ACCOUNTS (CREDIT AND DEBIT ACCOUNT BALANCES)
1 Please give full titles of all accounts whether in local or in any other currency together with the account numbers and balances thereon, including NIL balances:
(a) Where your customer's name is the sole name in the titles;
(b) Where your customer's name is joined with that of other parties;
(c) Where the account is in a trade name
(Please fill in the confirmation information as below)
Account type Account number As at 31 December
Interest rate (%/year) Deposit term a Your customer's name is the sole name in the titles
Other (specify) b Your customer's name is joined with that of other parties
Other (specify) c The account is in a trade name
2 Full titles and dates of closure of all accounts closed during the period
Account type Account number Dates of closure of all accounts a Your customer's name is the sole name in the titles
Other (specify) b Your customer's name is joined with that of other parties
Other (specify) c The account is in a trade name
3 The separate amounts accrued but not charged or credited as at the above date, of (a) provisional charges (including commitment fees) and (b) interest
(Please fill in the confirmation information as below)
But not charged as at 31 December
But not credited as at 31 December 2020 a/ Provisional charges
(including commitment fees) b/ Interest (specify)
4 The amount of interest charged during the period if not specified separately in the bank statement
(Please fill in the confirmation information as below)
Currency (VND or foreign currency)
Deposits interest for bank receivable
Interest on deposits incurred in the period
Interest on deposit received during the period
Interest on deposits in banks receivables
5 Provide any account or balance that is subject to any restriction(s) whatsoever and indicate the nature and extent of the restriction
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Account or balance that is subject to any Indicate the nature Extent of the restriction
6 Particulars (i.e date, type of document and accounts covered) of any written acknowledgement of set-off, either by specific letter of set-off or incorporated in some other document or security
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Content Date Type of document Accounts covered
7 Details of: a) Overdrafts and loans repayable on demand, specifying dates of review and agreed facilities; b) Other loans specifying dates of review and repayment; c) Other facilities
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Value Date Due Date Agreed facilities
8 Provide details of any defaults during the period and full details (e.g., principal, interest, redemption terms, carrying amount of loans payable in default at the reporting, whether the default was remedied) of such defaults
(Please fill in the confirmation information as below)
Debt type Account Number Principal
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10 Provide details of any other contractual arrangement(s) between the customer and the bank e.g., forward bank bills/bonds, repurchase agreements, transactions packaged as a unique product for the customer, bullion contracts, commodity contracts, swap arrangements (near and far dates), credit derivatives including collateralised debt obligations (CDOs), and others (indicate their nature)
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Provide details of any other contractual arrangement (specify)
CUSTOMER'S ASSETS HELD AS SECURITY
11 Please give details of any such assets whether or not charged to the bank
If formally charged, please provide details about the security, including the date, ownership, and type of charge Additionally, indicate if the security is limited in amount or specific borrowing, and disclose any prior, equal, or subordinate charges that you may be aware of.
(Please fill in the confirmation information as below)
Collateral Date Ownership Type of charge
When detailing the security interest claimed by the bank, specify the nature of any informally charged assets Additionally, regardless of whether a formal charge exists, provide information about any undertakings made to the bank concerning these assets It is also essential to clarify whether the security underpins facilities extended by the bank to the customer or to a third party.
(Please fill in the confirmation information as below)
Collateral Nature of security interest
Commitment with official related bank
12 Please give full details of the customer's other assets held, including share certificates, documents of title, deed boxes, sealed packets and any other items listed in your Registers maintained for the purpose of recording assets held
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The customer's other assets held Specific content
PROMISSORY NOTES/BILLS OF EXCHANGE HELD FOR COLLECTION ON BEHALF OF THE CUSTOMER
13 Please indicate Maker/Acceptor/Due Date/Balance
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Content Maker Acceptor Due Date Balance
CONTINGENT AND OTHER LIABILITIES AND ASSETS
14 Provide details of the currencies, terms and due dates and amounts of All contingent liabilities, including: a) Listing of bills discounted for your customer, with recourse;
Please provide the date, beneficiary's name, amount, and details of any guarantees, bonds, or indemnities provided by the customer for the benefit of third parties.