With the importance of this item together with the deep concern and work experience in the fixed asset audit process, the topic "Audit procedure of fixed assets at ABC company by Deloitt
The needs of the study
The rapid development of society has complicated business management systems, making them harder to control This has intensified the agency issue, raising concerns for owners and investors regarding the accuracy of financial information provided by the Board of Directors.
Government policies aimed at promoting economic development have led to a rising capital market; however, some business owners may exaggerate their company's strengths, resulting in a lack of trust from investors Consequently, the credibility of information published by enterprises suffers, hindering the overall growth of the capital market.
Recognizing the critical need for transparency, independent audit services were established to ensure the accuracy and fairness of financial statements (FS) prior to their public release Auditors evaluate the data presented in the FS according to Vietnamese Auditing Standards, providing an opinion based on the evidence gathered This process enables FS users to make informed and timely decisions During audits, fixed assets receive particular attention from auditors for several key reasons.
• Fixed assets account for a large proportion of Assets presented in the BS, especially for manufacturing entities
• Fixed assets between entities have different characteristics, so the audit of fixed assets should be evaluated and considered differently between each type of enterprise
Depreciation expenses of fixed assets significantly impact their net book value and can represent substantial amounts Incorrectly calculating depreciation can lead to inaccuracies in the balance sheet and income statement, ultimately distorting the entity's operating revenue figures.
Given the inherent risks associated with fixed assets that can impact the accuracy and integrity of financial statements, auditors prioritize these items during audits Consequently, fixed assets undergo rigorous evaluation This emphasis, combined with extensive experience in auditing fixed assets, has led to the selection of the topic "Audit Procedure of Fixed Assets at ABC Company by Deloitte Vietnam" for presentation and discussion.
Study objectives
Analyse the audit procedures of fixed asset and fixed asset depreciation at Deloitte Vietnam Company Limited
Describe fixed assets audit procedures of Deloitte Viet Nam at ABC company in reality Recommend suggestions for audit of fixed assets at Deloitte Vietnam Company Limited.
Study subject
The subject of the study is the audit process of fixed assets at Deloitte Vietnam.
Scope and limitation of the study
The article examines the fixed asset audit cycle, highlighting the challenges posed by limited access to client documentation and constrained research time Due to these restrictions, a comprehensive understanding of the subject matter remains elusive Additionally, Deloitte Vietnam Co., Ltd enforces stringent customer information security protocols, resulting in the data and evidence presented in this report being for reference purposes only Consequently, the practical implications of the study are inevitably diminished.
Study method
Document research involves utilizing a variety of sources, including textbooks, Vietnamese Accounting Standards, Vietnamese Auditing Standards, the Vietnamese Accounting System, and relevant current circulars Additionally, the Auditing Model Program developed by the Vietnam Association of Certified Public Accountants (VACPA) serves as a crucial resource in this process.
Deloitte Vietnam conducts comprehensive fixed assets audit procedures, which include reviewing audit documents and working papers relevant to specific clients Engaging with auditors at Deloitte provides valuable insights into their methodologies and practices.
THEORETICAL BACKGROUND OF FIXED ASSETS AND FIXED
Fixed assets
Fixed assets are valuable resources with a long useful life, often extending across multiple accounting periods These assets play a crucial role in production and business cycles, representing a significant portion of total assets on financial statements.
Property, plant, and equipment (PPE) are essential assets for a company, representing its productive capacity and the integration of science and technology into its operations These assets play a crucial role in fostering sustainable growth, enhancing labor productivity, and ultimately lowering costs associated with products and services.
Fixed assets, essential for production and business operations, are not intended for resale These assets, including property, plant, and equipment, undergo gradual depreciation throughout their useful life As their value diminishes, it is transformed into operating costs, which are ultimately recouped through the sale of goods and services.
To maximize the effectiveness of fixed assets, companies must not only utilize them efficiently but also prioritize regular maintenance and repairs The treatment of repair costs varies based on the type of asset and the nature of the repairs Fixed assets can be categorized using several common criteria, which aid in understanding their management and financial implications.
• By Form: Fixed assets are divided into tangible and intangible fixed assets
• By Ownership: Assets are classified into existing assets and outsourced fixed assets lease
Fixed assets can be categorized into several types: those financed by equity, those acquired through loan capital, assets resulting from capital contributions, and assets obtained through sponsorship or donations.
Fixed assets are categorized based on ownership into three main types: tangible fixed assets, intangible fixed assets, and financial lease fixed assets This classification is widely recognized and is also reflected in the trial balance, making it a standard criterion for organizing fixed assets.
Tangible fixed assets, as defined by VAS 03, are physical assets owned by enterprises that play a crucial role in various production processes and business activities To be recognized as tangible fixed assets, these assets must meet four specific criteria.
1 It is certain that future economic benefits will be obtained from the use of that asset;
2 The cost of an asset must be reliably determined;
3 The estimated usage time is over 1 year;
4 Having sufficient value criteria according to current regulations
Intangible fixed assets, as defined by VAS 04, are non-physical assets that can be valued and are utilized by businesses for production, service provision, or leasing to other entities To be recognized as intangible fixed assets, these assets must meet four specific criteria.
1 It is certain that future economic benefits will be obtained from the use of that asset;
2 The cost of an asset must be reliably determined;
3 The estimated usage time is over 1 year;
4 Having the appropriate value according to the current regulations (valued at VND 30 million or more)
Under VAS 06 - Lease of Assets, finance lease fixed assets refer to fixed assets acquired through financial leases, where the lessor transfers most risks and benefits of ownership to the lessee At the conclusion of the lease term, ownership of the asset may be transferred to the lessee.
1.1.2 Principle of recognition and evaluation fixed assets
The historical cost of tangible fixed assets encompasses the purchase price, excluding any commercial discounts, along with all expenses necessary to prepare the asset for use This includes initial shipping and handling costs, installation and commissioning expenses, as well as fees for experts and other directly related expenditures.
The historical cost of an intangible asset encompasses its purchase price (excluding commercial discounts), non-refundable taxes, and any expenses directly related to preparing the asset for its intended use When land use rights are acquired alongside the purchase of buildings and structures, the value of these rights must be separately assessed and documented as intangible fixed assets.
Historical cost of fixed assets formed from CIP: "Is the final settlement value approved by a competent agency or person in accordance with the law on construction investment".
Accumulated depreciation
Depreciation of fixed assets, as outlined in paragraph 5 of VAS 03 and paragraph 6 of VAS 04, refers to the systematic allocation of the depreciated value of both tangible and intangible fixed assets over their useful life.
Value must be depreciated: Cost recorded on the financial statements, minus (-) estimate the liquidation value of the asset
Enterprises can choose one of the following depreciation methods:
1.2.2 The characteristics of fixed asset depreciation
In connection with depreciation expenses, the audit has two different characteristics compared to other normal expenses:
Depreciation expenses are accounting estimates rather than actual incurred costs, as they rely on the historical cost of an asset and the entity's estimated depreciation period This means that the calculation of depreciation cannot be solely based on documents, making it an inherently subjective process Consequently, auditing depreciation expenses involves evaluating these estimates rather than verifying actual expenses.
Depreciation represents the systematic allocation of historical costs, and its validity hinges on the chosen depreciation method The audit of depreciation expenses fundamentally involves assessing the adherence to accounting policies.
1.2.3 Principles of recognition and evaluation fixed assets
Under VAS 03, the depreciable value of tangible fixed assets is systematically allocated over their useful life, with the chosen depreciation method reflecting the economic benefits these assets provide to the business Each period's depreciation is recorded as part of production and business costs, unless it contributes to the value of other assets For instance, depreciation of tangible fixed assets utilized during the implementation stage is considered part of the historical cost of an intangible fixed asset, in line with intangible asset standards, or as amortization for intangible assets involved in self-construction or the construction of other assets.
The useful life of tangible fixed assets is primarily based on the enterprise's estimated utilization However, an organization's asset management policy may lead to a shorter estimated useful life than the asset's actual lifespan.
Therefore, estimating the useful life of a tangible fixed asset must also be based on the enterprise's experience with similar assets.
Auditing the fixed assets
The objective of a fixed asset audit is to determine:
Existence E The fixed assets shown on the financial statements are existing
Completeness C Fixed assets under ownership / control of the entity have been fully recorded
Right and obligation R&O Fixed assets shown in financial statements belong to the ownership and control of the entity
The fixed assets shown in the financial statements are priced and recognized in accordance with current accounting standards
The fixed assets presented on the Notes are real, belong to the units, complete, easy to understand and correctly classified
1.3.2 Common errors occur during auditing fixed assets
The entity does not conduct a physical count of fixed assets at the end of the period, which involves weighing, measuring, and counting to assess their quality and value for reconciliation with accounting records Without this procedure, customers cannot verify the existence of their assets or identify any activities that may diminish their value, such as theft or damage Consequently, this oversight impacts the accuracy of declarations regarding asset existence and completeness.
• Therefore, when taking a physical counting, customers cannot accurately determine which assets correspond to the assets recorded on the books This error affects assertions about existence, completeness, evaluation, and classification
• The classification of fixed assets on Fixed assets count sheet and Accounting Books is not consistent, which makes their reconciliation impossible This error affects valuation and classification assertions
Expenses such as repair and maintenance costs should not be capitalized, as they are recorded at the historical cost of fixed assets, ultimately inflating the asset's value This misclassification can significantly impact valuation assertions.
An increase in the historical cost of fixed assets can include expenses that are not historically measurable or expenses that should be recorded historically but are instead recognized as current period expenses This misclassification impacts the accuracy of valuation assertions.
• Incomplete recording of the disposed fixed assets This error affects valuation assertions
• Accounting for reduction in fixed assets in the absence of a liquidation decision
This error affects declarations of existence and completeness
• Do not keep track of pledged or mortgaged assets.This error affects declarations of existence and completeness
Fixed assets may be fully depreciated yet continue to incur depreciation, particularly in the case of operating leases, while finance lease assets should not be depreciated Errors in depreciation, such as incorrect calculations, improper estimates of useful life, or inconsistent methods from year to year, can significantly impact valuation assertions.
1.3.3 Control procedure for fixed assets
Besides the business cycle activities, auditors need to note the risks for fixed assets to control to prevent potential risks in the process of auditing
• Planing: Investment, procurement, repair, liquidation
− Review of investment needs and capacity
− Review and approval of specific structure of fixed assets
− Review and approval of specific cost estimates of investments
− Acceptance and final settlement of the project
− Review and approve the liquidation of fixed assets during the year
− Track the depreciation of each asset
− Check liquidation records and ledger
− Assign duties between recorders and fixed assets managers in reality
• Check detailed records of fixed assets:
− Detailed card of fixed assets
• Propose policies to differentiate between investment expenses and expenses of returns
1.3.4 Audit procedure for auditing the fixed assets
During this phase, the audit team examines the client's documentation to gain insights into the enterprise's regulations and accounting processes They assess the internal control system through prepared questionnaires, direct investigations, interviews, and the collection of relevant information The primary objective for the audit team is to thoroughly understand the client's internal control mechanisms.
− Client’s business environment and areas;
− Accounting policies applied by the entity;
− Accounting standards, Institutions, and Other regulations affecting the business lines of enterprises;
− The company's objectives and operational strategies and related business risks;
− Assess the business situation and financial strength;
− Review new or significant changes in important contracts and agreements to identify risks of material misstatement
❖ Understanding the internal control system:
Auditors gain insight into the Internal Audit System by examining its key components: the control environment, risk assessment, information and communication, control activities, and monitoring activities Once they have a thorough understanding of the internal control system, auditors must document the information gathered to show their awareness of the system This documentation is typically compiled and presented in the form of reports.
❖ Preliminary assessment of control risk
The auditor will assess the client's internal control system, leveraging gathered information and their professional judgment, to evaluate and conclude on the risks related to each assertion for every item.
• When conducting an audit of fixed assets, it is necessary to pay attention to the following risks that may occur:
− Relating to the historical cost of fixed assets: may be misrepresented with reality, incorrect recording of increase or decrease in asset value, incorrect source transfer
− Regarding the depreciation of fixed assets: the depreciation calculation method is not suitable, the calculation and allocation method is not reasonable, not in accordance with current regulations
When addressing the repair and upgrade of fixed assets, it's crucial to distinguish between repair operations and upgrading activities, as they are often confused Consequently, it is incorrect to record an increase in the historical cost of fixed assets due to these misunderstandings.
− Relating to liquidation activities: wrongly determining the residual value of liquidated assets Assets that have been depreciated but continue to depreciate
Many leasing transactions fail to be accurately categorized as leases, and the fixed assets involved are often misclassified based on the terms of the lease agreement.
Auditors must be vigilant about common errors encountered in fixed asset audits, employing effective audit techniques to identify potential discrepancies and mitigate associated risks.
The final stage of general audit planning is conducted by the audit team leader, with the auditor's director serving as the final reviewer Key criteria for determining performance metrics (PM) typically include profit before tax, revenue, and total assets.
Testing controls is an audit procedure aimed at assessing the effectiveness of controls in identifying, preventing, and correcting significant misstatements at the assertion level The findings from this testing enable auditors to determine whether to proceed with or expand their substantive testing.
The controls on fixed asset tests we perform generally cover three aspects including fixed assets tagging, segregation of duties, and procurement procedures of the assets Fixed Assets Tagging
The client implements a control procedure by affixing unique identifying tags to each asset, including furniture and equipment This fixed asset tagging system enables the client to monitor all tagged items effectively and make necessary adjustments to the balance sheet for acquisitions and disposals Furthermore, it serves as a safeguard against the unauthorized use of assets for personal gain.
The audit team conducts control tests by verifying that the tag numbers on the fixed assets list match those on the actual assets This process ensures that clients manage their assets efficiently and effectively When this control procedure is successful, it significantly increases the likelihood of accurate transaction recording and timely detection and correction of errors.
Segregation of Duties over Assets
Segregation of duties simply means that no person handles all or most of the transactions involved in fixed assets alone, including recording, authorization, purchase and payment
In this case, segregation of duties plays an important part in preventing fraud that can occur with fixed assets
The audit team must verify the effective segregation of duties concerning fixed assets during control testing This includes ensuring that responsibilities are appropriately divided among different individuals to prevent any potential conflicts of interest and enhance accountability.
• The client's staff requesting for the fixed asset is not the same person approving it
• The person who keeps the fixed assets records is not the same person who enters or removes entries in the general ledger
• The person keeping custody of fixed assets is not the one in the accounting function Procurement Procedures and Disposal of Fixed Assets
APPLICATION OF FIXED ASSETS AUDIT AT DELOITTE VIET
History and development of Deloitte Vietnam
Diagram 1 History of Deloitte Vietnam
Core value
Deloitte is dedicated to delivering exceptional service to its clients while cultivating an inclusive and supportive environment By collaborating with integrity and passion, the company strives to create positive impacts that benefit the community.
Deloitte Vietnam has built up core values as the basis for decisions made and actions taken to meet common goals:
Deloitte sets the industry standard through its exceptional scale, expertise, and services, while also reinvesting in future growth By contributing to communities and fostering opportunities, Deloitte is committed to paving the way for a better and more sustainable world.
By consistently upholding integrity and ethics in action, Deloitte has won the trust of clients, regulators and the public
• Take care of each other
The culture of Deloitte is “We are all this together”, all employees of Deloitte always take care and support each other, prioritizing respect, fairness and development
Deloitte prioritizes fostering a diverse and inclusive culture within its multinational work environment, aiming to attract top talent globally The firm is committed to ensuring equal opportunities for all employees, allowing them to develop and advance in their careers.
Adopt a collaborative mindset that spans across various businesses, geographies, and skill sets to achieve a significant and measurable impact Evaluating Deloitte's success goes beyond mere metrics; it encompasses the strength of the relationships fostered and the level of innovation introduced to address challenges effectively.
Business service of Deloitte Vietnam
Deloitte Vietnam offers a comprehensive range of services including auditing and assurance, tax and legal support, financial consulting, risk consulting, and specialized training Led by experienced partners, Deloitte delivers effective solutions tailored to businesses and organizations globally Their integrated approach, which combines deep industry knowledge, innovation, and business insights, ensures clients receive high-quality services that meet their unique needs.
Organizational Structure of Deloitte Vietnam HCM Branch
Diagram 2 The management apparatus in Deloitte Vietnam
Sources: Prospectus of Deloitte Vietnam Company Limited
• Audit and Assurance Department in HCM
Diagram 3 The structure of Audit and Assurance Department
During fieldwork, the engagement team typically includes 1 manager, 1-2 seniors, 1-2 assistants, and 1-2 interns, with staff selection being random and managed by the engagement team If the job has undergone an interim audit, the same group will be retained for the final audit Once Ms Huyen assigns the staff, their details are entered into Deloitte's SAP system, allowing team members to easily access their job information.
The senior is responsible for directly assigning tasks to assistants and interns Prior to fieldwork, the senior provides task allocations and previous year's working papers for the staff to review.
Interns are typically tasked with managing various working papers, including Cash, Other Receivables and Payables, Fixed Assets, Other Income and Expenses, Financial Income and Expenses, Other Assets, Equity, and Operating Expenses Additionally, they are responsible for preparing documentation for each engagement.
Introduce Deloitte’s audit tools
Since 2017, Deloitte has been enhancing auditor efficiency and quality through its globally utilized Engagement Management System (EMS) software By leveraging EMS, auditors can execute tasks swiftly and accurately using a structured system of records This software is compatible with the Windows operating system and integrates seamlessly with user-friendly applications like Word and Excel, ultimately delivering greater value to customers.
EMS offers a valuable tool that enables examiners to generate review notes on auditors' work papers, addressing any concerns or areas requiring clarification This functionality facilitates a more efficient and effective review process.
Since 2019, Deloitte has introduced the use of DWW (Deloitte Way Workflows) for audit contracts exceeding 600 hours, enabling standardized audit procedures among its global members.
Application of audit of fixed assets audit at Deloitte Viet Nam in reality and
Deloitte's motto, "Making an Impact," emphasizes the importance of understanding each client's unique business environment Different industries face varying risks, and the management's risk tolerance shapes their organizational culture and operational methods This highlights the distinct characteristics of business-to-business interactions, underscoring the necessity for Deloitte Vietnam to initiate the audit process with a thorough understanding of the client's business.
The understanding phase serves as a crucial foundation for a company to establish an effective audit process that balances cost and time By identifying and analyzing potential risks during the audit, the company can make informed decisions that facilitate the optimal allocation of resources.
Clients using the service auditor's FS Deloitte Vietnam will be divided into two types of clients: clients have audited the previous year and the audit client's first year
Deloitte Vietnam simplifies the audit process for clients who were audited the previous year by proactively reaching out to discuss the engagement letter for the current year They utilize and adapt the information gathered from last year's business activities to reflect any changes that have occurred To effectively assess these changes, the audit team collects essential background information, including the organizational structure, modifications in business operations, and updated accounting policies This comprehensive approach allows the audit team to develop a tailored audit plan for the current year.
For the first year audit client, after receiving the FS audit service request from the client, the audit team will collect information about the client as follows:
• Business activities and key activities;
• Basis for preparing financial statements;
In the pre-planning phase, experienced auditors conduct a thorough analysis of relevant information to assess the feasibility of an effective audit Once the engagement letter is signed, auditors must delve deeper into the collected data to formulate a tailored and efficient audit plan while identifying potential risks throughout the audit process.
ABC Company is a client audited by Deloitte Vietnam last year Client information is summarized in the table:
Table 4 Basic information of ABC Company
Vietnam-Singapore Industrial Park, Binh Hoa Ward, Thuan An City, Binh Duong Province
Business field Company production of drink products
Business cycle 12 months (from 1/1 – to 31/12)
ABC's financial statements are prepared in compliance with Vietnamese Accounting Standards, the Corporate Accounting System, and relevant legal regulations governing the preparation and presentation of financial statements These statements are generated using the accrual basis of accounting.
Applicable accounting book form: General journal
• Basic information related to fixed assets
The drink manufacturing industry is characterized by large, immobile fixed assets, making them susceptible to theft Consequently, ensuring the completeness of these fixed assets is the most critical risk factor to address.
All fixed assets are meticulously labeled and numbered in accordance with the accounting system, facilitating an efficient annual physical count On the day of the fixed assets count, the audit team leader conducted interviews with the client to ensure that team members were appropriately assigned to oversee the physical counting process.
• Understand accounting policies for fixed assets
Auditors have gathered accounting policies for fixed assets from client interviews, revealing that ABC's client, a state-owned enterprise, adheres to Circular 45 The client employs the straight-line depreciation method for all fixed assets, with the depreciation timelines for asset groups detailed in Table 5.
Table 5 Accounting policies for fixed asset at ABC company
Types of fixed assets Minimum depreciation time (year)
Deloitte Vietnam, like many auditing firms in the country, emphasizes proactive communication with clients by reviewing previous audits This approach fosters strong connections and demonstrates Deloitte's commitment to collaboration with its clients.
Deloitte Vietnam aims to thoroughly understand the unique characteristics of first-year audit clients, ensuring a seamless and effective audit process that aligns with their collaborative goals.
2.2.2 Getting understanding of internal control and process
The assessment of internal control systems is tailored to the client's business activities, providing auditors with a comprehensive understanding of the organization to effectively plan audits and evaluate the risks of material misstatement in financial statements Effective internal control systems can streamline the audit process, allowing auditors to save time while still meeting their audit objectives.
The audit team comprehensively evaluates the client's internal control system across the enterprise by analyzing five key components: control environment, risk assessment, information and communication, control activities, and monitoring activities This assessment is further enhanced through detailed research on critical business cycles, particularly focusing on fixed assets and their depreciation.
In Vietnam, Deloitte typically does not evaluate the internal control system for fixed assets separately; instead, they conduct a general assessment through client interviews to understand the processes of recording and depreciating fixed assets Once the audit team comprehends the internal control system, they perform design and implementation testing (D&I) to determine the effectiveness of control activities Effective D&I results can shorten the audit duration while still meeting objectives by reducing the need for substantive tests Conversely, ineffective results necessitate additional substantive testing procedures.
Last year, Deloitte Vietnam conducted an audit of ABC Company, focusing on the understanding of fixed assets and their depreciation cycle The audit results were presented using pre-designed questionnaires, supplemented by narrative descriptions, and in some instances, the audit team included flow charts to illustrate the findings.
Through client interviews, the audit team obtained information about fixed asset management process as follows
✓ For process of fixed assets depreciation
To increase efficiency in fixed asset management, client perform separate tasks, segregation of duties is summarized in table 6
Table 6 Fixed asset segregation of duties at ABC company
Updating addition and disposal FA into accounting system
Reconciliation general ledger to fixed assets register
Approve annually asset budget and capital expenditure appropriation requisition
Approve purchasing order Ms D - General Director
Review fixed assets register Ms A - Chief Accountant (from
✓ For understanding the flow of transactions
Name of the Significant Flow of
Principal Business Activities/Sub-process
Fixed Asset cycle Acquiring fixed assets
Disposal fixed assets Depreciating fixed assets Managing fixed assets
To acquire new fixed assets, the requesting department or project head must complete a Requisition Form and submit it to Ms D for approval Following this, Ms D collaborates with department heads to develop a purchasing plan for each project, which is then forwarded to the purchasing and accounting departments Given ABC's unique business requirements, certain fixed assets must be imported or sourced from specific suppliers For these particular assets, Ms D will approve the request and identify the appropriate supplier, after which an approval decision is sent to the purchasing department to facilitate the acquisition process.
REMARKS AND SUGGESTIONS TO THE APPLICATION OF
Remarks on the audit of fixed assets at Deloitte Viet Nam
Deloitte Vietnam, a prominent member of Deloitte International, ranks among the top four auditing and consulting firms in the country, consistently achieving high annual revenues and prestigious global rankings Proudly inheriting the traditions and culture of RSM International, Deloitte Vietnam fosters a professional and friendly work environment that encourages continuous learning and personal development for all employees.
Deloitte Vietnam is guided by experienced auditors with extensive training from leading developed countries, ensuring a high level of professional knowledge Many of its managers and partners hold the first audit practice certificates issued in Vietnam, demonstrating their expertise As a result, Deloitte Vietnam is fully equipped to meet all customer service requirements.
Dynamic and enthusiastic human resources are essential for fostering a vibrant working environment at Deloitte Vietnam, where continuous learning is prioritized The company offers regular training courses that keep employees updated on the latest Vietnamese and international laws related to audit and accounting, as well as essential soft skills for effective customer communication These elements collectively contribute to the strength and success of Deloitte Vietnam.
❖ For audit process, specifically the auditing process of fixed assets at Deloitte Vietnam
The carefully designed process ensures effective implementation, yielding reliable results with minimal audit risk Each task is meticulously planned, with clear assignments of responsibilities, while every audit stage is executed with attention to detail, care, and adaptability.
In the final stage of a fixed assets audit, senior audit team members collaborate to ensure compliance with quality control procedures The Board of Directors reviews the auditor's working papers, focusing on risks that could materially impact the financial statements Following this, an independent team conducts a cross-control review of all working papers to verify adherence to the company's quality and ethical standards.
Year-end audits often face manpower shortages due to seasonal demands, leading to interns handling non-significant accounts While these audits are overseen by senior auditors, managers, and partners, entrusting inexperienced interns with this responsibility poses risks to the company's social benefits and reputation.
The uncooperative behavior of certain clients hinders auditors from effectively implementing evidence collection techniques Some clients exhibit negative attitudes and fail to supply requested documents, which prevents auditors from gathering adequate and appropriate evidence necessary to assess the reasonableness of financial statements.
Familiarity plays a significant role in audit assignments, as audit teams are often comprised of auditors who have previously worked with specific clients For instance, if Auditor A is assigned to client B this year, the likelihood of A continuing to audit B in subsequent years is high This continuity can be beneficial, as a familiar auditor is typically more knowledgeable about the client's processes and policies, allowing for quicker identification of risks and efficient execution of audits However, long-term relationships can pose challenges, as auditors may struggle to detect new risks or errors, focusing instead on past mistakes or, due to familiarity, overlooking client errors This can compromise the independence and objectivity of the audit report.
In addition, the application of fixed assets audit at ABC Company sometimes proved not really effective in fixed assets audit process at Deloitte:
Auditors often face challenges in assessing the machinery and equipment of various enterprises due to their limited experience and the unique nature of each industry's operations Consequently, the auditing process for fixed assets frequently fails to accurately re-evaluate the condition of these critical assets.
Due to time and resource constraints, auditors often do not fully implement detailed testing during audits For instance, in TOD 8, which focuses on testing the details of fixed assets depreciation, the auditor has only compared fluctuations between the current and previous years, neglecting to analyze monthly variations As a result, auditors lack a comprehensive understanding of the status and characteristics of fixed assets for the year To enhance audit effectiveness, it is crucial to conduct a thorough assessment of fixed asset depreciation trends over time.
To prevent overloading human resources during peak periods, Deloitte Vietnam should consider increasing its workforce Additionally, interns should be utilized primarily for support roles rather than being assigned main responsibilities for accounts, as they may lack the necessary experience and professional expertise.
Deloitte Vietnam should expand its training offerings to include classes focused on the unique characteristics of various business types This initiative will enhance auditors' understanding of different machines and equipment, enabling them to more effectively assess their operational status.
When assessing fixed asset depreciation expenses, auditors must analyze the monthly depreciation expense allocation table and determine if the variations align with the entity's fixed asset status during that period.
Over the past 25 years, the audit industry in Vietnam has experienced significant growth in both scale and quantity, establishing a vital role in the economy Audit firms are continuously enhancing the quality of their services, aligning them with market demands By offering audit and financial advisory services, these companies have played a crucial role in refining economic and financial policies, thereby supporting effective state management and business operations.
Deloitte Vietnam, part of Deloitte International, is committed to expanding its operations and enhancing service quality under the motto "Making an impact." To achieve this goal, the firm frequently conducts training sessions aimed at improving employees' professional skills and establishes rigorous quality audit processes to ensure the excellence of its services.