Auditing procedures of fixed assets for r nprofessional logistics etc joint stock company at r npwc vietnam co , ltd

AUDITING PROCEDURES OF PWC's FIXED ASSETS AT PROFESSIONAL LOGISTICS ETC JOINT STOCK COMPANY .... 13 3.2 Audit procedures of PwC Vietnam Co., Ltd for Fixed Asset of Professional Logistic

Reasons for choosing this topic

Fixed assets are used in production and business, with practical significance in many production cycles

Fixed assets are crucial in financial statements, as their depreciation costs significantly impact enterprise income tax calculations and payments The Ministry of Finance closely regulates this area due to its inherent risks and sensitivity.

The topic of fixed assets is essential for practitioners as it enhances their knowledge and deepens their understanding through research on related issues This is the reason I selected this subject for exploration.

"Audit process of Fixed Assets of Professional Logistics ETC Joint Stock Company at PwC Vietnam Co., Ltd."

The topic’s objectives

This article explores the General Audit process at PwC Vietnam, focusing on the auditing of fixed asset operations for a specific corporation Through this experience, I aim to gain practical insights as an auditor, while also providing businesses with recommended solutions to enhance their growth and sustainability.

Research Methods

• Learn about Vietnamese accounting and auditing standards combined with related documents related to fixed assets from books, newspapers, and the internet

• Collect audit procedures relating to fixed assets at PwC Vietnam, learn several records and working papers of the auditor provided by the company and select a specific client

• Interview and observe how the auditors collaborate together and communicate with clients; then consult with Instructors on remaining issues.

Scope and limitations of the topic

This article examines the auditing cycle of fixed asset operations, utilizing various sources such as client documents, general ledgers, prior year reports, and the author's firsthand experience PwC Vietnam Co., Ltd emphasizes the utmost importance of client confidentiality, ensuring that all data and information shared are for illustrative purposes only, which may not fully capture the complexity and multifaceted nature of the situation.

The general layout of the topic

The structure of the thesis consists of 3 main parts as follows:

 Chapter 1: Overview of PwC Vietnam Co., Ltd

 Chapter 2: The process of auditing PwC Vietnam's fixed assets at Professional Logistics ETC Joint Stock Company

OVERVIEW OF PWC VIETNAM CO., LTD

History of formation and development

The company was established in 1998 by Coopers & Lybrand and Price Waterhouse merger These two companies appeared in England in the mid-19th century

In September 2010, the company rebranded and officially shortened its trading name to PwC Subsequently, on May 30, 2017, the legal entity was updated to PwC (Vietnam) Ltd PwC Vietnam primarily serves clients involved in foreign direct investment (FDI).

According to the PwC Transparency Report 2018, businesses that are clients of PwC can be named: JPMorgan Chase Bank, Insurance Company AIA Insurance, HSBC Bank

PwC has evolved into a vast network of companies operating in 158 countries, with 743 locations and over 236,000 employees As a leading provider of quality audit, tax, and consulting services, PwC is recognized for its professionalism and expertise in the industry.

PwC is recognized worldwide for its extensive client base, which includes prominent companies such as Bank of America, Goldman Sachs, Prudential, IBM, and Ford Additionally, PwC has a longstanding partnership as the audit firm for the Oscars, the oldest and most prestigious film awards in the world.

Main activities of the company

The slogan, "Values and beliefs are the fundamental foundations of achievement." Trust creates value - the trust that clients have in individuals and their trust in themselves

PwC Vietnam provides a comprehensive array of services designed to meet the diverse needs of its clients, focusing on collaboration, strategic planning, and enhancing trust in business professionals The firm is structured into three primary categories to effectively deliver these services.

PwC plays a crucial role in enhancing the operational efficiency and financial health of businesses The firm aids organizations in elevating the quality of their external financial statements while ensuring compliance with evolving regulations, including Vietnamese Accounting Standards and International Financial Reporting standards.

Standards (IFRS) They also assist clients in supplying non-financial information from outside sources and improving the client's company management procedures

• An audit of financial statements is performed

• Pre-agreed-upon processes are audited

Discover valuable opportunities in mergers and acquisitions, exit strategies, and capital markets with PwC Renowned for its practical support during M&A transactions, PwC offers comprehensive advisory services throughout the entire process, from execution strategy to post-transaction integration Their expertise encompasses financial, tax, legal, and operational due diligence, capital market access, appraisal, negotiation, and deal structuring, ensuring a seamless and successful transaction experience.

Assisting clients in increasing their technological and digital influence, nurturing and generating competitive advantages, changing human resources, strategically allocating costs, managing risks, and legal complexity

We help businesses identify and mitigate tax risks in Vietnam and globally, ensuring they understand and fulfill their tax compliance obligations Our services include implementing tax strategies that align with commercial and operational goals, resolving disputes with tax authorities, and addressing planning, accounting, and tax reporting issues effectively.

PwC Vietnam Law Firm's diverse legal consulting offerings enable it to serve clients effectively:

● Banking and finance legal assistance

● Corporate and commercial legal advice

● Business mergers and acquisitions consulting

This includes international personnel transfer, salary and benefits analysis, human resource assessment, human resource transformation, and organizational restructuring

Supporting private enterprises involves offering practical business guidance to help them thrive and meet their specific needs PwC Vietnam's experts aid clients in navigating product challenges and complex issues throughout a company's growth, addressing areas such as compliance, internal controls, cash flow management, business expansion, risk management, asset protection, and value enhancement.

Foreign business assistance (Europe, Japan, Korea, China, and Taiwan): includes professionals who speak native languages

This expert team offers tailored solutions to meet the unique corporate needs of each client Acting as the primary liaison for PwC's global network of specialists, they help streamline the connection process by leveraging their vast human resources and expertise.

Core values

At PwC, our primary goal is to restore trust in society and address critical challenges PwC Vietnam excels in delivering unique value through a robust network of technology innovators, consistently committed to enhancing client experiences We focus on developing effective strategies and executing them with the highest level of service, aiming to boost client satisfaction while ensuring transparency, trustworthiness, and consistency in business operations.

According to PwC, a corporation's success relies on the personal and professional skills of its members By prioritizing diversity and inclusion, PwC ensures that it hires the best talent on an equal footing, fostering a collaborative environment aimed at making the company an exceptional workplace.

Employees are equipped with essential tools, including hands-on work experience, daily training sessions, prompt and constructive feedback, and top-notch learning and development opportunities These resources empower them to fulfill their commitments to the community and clients while adding significant value to the business.

Organizational structure

PwC Co., Ltd has developed a well-defined organizational chart that clearly delineates its functional departments for effective operations At the top of this structure is the General Director, who oversees the company's management Please refer to the image below for a visual representation.

Audit and Assurance is the department with the most personnel in the organization, and it supplies audit, review, and assurance services to clients

This section offers expert tax advice to clients, helping them create an efficient tax strategy while ensuring compliance with current legal regulations Additionally, it provides support to other departments on tax-related issues, including tax counseling and assessment.

Like the other departments in the organization, the Legal department advises clients on Labor law,

Investment legislation, Securities law, and other regulations and laws

Perform staff recruiting, assessment, event organization, and timekeeping in the firm

The accounting department is responsible for documenting financial transactions and converting them into financial statements to evaluate profit and loss over a specific operational period Additionally, it plays a crucial role in revenue and expense planning while collaborating with other departments to execute the company's overall strategic objectives.

Global PwC guidance - Overview of PwC Audit

PwC has implemented a standardized methodology that serves as the foundation for all its audits, ensuring adherence to the International Standards on Auditing (ISAs) as well as PwC's internal policies and guidelines.

The PwC audit methodology, known as PwC Audit, is founded on International Standards on Auditing (ISAs) and incorporates specific PwC policies and guidelines as necessary The PwC Audit Guide outlines this methodology, ensuring a consistent audit approach across PwC member firms It is complemented by technology-based audit support tools, templates, and resources that assist engagement teams in delivering assurance and related services Designed for flexibility and scalability, PwC Audit accommodates various types of engagements, although Global Independence Policies (GIP) and Network Risk Management policies may apply different guidelines for certain entities based on their characteristics.

INTRODUCTION TO PROFESSIONAL LOGISTICS ETC JOINT STOCK COMPANY

General introduction about Professional Logistics ETC Joint Stock Company

Professional Logistics ETC Joint Stock Company, previously known as Professions Logistics ETC Company Limited, is a limited liability company with multiple members This company, which operates under the auspices of PwC, exemplifies a realistic client in the logistics sector.

SR Vietnam pursuant to the initial Business registration certificate No 1902000665 dated 27 January

2005 which was issued by the Department of Planning and Investment of Vinh Phuc Province

On 17 October 2008, Professional Logistics ETC Limited Liability Company was granted a Business registration certificate for two or more members limited liability company No.0102036241 by Department of Planning and Investment of Hanoi City

On 27 April 2011, Professional Logistics ETC Limited Liability Company was granted a Business registration certificate for one-member limited liability company No.25002354 by Department of Planning and Investment of Hanoi City Accordingly, the sole owner of Professional Logistics ETC Limited Liability Company was Hung Tri Refrigeration Industry Joint Stock Company

The company officially operated under model of a Joint Stock Company under the 12 th amended

Enterprise registration certificate No.2500235476 dated 23 December 2014 issued by the Department of Planning and Investment of Hanoi City Accordingly, Professional Logistics ETC Limited Liability

Company was renamed as Professional Logistics ETC Joint Stock Company The company’s registered charted capital was VND40,000,000,000, equivalent to 4,000,000 shares with per value of VND10,000 per share

On 6 April 2016, Digital Machine and Equipment Joint Stock Company – established under the Enterprise registration certificate No 2500236448 issued by Department of Planning and Investment of Hanoi City in

21 April 2005 – merged with the company under 14 th amended Enterprise registration certificate

The Digital Machine and Equipment Joint Stock Company will transfer all tangible and intangible assets, rights, obligations, and legitimate interests to the receiving company, which will also inherit all associated debts, including taxes and employment contracts According to the 14th amended Enterprise Registration Certificate, the total charter capital of the company is VND 89,000,000,000, with the most recent 16th amendment dated September 23, 2021.

Professional Logistics ETC Joint Stock Company, established on January 27, 2005, is situated in Lot No 39E, Quang Minh Industrial Park, Quang Minh Town, Me Linh District, Hanoi, Vietnam The company specializes in road freight transit and emphasizes the importance of its organizational structure, managerial capabilities, and financial ratios in evaluating its commercial commitment.

Professional Logistics ETC Joint Stock Company specializes in storage services, employing over 100 staff members across various locations With a total revenue of $2,757,343.61, the company has established connections with 5,990 firms, highlighting its significant presence in the logistics industry.

Overview of organizational structure

The company’s organizational chart was as below

The board of directors is responsible for developing corporate management policies and making major corporate decisions, such as

 Hiring/firing members of the board of directors (the General Meeting can also decide to fire a director of Shareholders);

 Providing dividend policy, options policy, and reward and punishment for trustees

A balanced Board of Directors is essential to ensure that both management team interests and shareholder interests are fairly represented When too many directors are affiliated with the company, decision-making may favor the management team over the shareholders, leading to potential conflicts of interest.

Providing organizational leadership and acting as the board's representative

Executive committees play a crucial role in advising the board on key business issues, as well as analyzing investment opportunities, assessing risks, and monitoring industry trends It is essential for these committees to closely track their objectives and initiatives, providing regular and timely updates on their progress to the entire board.

The executive committee plays a crucial role in ensuring adherence to board policies and promoting good governance practices Their responsibilities encompass overseeing the company's ethical standards, security protocols, quality management, human resources, and compliance with legislation Additionally, they are tasked with monitoring progress to ensure that organizational objectives are successfully achieved.

Executive committees facilitate communication between the board, committees, and employees in specific ways The executive committee is frequently in charge of keeping everyone informed regarding alignment and decision-making

Every year, executive committee members engage in board development, mentoring, and evaluating board members This process enhances the efficiency of the board by streamlining various activities, ultimately leading to a more effective governance structure.

Business Department Board of Manages

The CEO guides the business under the board's directives Management responsibilities include the following:

 Keeping the board informed and knowledgeable

 Bringing to the board well-documented suggestions and information

2.2.4 Human Resources Organization and Department

When hiring for new positions, HR must first identify the organization's specific needs and ensure they are met After announcing the job opening, further research is essential to attract and present qualified candidates Recruitment is a significant and costly endeavor; selecting the right candidate can revitalize a business, whereas the wrong choice may disrupt operations.

Human resources are responsible for scheduling interviews, managing hiring initiatives, and onboarding new workers

Payroll is a beast unto itself Every paycheck, taxes, and hours must be calculated and collected

Expenses must be refunded, and increases and incentives must be included

Mishandling disciplinary procedures can tarnish the reputation of human resources, leading to the loss of valued employees and potential litigation Conversely, when executed properly, disciplinary action can foster employee growth and success.

As companies evolve, it is essential to review and update policies annually to ensure they remain beneficial for both the organization and its employees Human Resources plays a crucial role in issuing public policy updates and recommending changes when policies no longer serve their intended purpose Additionally, policies should be amended in response to specific incidents, emphasizing the importance of involving HR in these decision-making processes.

Maintaining HR records is a legal obligation that helps organizations identify skill gaps, streamline recruitment, and analyze demographic data for compliance with regulations These records also contain essential personal and emergency contact information for each employee.

To attract top talent, it's essential for companies to remain competitive in their offerings If the benefits provided are not appealing enough, potential candidates may choose to join other organizations, even if those companies offer lower salaries Therefore, HR departments should consistently analyze comparable businesses to ensure their perks are attractive and competitive in the job market.

Besides that, Finance and Accounting Department organizational structure is presented as below

Chief Financial Officer: The General Director is legally responsible for the company's financial choices, organization, direction, cash flow monitoring, financial planning, financial risk management, record keeping, and financial reporting

The Chief Accountant oversees the unit's accounting operations and reports directly to the Finance Director This role includes inspecting and assisting the accounting department staff in fulfilling their duties Additionally, the Chief Accountant is responsible for managing and enforcing the financial accounting reporting system, evaluating the company's business performance, and ensuring the accuracy of all financial reports.

The General Accountant reports to the Chief Accountant and is responsible for collecting, processing, verifying, and documenting the company's economic transactions This role involves synthesizing detailed data to ensure accurate summaries in the accounting books.

A tax accountant, reporting to the Chief Accountant, is responsible for preparing monthly and quarterly tax reports, as well as managing corporate tax payments This role includes the preparation of financial accounts, year-end tax reports, corporate income tax (CIT), and personal income tax (PIT) reports Additionally, the tax accountant engages directly with tax authorities to resolve any arising issues.

A payment accountant is responsible for processing receipts and payments for the Chief Accountant while directly monitoring and controlling transactions This role involves accounting for economic and financial activities related to cash flow, ensuring that payments are made to both internal and external entities of the organization.

A warehouse accountant is responsible for managing various warehouse activities, including tracking inventory, handling the import and export of goods, and generating invoices and necessary documentation They ensure accuracy by comparing invoices and documents with data before reporting findings to the Chief Accountant Additionally, they oversee the inventory levels maintained in the warehouse.

Accountant: Carry out the allocated tasks; the primary responsibility is to assist the accounting team's leader in taxes, costs, rent, cash, sales, and purchases

The Marketing Department plays a vital role in advancing an organization's business objectives and mission by serving as its public face It is responsible for creating and managing all promotional materials that represent the company effectively.

Department's responsibility is to reach out to prospects, customers, investors, and the community while building an overall picture that reflects the firm favorably

The Marketing Department's responsibilities may involve one or more of the following:

 Establishing and managing the company's brand

 Creation of marketing and promotional materials

 Creating material for the company's website that is search engine optimized

 Managing and monitoring social media

 Conducting market and customer research

 Supervising third-party suppliers and agencies

The Business department must market, advertise, and distribute the company's products/services to consumers through various channels Furthermore, the sales department will advise the Board of

AUDITING PROCEDURES OF PWC's FIXED ASSETS AT PROFESSIONAL LOGISTICS

Overview of the item Fixed assets

3.1.1 Characteristics of the item Fixed assets

In addition to the basic accounting regime rules, Fixed Assets are impacted by many Vietnamese regulations and circulars

● Accountancy Standard No 03: Tangible fixed assets Accounting Standard No 04: Intangible fixed assets

● Circular 200/2014/TT-BTC governing the corporate accounting regime

● Circular 45/2018/TT-BTC governing the management and depreciation of fixed assets at agencies and organizations, as well as fixed assets entrusted to firms by the State to manage

Furthermore, many organizations use the accounting system based on international accounting standards IFRS (IAS 16, IAS 38, )

3.1.1.2 Summary of Fixed Asset Accounting in Vietnam

Fixed asset accounting involves managing specific documentation, including delivery and receipt records, contracts, purchase invoices, and other relevant papers Each fixed asset must be individually categorized, numbered, and documented, with detailed tracking in a fixed asset monitoring book to ensure accurate record-keeping.

Accounting regulations mandate that fixed assets be tracked based on their historical cost, accumulated depreciation, and residual value Assets that are no longer in use and pending liquidation, yet not fully depreciated, must be preserved and monitored according to current standards, while also being depreciated in line with applicable laws.

3.1.1.2.2 Accounting for the additions and deductions of fixed assets

New acquisitions, capital contributions, and selected unit transfers are classified as additions to fixed assets According to the Vietnamese Accounting Standards (VAS), these are recorded under accounts 211 for tangible fixed assets, 212 for fixed assets under finance leases, and 213 for intangible fixed assets.

Fixed asset deduction takes place when enterprise assets decrease due to factors like end-of-useful-life liquidation, sales to other units, or capital contributions to joint ventures Accountants are required to maintain accurate and legitimate records during this process Additionally, accounts 711 (Other Revenue) and 811 (Other Costs) are used to reflect these transactions appropriately.

Depreciation refers to the methodical distribution of a fixed asset's depreciable value over its useful life, aligning it with the value of the products, goods, and services produced This process serves as a subjective assessment of an individual's ability to recover the capital investment associated with the asset It is essential to view depreciation as a total usable value allocated for manufacturing and economic objectives throughout the asset's lifespan.

Fixed asset depreciation refers to the decline in value of fixed assets over time, regardless of their involvement in production and business operations or other factors.

Fixed assets experience wear, tear, and damage from various factors during their usage The types of repairs required can be categorized into two groups, reflecting the distinct nature and extent of wear and tear on these assets.

Regular repair and maintenance involve minor, routine repairs conducted according to technical specifications to ensure the optimal functioning of fixed assets The costs associated with these regular repairs are promptly recorded within the department, reflecting the production and operational expenses of the repaired assets.

A significant repair involves restoring, updating, or renovating fixed assets that have sustained serious damage or do not meet technical specifications These repairs often require extended timeframes and incur substantial costs, prompting businesses to develop detailed plans and estimates Account 241 - Construction in Progress - is utilized by accountants to accurately reflect these financial activities.

In the fixed asset accounting process, it is crucial for enterprises to address the previously mentioned challenges to ensure effective tracking of fixed assets through swift and precise accounting practices.

In order to assist the deployment of fixed asset accounting in businesses, software is a handy support tool in addition to needing accountants to grasp essential information

Fixed assets serve as the essential physical foundations that enable a company to achieve its production and financial goals Effective management of fixed assets is crucial for enhancing operational efficiency Although fixed assets maintain their physical form throughout production cycles, their value depreciates over time Consequently, organizations must diligently monitor both the condition and value of their fixed assets to ensure optimal management and performance.

Management in-kind entails controlling the amount and quality of fixed assets

In terms of quantity, the fixed asset management department must assure appropriate supply in terms of capacity and satisfying the enterprise's production and business requirements

In terms of quality, preservation must guarantee that intricate pieces are not damaged or lost, which reduces the value of fixed assets

To effectively protect and utilize fixed assets, organizations must establish clear guidelines tailored to their specific activities Additionally, each unit should develop technical and economic regulations for different categories of fixed assets to ensure successful management This approach enables units to strategically plan and execute timely repairs, updates, and investments in new fixed assets, thereby enhancing production and business operations.

Value management focuses on accurately assessing the historical cost and residual value of fixed assets that are invested in, acquired, transferred, and amortized The core function of accounting revolves around the valuation of these fixed assets.

This role ensures that management receives precise, timely, and comprehensive information regarding the value of each type of fixed asset—encompassing original cost, depreciation value, and residual value—whether they are tangible, intangible, or financed lease assets, at all times.

3.1.2 Audit objectives and responsibilities for the item Fixed assets

Fixed assets represent a substantial portion of a unit's total asset value, with their significance varying by industry and operational type Consequently, the valuation of fixed assets serves as a crucial indicator of a unit's financial health and operational capacity.

Audit procedures of PwC Vietnam Co., Ltd for Fixed Asset of Professional Logistics ETC

PwC has established a comprehensive audit technique, known as the PwC Audit Guide, which serves as the foundation for all financial statement audits across its global offices This approach is structured around five key components, ensuring consistency and quality in the auditing process.

1 General understanding of the client and audit planning (Understand and Plan)

2 Risk assessment in auditing (Risk and response)

Although it is a distinct technique, PwC relies on the foundation of International Accounting Standards to ensure appropriate and consistent standards for most nations and all types of organizations worldwide

3.2.1 General understanding of the client and audit planning (Understand and Plan)

Developing a deep understanding of the client is essential for auditors, as it lays the groundwork for sound judgment and effective audit strategies By gaining insights into the client's operations, auditors can create a well-informed approach that ensures accurate evaluation of financial statement items.

The audit team relies on documentation provided by the client organization, along with the enterprise's standards and regulations, to understand the business's accounting processes Additionally, the auditor assesses the client's internal control system by preparing targeted questions, conducting surveys and interviews, and gathering relevant information about the entity's internal controls.

The audit team must precisely determine:

The operational model of a company significantly influences its fixed assets, which vary by industry type In manufacturing firms, fixed assets often consist of high-value machinery that is depreciated over several years, representing a substantial portion of the business's value Conversely, in service and tourism sectors, fixed assets typically include buildings, tourist attractions, and various constructions that support their operations.

● Clients use accounting strategies to account for fixed assets: recognizing fixed assets, capitalization, depreciation methods, legislation governing the acquisition, sale, transfer, and liquidation of fixed assets

● Find out what assets the firm acquired and liquidated over the fiscal year, as well as how much they were worth

Clients tend to conceal flaws in the operating system and procedures; thus, the auditor must use professional skills to get the most information from the client-side

Here is the illustration of how PwC understand of entity and environment

2: Undertanding of entity and environment

In this procedure, PwC analyzes the characteristics of ETC's business model to gain insights into the management of fixed assets and applied accounting methods This understanding enables the audit team to develop a tailored plan that highlights key focus areas and potential risks, allowing them to implement suitable procedures based on the specific nature of the client's company.

The accounting method used at Professional Logistics ETC Joint Stock Company as below:

● Tangible fixed assets (excluding construction in progress) are presented at cost less cumulative depreciation and losses All costs directly related to acquiring the asset are included in the cost

Expenses related to an asset purchase are included in the asset's book value or recognized as a separate asset only if they are expected to generate future economic benefits and can be reliably measured Conversely, all repair and maintenance costs are recorded in the income statement for the fiscal year in which they are incurred.

The primary focus of the enterprise is the processing and preservation of aquatic products Due to the nature of the industry, the risk of machine wear is greater compared to mass production companies To manage this, selected companies apply the straight-line method for depreciation over the estimated useful lives of their assets.

● After each accounting period, the carrying amount and useful life of assets are reviewed and, if required, changed

● If the book value exceeds the anticipated realizable value, the carrying amount of assets is immediately recognized at realizable value

● Gain/loss on asset disposal is defined by the excess of book value recorded in the income statement

● Construction in progress comprises capital expenditures of incomplete buildings, which are expenses minus cumulative losses and losses There is no depreciation expense allocation for construction in progress

● The accounting approach for intangible fixed assets is identical to that stated above for tangible fixed assets

3.2.1.3 Determine the level of materiality

This is one of the most critical duties in the audit planning process; hence only highly skilled and experienced auditors should execute it

Materiality is assessed through qualitative factors such as industry, production, and business environment, alongside quantitative metrics including profit before tax, profit after tax, net revenue, and total assets Additionally, equity considerations and the auditor's professional judgment play a crucial role in determining materiality.

There are three degrees of materiality at PwC Vietnam:

Overall materiality (OM) is the maximum threshold at which an auditor believes that financial statements may contain errors that do not influence their decision-making This concept is crucial for understanding the reliability of financial statements, as it helps auditors assess the significance of potential misstatements By utilizing standard OM levels, auditors can effectively evaluate the information presented in financial statements.

This ratio is affected by various factors, including the efficacy of the internal control system

● Performance materiality (PM) is defined as the allowable number of mistakes for a specific item in the financial statements PM is usually defined as follows:

The de minimis level, or minimum materiality (SUM), defines the threshold for misstatement adjustments, indicating when such adjustments become unnecessary An ideal SUM value is typically set between 1% and 2% of the performance materiality (PM), signifying the point at which any arbitrage adjustments are considered irrelevant.

○ When PM is set to 50% OM, SUM is defined as 5% OM; otherwise, SUM equals 10%

So to PROFESSIONAL LOGISTICS ETC Joint Stock Company, the overall materiality, Performance materiality and De minus materiality are set as below

Evaluating the selection criteria, or benchmark, is essential for assessing the materiality of financial statements Key metrics such as profit before tax, total income, gross profit, total cost, total equity, and net worth are commonly utilized Financial statement users tend to prioritize pre-tax earnings when analyzing performance Given that ETC has operated for over fifteen years as a profit-oriented company, the auditor chose to focus on the profit before tax benchmark.

OM is valued at 3% Profit before tax = 3% x 50,133,333,333333

Auditors utilize their prior knowledge of the client's firm to identify and assess events that could hinder the planning and execution of the audit In doing so, they uncover inherent weaknesses within the organization, which allows them to provide an initial assessment of control risk and determine the appropriate audit strategy for each item.

According to International Standards on Auditing 300 (ISA 300), auditors are required to create a comprehensive audit strategy that outlines the scope, timing, and direction of the audit, which is essential for the development of the audit engagement In formulating this overall audit strategy, auditors must carefully consider various key factors.

● Determine the nature of the audit engagement and its scope; Ensure reporting objectives to plan the audit time;

● Using professional judgment, consider material factors that have a direct impact on the engagement team;

● Determine the nature, timing, and extent of resources required to participate in the audit

3.2.2 Risk assessment in auditing (Risk and response)

Audit risk assessment involves identifying and analyzing potential risks of material misstatement to develop effective strategies for minimizing these risks This process requires auditors to conduct a thorough risk analysis, examining discrepancies or conflicts between financial and non-financial data and the firm's historical information The goal is to determine if the client firm presents a significant risk of misrepresentation.

For example, the PwC audit team also conducts an evaluation of cyber risk which is somehow still a new definition but can cause significant consequences

3: Understanding cybersecurity risk related to the audit

On the other hand, to consider about the risk of management fixed assets, the auditor evaluates potential audit risks after gaining a detailed understanding of the client:

● Are the assets liquidation and sale legal?

● Are capitalized costs adequately accounted for?

● Is the computed depreciation value appropriate for the enterprise's use?

● Accounts that have been shifted from incomplete development to fixed assets

● Are fixed asset insurance, maintenance, and repair correctly allocated?

This year, the corporation has limited liquidated assets, but its manufacturing equipment represents a significant portion of its overall assets This situation increases the risk of inaccurate cost capitalization To address this concern, the auditor will take necessary measures.

● Examine the acquisition and sale of fixed assets throughout the fiscal year, as well as whether or not depreciation expenditure was appropriately reported

● Examining transfers from incomplete construction to physical and intangible fixed assets

● Examine fixed asset insurance, maintenance, and repair

COMMENTS – RECOMMENDATIONS

During the audit preparation stage

Due to limited time and audit costs, auditors depend significantly on the information provided by clients, which can compromise the completeness and accuracy of this data This reliance can adversely affect the auditor's initial assessments and evaluations of clients.

To address this issue, auditors should diversify their information-gathering methods by consulting various sources, including industry professionals, the media, and peer companies Although this approach may require significant time and financial resources, it enables auditors to collect high-quality, objective data, ultimately leading to more precise initial assessments and evaluations of their clients.

To enhance the audit process for conventional clients, PwC should implement standardized audit records that consolidate historical information from each client's financial years Currently, the reliance on annual audit files limits auditors' access to comprehensive data on long-term clients By developing a uniform audit file that includes essential documents such as establishment decisions, company registration certificates, the Company's Charter, tax papers, and personnel records, PwC can ensure that any updates to these documents are reflected annually This approach will enable auditors to gain a deeper understanding of their conventional clients, ultimately improving the audit quality and efficiency.

At the time, it helps to find general information about clients of auditor more conveniently and quickly.

During the audit preparation stage

4.2.1 Completing the evaluation and inspection of the fixed asset internal control system

To effectively reduce extensive test procedures, auditors must conduct a comprehensive evaluation of the internal control system This involves utilizing available questionnaires, conducting client interviews, and considering variances in fixed asset management and the specific business type of each client Additionally, auditors should review the client company's books and documents related to procedures and internal control regulations By examining completed paperwork and records, auditors can verify adherence to established processes, leading to a more accurate assessment of the internal control system This thorough approach enables auditors to develop tailored inspection procedures, ultimately saving time during the audit process.

Analytical processes in fixed asset audits are often underutilized, primarily focusing on trend analysis rather than ratio analysis To enhance the overall analysis of financial statements, particularly fixed assets, auditors should prioritize ratio analysis Additionally, analytical operations should be applied throughout various stages of the audit, not just in the initial phases, to assess changes in asset values compared to the previous year Utilizing analytical techniques during audit planning can help auditors identify areas of risk more effectively and accurately.

The analytical method aids auditors in validating their findings during the final review stage of the audit, focusing on accounts and items within the financial statements This process enables auditors to form comprehensive judgments about the accuracy and fairness of the overall financial statements, addressing key concerns effectively.

The audit of Professional Logistics ETC Joint Stock Company revealed a limited application of analytical techniques, focusing solely on the annual changes in fixed assets without comparing data from earlier years or the broader industry This narrow analysis failed to uncover significant variations from previous years, and the auditors did not provide a detailed explanation for the differences identified in their calculations.

36 analytical techniques, but instead investigate the causes for the rise, focusing on which elements are primarily responsible for the increase Furthermore, no use of ratios has been made

Auditors rely on their expertise and judgment to select transaction samples for analysis, often favoring high-value transactions This tendency can lead to overlooking potentially significant fraudulent errors in lower-value transactions, resulting in inaccurate audit findings Various sampling techniques exist, including random sampling, attribute sampling, and currency sampling, each with its advantages and disadvantages However, the sample selection process can be complex and time-consuming To enhance efficiency during client audits, companies should equip auditors with specialized sample selection software.

Computer-assisted random sampling enhances efficiency for auditors by saving time and minimizing errors in the sampling process This probabilistic method, when combined with the auditor's expertise, yields optimal results For instance, in auditing client ETC, it is advisable to select an attribute sample based on the auditor's judgment while also employing random sampling to validate the audit findings, thereby ensuring greater reliability.

Organization structure

Audit and Assurance is the department with the most personnel in the organization, and it supplies audit, review, and assurance services to clients

This section offers expert tax advice to clients, helping them establish an efficient tax system while ensuring compliance with current legal regulations Additionally, it provides support to other departments on tax-related issues, including tax counseling and assessments.

Like the other departments in the organization, the Legal department advises clients on Labor law,

Investment legislation, Securities law, and other regulations and laws

Perform staff recruiting, assessment, event organization, and timekeeping in the firm

The accounting department is responsible for documenting financial transactions and converting them into financial statements to evaluate profit and loss over a specific operational period Additionally, this department plays a crucial role in revenue and expense planning while collaborating with other departments to execute the company's overall strategic objectives.

1.5 Global PwC guidance - Overview of PwC Audit

PwC has established a comprehensive methodology that serves as the foundation for all its audits, ensuring adherence to the International Standards on Auditing (ISAs) along with PwC's internal policies and guidelines.

The PwC audit methodology, known as PwC Audit, is grounded in International Standards on Auditing (ISAs) and supplemented by specific PwC policies and guidelines The PwC Audit Guide outlines this methodology, offering a standardized approach for PwC member firms to ensure consistency across engagements Enhanced by technology-driven audit support tools, templates, and resources, the Guide aids engagement teams in delivering assurance and related services effectively Designed to be both flexible and scalable, PwC Audit accommodates various engagement types, while Global Independence Policies (GIP) and Network Risk Management policies may impose distinct guidelines for certain entities based on their characteristics.

CHAPTER 2: INTRODUCTION TO PROFESSIONAL LOGISTICS ETC JOINT STOCK COMPANY 2.1 General introduction about Professional Logistics ETC Joint Stock Company

Professional Logistics ETC Joint Stock Company, previously known as Professions Logistics ETC Company Limited, is a limited liability company established by multiple members This company operates under the guidance of PwC, showcasing its commitment to professional logistics solutions.