Phụ lục 5b2 – PHIẾU ĐÁNH GIÁ KHÓA LUẬN TỐT NGHIỆP – GVHD – Đề tài: KIỂM TOÁN Điểm từng phần Không đạt yêu cầu Cần cải thiện Đạt yêu cầu Xuất sắc Tổng điểm Chương mở đầu Nội dung chươ
INTRODUCTION ABOUT PWC LIMITED LIABILITY COMPANY VIET
History of establishment
PwC was formed in 1998 through the merger of Price Waterhouse and Coopers & Lybrand, both of which boast over 150 years of rich history The diagram below highlights notable achievements of these two esteemed firms.
Diagram 1: History of PwC establishment and development
PwC is recognized as one of the leading auditing firms globally, boasting a workforce of over 250,000 employees across 158 countries The company offers a diverse range of services, including auditing, financial consulting, legal consulting, and tax consulting, with auditing representing the largest segment of its operations.
The legal name of PricewaterhouseCoopers Limited Liability Company Viet Nam has been changed into PwC Limited Liability Company Viet Nam since 30 th of
In May 2017, PwC Vietnam operates as part of a global network under the management of its headquarters in England, rather than functioning independently It is connected with other PwC branches in Southeast Asia, including PwC Thailand, Cambodia, Laos, Malaysia, and the Philippines, forming the SEAPEN network.
During 20 years opearating, PwC expanded client network all over 63 provinces in all of country and create good relationships with key officials industries as well as financial institutions, businesses in Vietnam Not only that, the relationship as well as the trust of foreign organizations in PwC Vietnam has been strengthened and improved, making PwC a reliable destination for many types of customer.
Principles of operation
PwC operates under the slogan "Building relationships, creating value," emphasizing the importance of cultivating strong connections to enhance value for clients A primary focus for PwC is client satisfaction, which is considered a core factor in their operations Additionally, the firm is committed to building trust in society and addressing significant challenges, contributing to its reputation as a trustworthy corporation within the community The accompanying graph highlights five core values that empower PwC to achieve its objectives and provide exceptional support to its customers.
Diagram 2: 5 Core Values of PwC
Organization structure and operation fields of PwC Limited Liability Company Vietnam:5
Diagram 3: Organzational structure diagram at PwC
Diagram 4: PwC Line of Services
AUDIT PROCEDURE AT BORROWINGS AND INTEREST EXPENSES AT
Overview about borrowings and interest expenses
Loans and bonds serve as essential equity supplements to maintain a business's operational stability Unlike bonds, which are raised from authorized issuers, loans establish an equal relationship between businesses, often requiring asset collateral and specific usage purposes Additionally, loans vary widely in terms, interest rates, and intended use Consequently, auditing loans should not only focus on financial accuracy but also ensure compliance with general borrowing regulations and proper capital utilization.
Loans are closely monitored by the lending bank both prior to borrowing and during the loan utilization process, following a strict procedure Ultimately, the responsibility for repaying the loan, including both principal and interest, lies with the borrowing enterprise, which must also ensure the loan is used for its intended purpose Consequently, maintaining a robust internal control system is essential for the unit When securing a loan with assets, the unit has several options for guaranteeing the loan.
- The unit pledges or mortgages with his property
- Pledge or mortgage with property of a third party
- Can be secured by the actual assets from the loan
Effective internal control is essential during the approval process for test takers, encompassing the signing of loan contracts and diligent monitoring of loan usage It is crucial to ensure that repayments of both principal and interest align with the specified loan term, whether short-term or long-term.
Short-term loans are closely linked to customer purchases and payments, necessitating thorough auditing of these transactions Businesses typically maintain a sub-book for each customer to monitor their accounts payable, ensuring that payments are made only when sufficient goods are imported To enhance internal control over operations such as ordering, receiving goods, and managing payment records, it is essential to fully segregate these processes This structured approach helps streamline financial management and ensures accurate tracking of receipts based on invoices and orders.
Payments should be based on sale invoices rather than statements to prevent duplicate payments Timely payments are crucial for businesses, as they can secure discounts that exceed bank loan interest rates.
Long-term loans play a crucial role in development investment, involving significant amounts and various payment structures To ensure effective management, internal controls must encompass approvals and regular assessments of loan necessity and effectiveness, as well as the utilization and repayment of funds, including resource mobilization with preferential terms Given the diversity of loans with varying terms and interest rates, it is advisable for enterprises to prepare a comprehensive "list of loans and accrued interest" prior to the audit.
Loans play a crucial role in corporate capital, enabling businesses to operate more efficiently By effectively managing their loan structure within total capital, companies can optimize their financial strategy and minimize interest expenses, ultimately benefiting their overall operations.
Loans can be primarily categorized into two types: short-term loans and long-term loans, based on their duration This classification is essential for both lenders and borrowers in managing their financial agreements effectively.
Short-term loan is a loan that has a maturity term, also known as the repayment period of both principal and interest over a period of one year or a business cycle
Long-term loan is a loan with the principal repayment period of more than one year or one business cycle that the enterprise must repay
The form of loan interest payment can be paid monthly, at the beginning or at the end of the loan term, depending on the loan contract
A financial statement audit aims to validate and provide an opinion on the reliability of information in accordance with compliance guidelines Each audit cycle has distinct objectives, with general purpose loans focusing on assessing changes in account balances and ensuring adherence to recognized accounting principles The overarching purpose of the audit can be refined into both general and specific goals.
The primary objective of auditing loans is to assess the effectiveness of the internal control system and to ensure the integrity and fairness of loan transactions This involves evaluating the accuracy of material financial information related to loans Specific goals of the loan audit include verifying compliance with established standards and ensuring that all financial representations are appropriate and reliable.
Existence: Loans are recorded according to the actual investment activities The recorded operation in relation to the loan account really happened and the loan balance
9 actually existed In fact, in some businesses, the status of overstatement of loans and interest expenses
Completeness in accounting requires that all borrowing and debt transactions are accurately documented in financial records If a business inadvertently or deliberately omits a loan agreement—such as the principal amount, interest rate, payment schedule, or principal repayment—it violates this essential principle.
Price recalculation for transactions in foreign currencies involves converting amounts into VND using the interbank rates applicable at the time of loan recognition Enterprises that utilize accounting rates must initially record transactions based on these rates, but they are required to adjust them according to the exchange rate as of December 31st For instance, when an enterprise records a short-term bank loan in account 311-Bank A, it should use the exchange rate on the recognition date, while subsequent payments must reflect the foreign exchange rate on the payment date This process ensures accurate accounting practices by adhering to the correct foreign exchange rates at each relevant time.
The entity must fulfill its obligation to repay all loans listed on the balance sheet, adhering to the prevailing accounting and financial regulations This raises the question of whether these loans should be considered genuine obligations of the business.
Accounting principles must align with applicable standards within the audit framework Transactions involving borrowing should be accurately categorized, ensuring that loan accounts are properly presented It is important to note that transferring loans from Bank A to Bank B or misclassifying short-term loans as long-term loans can lead to violations of these accounting standards.
In accounting, it is crucial to adhere to the cut-off principle, ensuring that all transactions occurring within a specific accounting period are accurately recorded in the books This includes a thorough review of credit-related transactions to confirm they are documented in the correct period as designated by the business Any inaccuracies in recording the period can significantly impact both the current and subsequent financial statements.
Overview about audit procedure in financial statement and audit about borrowings and
PwC has established a comprehensive audit process that supports all financial statement audits globally, consisting of five key components.
• General understanding of customers and audit planning (Understand and Plan)
Diagram 2.1: General audit procedure at PwC
PwC's approach, while distinct, is rooted in International Accounting and Auditing standards, promoting consistency across various countries and business types globally.
2.2.1 General understanding of customers and audit planning:
During the audit period, the audit team will utilize documents from the client company, along with the enterprise's regulations and specific circumstances, to gain a comprehensive understanding of the business's accounting processes.
To effectively understand the customer's internal control system, the audit team should prepare a comprehensive questionnaire, conduct direct surveys, and perform interviews to gather relevant information This approach will enable the team to thoroughly explore and assess the internal control mechanisms in place within the organization.
• The environment and the business sector of the customer
• Accounting standards, regimes and other regulations that the company applies to, or that affect the business line of the business
•Understand the Entity and Environment
•Determine unsual things, fraud risk
•Determine audit strategy to respond risk
•Execute and Evaluate results of Control and Substantive Procedures
•Update preliminary assessments, changes to plan and Subsequent Events
• The separate accounting policies of the business
• Operational goals and strategies of the company and business risks
• Evaluate the business situation and financial capacity of the unit
• Review new points or major changes in key contracts and agreements to identify the risks of material misstatement
Auditors must leverage their professional skills to uncover hidden weaknesses in a client's operational apparatus and processes, as customers often conceal these shortcomings By effectively extracting valuable information from the client, auditors can gain deeper insights into the organization's performance and identify areas for improvement.
During the audit planning stage, establishing materiality is crucial and is carried out exclusively by highly qualified and experienced auditors The determination of materiality relies on both qualitative factors, such as industry and business circumstances, and quantitative factors, including profit before and after tax, net revenue, total assets, and sources of capital Additionally, the auditor's professional judgment plays a significant role in this process.
PwC Vietnam Co., Ltd has 3 main levels of materiality:
Overall materiality (OM) refers to the maximum error threshold in financial statements that could influence an investor's decision-making Typically, OM levels are set at 5% to 10% of profit before tax, 0.5% to 1% of revenue, and 1% to 2% of gross profit.
This ratio depends on a number of other factors, such as the effectiveness of the internal control system
Performance Materiality (PM) is set below the overall significance level to minimize the risk of material misstatements By doing so, it ensures that the cumulative impact of unadjusted errors does not surpass the Overall Materiality (OM) threshold.
Minimum materiality (SUM) represents the threshold for error correction, indicating that any discrepancies below this level are deemed insignificant and do not require adjustments The SUM value is most effective when set between 1% and 2% of the performance materiality (PM), ensuring that only meaningful errors are addressed.
SUM is defined as 5% OM when PM is set to 50% OM or SUM is 10% PM
The auditor leverages their understanding of the client's company to identify and assess events that may hinder the audit process Additionally, they pinpoint potential errors within the organization, provide an initial evaluation of control risks, and develop a tailored audit strategy for each specific item.
According to ISA 300, auditors must formulate an overall audit strategy that outlines the scope, timing, and direction of the audit, serving as a framework for the audit plan's development In creating this general audit strategy, auditors are required to consider various factors to ensure a comprehensive approach.
• Determining the nature of the audit engagement and its scope;
• Ensuring reporting objective to plan the time of the audit;
• Based on professional judgment, considering the critical factors that directly affect the audit team;
• Determine the nature, timing and extent of resources required to participate in the audit
Audit risk assessment involves identifying and evaluating potential risks of material misstatement to develop effective procedures that minimize these risks to an acceptable level During this process, auditors analyze risks to detect fluctuations or discrepancies between financial or non-financial information and the company's public knowledge, which may indicate the risk of material misstatement.
Every exercise has distinct audit objectives that must be addressed At this stage, auditors identify these objectives and carry out necessary procedures to gather evidence that supports the audit goals established for each financial statement exercise.
The detailed inspection process typically includes selecting samples to verify that transactions have occurred and are accurately recorded in the financial documents PwC employs three distinct sampling methods to ensure thoroughness in this verification process.
• Targeted: Pattern with value greater than PM
Sampling involves choosing a sample that maintains a minimal error level, typically set at 20% of the PM value This method is ideal when the components of the sample size hold equal value and do not exceed the PM.
Audit procedure at loans of borrowings by illustrations at clients
2.3.1 Overview about client and plan for audit:
Founded on May 1, 1946, ABC emerged from the consolidation of five major paper plants and a forest farm, initially operating under the Ministry of Economic Affairs Following the government's "land to tiller" policy in 1954, the company transitioned to privatization Over the past sixty years, ABC has navigated various challenges and successes in its journey It specializes in the production and marketing of pulp, cultural paper, and chemical products Recently, the company has not only expanded its pulp and paper operations but has also actively pursued diversified and international growth to adapt to changes in both local and global economic landscapes.
The production process and quality standards of our products are certified and recognized by NIKE and other leading international companies Our dedicated Quality Control team guarantees that every box adheres to global packaging and shipping standards.
Packaging Solution: They have world reowned ESKO packaging design system to accommodate customers packaging solution from packaging design, product protection and product stacking
Top-quality printing is achieved through advanced technology, including an ink mixing machine that meets customer color specifications and helps create unique images Additionally, the use of an X-Rite Imaging Spectrocolorimeter guarantees consistent color stability across all boxes during mass production.
Their corrugated carton and box products have these characters:
Light weight, strongly firm Easy to stack and store Provide the best protection to the merchandise during the transportation
All recyclable, from materials to carton, minimize the environmental impact
Water-based flexographic printing ink aligns with eco-friendly packaging initiatives, as it is free from heavy metals and toxic organic solvents This type of ink is ideal for packaging products that require high safety standards, such as food, pharmaceuticals, and children's toys.
The latest flexographic printers showcase a modern and streamlined design, delivering vibrant colors and exceptional quality They offer significant advantages in terms of potential and cost-effectiveness, making them a viable alternative to traditional offset printing, especially for corrugated boxes.
No.94, Nantzu St., Hsin Ying Dist., Tainan City, Taiwan
Diagram 2.3: Company’ key financial highlights
Table 2.4: Questionaries about independence of auditors
Auditors assess various factors, including revenue, profit after tax, gross profit, and equity, to determine the Operational Materiality (OM), with equity being the key indicator of the fund's core operations The auditor's choice of a percentage value, whether 5% or 10% of equity, is influenced by their judgment regarding the potential for material errors in the financial statements of the audited years, as well as their research on current customer trends Ultimately, the auditor establishes the OM value at 10% of equity (net asset value).
Finally, OM fiscal year 2020 is equal to 16.380.00.000 VND
The Performance Materiality (PM) is established through the auditor's professional judgment regarding the level of material deficiencies identified in previous fiscal years, along with inquiries from the current year For the fiscal year 2020, the PM is set at 75% of the Overall Materiality (OM), amounting to 12,285,000,000 VND.
Similar to determining the above two significance levels, the auditor determines that SUM is equal 10% OM, which means VND 1.638.000.000
Establish an audit team including 1 Audit Manager, 2 Audit Team Senior, 3 Audit Assistants and 4 Interns due to huge amount of workload in this client
The audit team opted against a Test of Control for the loan item due to the complexity of the process and the involvement of numerous participants Instead, they determined that Substantive Procedures would be more effective, streamlining the work while still providing adequate evidence for the auditor.
Following interviews with the Board of Directors regarding potential fraud and a thorough understanding of customer relationships, the auditor has evaluated the risk of fraud utilizing the fraud triangle framework.
Table 2.3.1: Results of fraud risk evaluation of Auditor
High liquid assets such as money, certificates, considered the easy object of embezzlement for personal purposes
However, money and other liquid assets have been deposited at the custodian bank
Money and other liquid assets have been deposited at the custodian bank
The company has a code of conduct for each employee level and this is repeated many times in each meeting of each department
All items may undergo thorough audit procedures to ensure that securities trading is managed by the custodian bank, with fees clearly outlined in the contract.
Supervisory banks are present in most loans Accounting estimates are made by an accountant have expertise, and are reviewed by the custodian
The company has a code of conduct for each employee level and this is repeated many times in each meeting of each department
2.3.3.1 Prepare a general general working paper (Lead schedule):
Objective: To ensure that there are general views and assessments of the loan, from which to select appropriate audit procedures for each element constituting this item
Step 1: Compare the ending balance of the loan and the detailed balance of each account that makes up each ending balance(Breakdown) in 2019 and 2020, abnormal explanation if any, determine the audit procedures that need to be performed
Table 2.3.2: Analytical procedure for borrowings
FS, TB, GL PwC Cal Audited Cal Cal
Short-term borrowings and finance lease liabilities
Long-term borrowings and finance lease liabilities
FS, TB, GL Obtained from FS,TB,GL
- Borrowing this year has increased significantly compared to 2019 This is due to additional borrowing from Grand development
- The additional borrowings are used for financing operations in this year, this is evident by a significant increase in sales
- Borrowings from Chailease has decreased as these borrowings are for financial lease assets from prior year
- During the year, ABC has not leased any asset and hence the balance with Chailease has decreased
Step 3: Movement and breakdown for short-term and long-term borrowings:
In this session, the auditor will analyze the movement of borrowings for Company ABC, focusing on transactions such as drawdowns, repayments, foreign currency revaluations, and other activities that contribute to the final balance for each entity This will be based on the detailed records of both short-term and long-term borrowings.
Table 2.3.3: Break-down for short-term borrowings
- Current portion of Gia Phu
15.000.000.000 Current portion of Hua Nan
Table 2.3.4: Break-down for short-term borrowings
In conclusion, the auditor found no discrepancies between the opening and ending balances when compared to the lead schedule figures, indicating that no further investigation is necessary.
Step 4: Testing Drawdown and Repayment
To verify audit assertions regarding drawdown and repayment amounts—specifically their Existence, Obligations, and Accuracy—auditors must implement testing procedures This involves utilizing templates for each drawdown and repayment type to determine the necessary sample size for testing.
Table 2.3.5: Testing template for Short-term Drawdown
Table 2.3.6: Testing templalte for Long-term Drawdown
Table 2.3.7: Testing template for Short-term Repayment
Table 2.3.8: Testing template for Long-term Repayment
Table 2.3.9: Summary of samples need to be tested
Type of sample Number of samples
Auditors begin by selecting samples that exceed the performance metric (PM) after analyzing template results If the samples for each type above the PM remain fewer than the required number, auditors will then choose additional samples that fall below the PM to meet the necessary quantity.
TTable 2.3.10: Testing result of Short-term Drawdown and Repayment
DOCUMENTATION OF SAMPLE DOCUMENTATION OF TESTING
Lender name per detailed listing
Loan amount per movement schedule selected for testing
Supporting document reference Drawdown Repayment Difference
907ZTRF20105004L- 907ZTRF20105004T- 907ZTRF201050051- 907ZTRF201050059- 907ZTRF20105005H
Table 2.3.11: Testing result of Long-term Drawdown and Repayment
DOCUMENTATION OF SAMPLE DOCUMENTATION OF TESTING
Transaction date Lender name per detailed listing
Loan amount per movement schedule selected for testing
Supporting document reference Drawdown Repayment Difference between amount selected for testing and recalculated closing balance
18/09/2020 Hua Nan 20200918005 79.254.474.436 9100RL008086 79.254.474.436 - 16/11/2020 Gia Phu 20201116009 110.000.000.000 910JRL010310 110.000.000.000 -
Conclusion: After performing testing procedure, the auditor realise that there is no need to perform further investigation for this step
Step 5: Substantive analytics for Interest Expense
In this step, the auditor will perform in 5 smaller steps for Interest Expense when auditing loan
Step 5.1 Determine suitability, evaluate reliability of underlying and develop an independent expectation
The auditor will summarise a table of interest rate collected from ABC data Then the auditor will build up expectation from this table
Bank Term Average Interest Rate
Hua Nan OBU Short-term 1,59%
Bank Term Average Interest Rate
In order to ensure that the data of interest rates table is Completeness and Trustfulness, then the auditor need to perform accept-reject procedure for this table
Testing objective: to gain C,A of the interest amount recorded in the client book in the period
- Auditor will perform Accept-Reject for Interest Rate through Testing template below
Table 5.1.2: Testing template of Accept – Reject for Interest Rate
APPRAISAL AND CONCLUSION
Appraisal after the internship
3.1.1 Appraisal about PwC Limited Liability Company:
PwC Auditing Vietnam Co., Ltd has established a reputable brand in the auditing sector over its two decades of operation in Vietnam, enhancing the transparency and reliability of financial statements This commitment significantly aids investors in making informed decisions.
Young, dynamic technicians, graduated from universities with experience in human resources training for accounting and auditing, eager to learn, progressive, cautious at work and effective in teamwork
Auditing method PwC Audit Guide provides a knowledge base for auditors, suitable for all types of businesses, updated annually to ensure auditors capture the latest career changes
During peak audit season, the workload can become overwhelming, often outpacing the available workforce This shortage of employees leads to increased stress and overextension of responsibilities Consequently, the high-pressure environment contributes to a notable number of auditor resignations, further complicating the challenges faced by remaining auditors.
Employees who remain in the workplace often bear the increased workload left by departing colleagues, leading to heightened pressure and stress Additionally, the slow distribution of awards and financial incentives fails to effectively motivate and encourage staff, further impacting overall morale.
3.1.2 Appraisal on PwC's general audit process:
PwC's audit process adheres to accounting standards and relevant regulations, prioritizing quality in its planning The firm conducts a thorough client inquiry to assess potential risks and only accepts audits from clients that meet its established criteria All customer insights are documented in clear, accessible working papers for auditors, ensuring a coherent understanding of the audit process.
The audit implementation process employs a diverse range of flexible procedures, incorporating both financial and non-financial analytical methods The selection of these procedures is closely aligned with the operational characteristics of the business, ensuring their effectiveness and appropriateness Additionally, the audit took longer to complete compared to other firms, with meticulous attention given to the presentation of working papers.
Meetings and information exchanges between technicians and customers are consistently prioritized to ensure timely solutions to issues that arise during the audit implementation process, as outlined in the internal prescribed form.
The work must be ensured to be completed, the adjustments proposed by the auditor must be agreed between the auditor and the customer before making the audit report
The improper organization of the audit team, along with inadequate planning of audit schedules and workload distribution, results in prolonged working hours that often extend into weekends and holidays, including Tet.
The audit process is designed to accommodate various business types, making it challenging to implement effectively for each specific enterprise The success of an audit largely depends on the auditor's experience and their understanding of the relevant industry Inexperienced auditors may conduct assessments mechanically, leading to unsuitable results and wasted time.
Auditors typically analyze financial data by comparing the current year's figures solely with those of the previous year, neglecting to benchmark against other businesses within the same industry or the industry average This limited approach hinders a comprehensive assessment of business fluctuations and performance.
Appraisal about thesis
3.2.1 Pros/ Cons of the test:
ABC loan audit process is described closely to reality, the whole article has correctly shown 90% of the work done at PwC
This article simplifies the loan audit process, making it accessible to readers without a background in accounting, auditing, or finance It provides essential information about loans and interest, helping readers to better understand these concepts and the auditing procedures involved.
This article provides a comprehensive overview of the compensation process, combining verbal information with written evidence and actual documents for clarity It is available in both English and Vietnamese to accommodate different readers, though the author notes that translations may not always align with technical terminology.
3.2.2 Advantages / disadvantages during the working process:
During the initial audit of the customer, the author focuses on processing the bill and assisting with document verification, while also offering valuable observations and advice throughout the process.
82 brothers and sisters in the group, and based on the experience in auditing other parts, the author has understood the loan item audit process and strategy
During the dissertation phase, the author faced challenges in gathering documents and data due to the conclusion of their practical experience However, with the dedicated support of the audit team members and the encouragement from instructors, the author successfully acquired the necessary resources for the thesis This experience highlights the valuable lessons learned by auditors during their internship and thesis development process.
PwC's auditing process encompasses a diverse clientele, including both typical and specialized customers like loan providers This exposure to various auditing roles within companies with distinct operational and accounting practices has enriched the author's knowledge across accounting, auditing, finance, corporate governance, and human resources Notably, the author's in-depth exploration of the loan audit process has enhanced their understanding of the fundamental principles governing loans and interest, as well as the internal and external regulatory impacts and the evolving calculations within the financial industry.
Engaging in thesis work offers valuable opportunities to develop essential soft skills, including effective communication, computer proficiency, self-directed learning, and research exploration This process not only enhances practical experience but also aligns with the rigorous standards of academic research papers.
Drawing on specialized knowledge gained from university education and practical experience from internships and surveys, the author has gained insights into PwC Vietnam's audit procedures regarding borrowings and interest expenses This understanding highlights that the PwC Audit Guide is effectively designed and implemented to meet current auditing standards.
The audit of borrowings and interest expenses is crucial for assessing the financial condition and income results of a business unit, as it enhances the overall reliability of financial statements By ensuring the reasonableness of these elements, users of financial statements gain a clearer understanding of the company's borrowing practices and interest expenses This insight allows stakeholders to evaluate the operational efficiency of the business and the effectiveness of its management policies regarding debt and interest management.
At PwC Vietnam, the audit of borrowings and interest expenses is continuously enhanced and expanded to meet clients' financial statement auditing needs Despite some errors, it is evident that both the executive committee and individual auditors are committed to delivering the best possible services to clients.
Despite diligently studying relevant materials and receiving enthusiastic support from Mr Bui Anh Thanh at the University of Economics and Law, as well as colleagues at various companies, the author acknowledges the presence of rational critiques stemming from a limited understanding The author expresses gratitude to the lecturer and peers encountered during the internship and hopes for positive appraisal and recommendations regarding this topic.