Improving the audit process of fixed assets in financial audits conducted by VACO auditing company limited

Bachelor Thesis National Economic University TABLE OF CONTENTS Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Bachelor Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper I clearly marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content Hanoi, 27/05/2016 Signature Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University LIST OF FIGURES Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University LIST OF DIAGRAMS Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University INTRODUCTION Rationale for the research With the strong development of market economy, the process of international economic integration that requires financing activities must take place in a transparent, fair and public environment, because the increasingly complex economic information will lead to a potential risk, misleading and unreliable economic information Currently, there are growing a number of investors both in local and abroad who increase investment and seek profits in Vietnam market Therefore, it is much more essential to consider the need of using information to make correct decisions And that the information provided by the accounting should be assessed and confirmed objectively by an honest and independent party Thus, auditing activity was born and the growth of this service is inevitable Nowadays, auditing service is considered to be one of the most professional services which brings many benefits in creating an effective business market In Vietnam, auditing service is quite new, but due to the high demands of the economy as well as the encouragement of the Government, this service is growing strongly and strongly Currently, along with the development of many auditing firms, the auditing of services offered is increasing more diversely However, the auditing about financial statements is still the principal activity of independent audit firms It means that the auditing of financial statements plays an important role in the economy Due to the higher complexity of these transactions, an audit about financial statements in general becomes more difficult and it is needed to study to be more perfect As a matter of fact, the item "Fixed assets" plays an important position in the audited financial statements With the inherent nature of fixed asset, it is an essential part which is enable to enhance a sustainable growth for businesses; moreover, there is an intimate relationship between fixed assets with other items on the financial statements, thus the discovery of violations related to fixed assets, and the inadequacies in the management and using of fixed assets are a necessary job The value of fixed assets in the enterprise is often a large, it also accounts for a significant proportion compared to the total assets on the balance sheet, particularly in the manufacturing enterprises (heavy industry, oil and gas, telecommunications conglomerates ) So, if there is a mistake related to fixed assets, the integrity of financial reporting will be affected largely Moreover, the fixed assets may be subject to the administrating adjustments of managers that may cause violation in the financial statements Therefore, the auditing fixed assets is one of the most important stages in Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University the audit of financial statements that requires the auditor to design and perform audit procedures in the manner that can detect risk to the lowest level Realizing the importance of auditing work, especially in the audit of fixed assets, with the knowledge has been fitted in the school and internship period in VACO- a limited liability company, I chose the topic for the final practice: "Improving the audit process of fixed assets in financial audits conducted by VACO Auditing Company Limited" Objectives of the research This topic is studied in order to achieve these objectives: Systematizing the basic theoretical issues on audit process of fixed assets in auditing financial statements, clarifying the situations, assessing the advantages, limitations that have still existed in the auditing process for fixed assets in auditing financial statements and proposing some solutions to improve the process at VACO Methods of the research The topic uses these research methods: general methodology and specific research methods General methodology consists of reasoning allows dialectical materialism and historical materialism and Specific research methods include statistical methods, integrated analysis, collecting information methods through the study of documents and interviews, information processing method through mathematical processing with quantitative and qualitative information; to clarify the status about the theoretical in auditing processes of fixed assets Besides the introduction, conclusion and the list of references the main structure of the thesis consists of three chapters: Chapter 1: Theoretical framework on audit of fixed assets in the financial audits conducted by VACO Auditing Company Limited Chapter 2: Practice of audit of fixed assets in the financial audits conducted by VACO Auditing Company Limited Chapter 3: Assessments and recommendation to improve the audit of fixed assets in the financial audits conducted by VACO Auditing Company Limited Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University CHAPTER I: THEORETICAL FRAMEWORK ON AUDIT OF FIXED ASSETS IN FINANCIAL AUDIT CONDUCTED BY VACO AUDITING COMPANY LIMITED 1.1 Features of fixed assets 1.1.1 Nature and content of fixed assets First, fixed assets are assets that have great value, long duration of use and involved in many business and production cycles Fixed assets is a significantly proportion of accounting items on the balance sheet Second, fixed assets are material and technical of the unit It reflects the production capacity and the technical level of the application of the unit operations Fixed assets is an important factor in the ability of sustainable growth, labor productivity growth, thereby the cost of goods and services will reduce Third, fixed assets are assets used for production and business purposes and not for sale In the course of use, the fixed assets are consumed Their value is converted gradually into operating expenses and will be recovered from the sale of goods and services for business operations • Tangible assets According to Vietnamese Accounting Standards No 03, “assets with physical forms held by enterprises for use in the production and trading in line with recognized standards of tangible assets” Tangible assets include: buildings and structures; machinery and equipment; means of transport, transmission equipment; equipment, management tools; perennial gardens, working animals; other type of fixed assets These assets are recorded as tangible fixed assets to satisfy simultaneously all four following criteria: certain economic benefit in the future from the use of such assets, the cost of such assets must be measured reliably, time use estimates over one year, qualified valid under current regulations According to Circular 45/2013/TT-BTC dated 25/04/2013 of the Ministry of Finance shall prescribe the standards of tangible assets must be valued at 30 million dong or more (start applying for fiscal year 2014) • Intangible assets Initially, intangible fixed assets, according to the Vietnam Accounting Standards No 04, “the property has no material form, but determining the value and business by holding, use in production and business, providing services or other objects for leasing in line with standards recognized intangible assets” Intangible assets include land use rights, distribution rights, patents of invention, trademarks… Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University An intangible asset is recognized as an intangible asset must satisfy simultaneously definition of intangible assets and four recorded following criteria, which are certain economic benefits in the future by bringing such properties, the cost of assets must be measured reliably, time use estimates over one year, being qualified for the value according to current regulations • Financial lease fixed assets Financial lease fixed assets, according to Vietnamese Accounting Standards No 06, "Leases", promulgated and published by Decision No 165/2002 dated 31/12/2002 of the Minister of Finance is an agreement between two parties: lessor and lessee about the lessor transfer use rights of property to the lessee for a certain period of time to receive money to hire one or more times Financial lease fixed assets is the leasing of assets which the lessor has transferred substantially all the risks and rewards associated with ownership of the leased assets Property ownership can be transferred at the end of the lease term A finance lease agreement must meet of conditions: First, the lessor transfers ownership of the property to the lessee at the end of the lease term; Second, t the inception of the lease, the lessee has the option to purchase the leased assets at a price lower than the estimated fair value at the end of the lease term; Third, duration minimum lease assets accounted for most of the time the economic use of the property even though there is no transfer of ownership; Fourth, at the inception of the lease, the present value of the lease payments minimum dominate the fair value of the leased asset; Fifth, leased asset is of specialized kind that only the lessee has the ability to use no need to change, a major reconstruction Noticeably, fixed assets is a kind of commodity that exist through trading, it can transfer the ownership and the using rights from one to another subject on material market, can join in the many business and production processes In the course of engaging in business, fixed assets will remain the initial physical forms until damaged Lastly, during using, fixed assets will be worn gradually and its value is shifted to the value of the product 1.1.2 Accounting for fixed assets 1.1.2.1 Accounting items system Under current accounting system, accounting fixed assets track on the following accounts: Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University Figure 1.1: Accounting items system of fixed assets No Concept 211 Tangible assets 2111 Buildings and structures perennial gardens 2112 Machinery and equipment 2113 Means of transport, transmission equipment 2114 Equipment, management tools 2115 Working animals 2118 Other type of fixed assets 213 Intangible assets 2131 Land use rights 2132 Rights issue 2133 Copyright, patents 2134 Trademarks, trade names 2135 Software program 2136 Permit and license 2138 Other intangible assets 214 Depreciation of fixed assets 2141 Depreciation of tangible assets 2142 Depreciation of financial assets 2143 Depreciation of intangible assets 2147 Depreciation of real estate investment In addition, in the process of accounting, accountant also uses other related accounts such as: 217 - Real estate investment; 331 - Payable to sellers; 111 – Cash; 112 - Bank deposits… 1.1.2.2 Bookkeeping and documents system of fixed asset The books are used for accounting purposes of fixed assets include: book of fixed assets, registers of fixed assets, book for monitoring fixed assets where used, the subsidiary ledger, books of general The system of accounting documents including: fixed assets increased accounting documents, fixed assets decreased accounting documents, depreciation accounting documents of fixed assets Fixed assets increased accounting documents: contracts to buy fixed assets, bill Do Van Thai – 11123459 Excellent Auditing 54 Bachelor Thesis National Economic University of sale, delivery records of fixed assets, inventory records of fixed assets, amortization test records… Fixed assets decreased accounting documents: decision disposals of fixed assets, liquidation records, sale contracts, delivery records and amortization, revaluation of fixed asset records Depreciation accounting documents of fixed assets: spreadsheets and allocate depreciation, registration Figures depreciation rate 1.1.2.3 Organization of accounting of fixed assets Transactions increased / decreased of fixed assets in company occurs infrequently but larger scale and related to multiple accounts on the critical nature of financial reports of a business, such as capital investment, loan Accounting process of fixed assets can be summarized through accounting Figure follows: Figure 1.2: Generalization of fix assets accounting procedures Historical cost Beginning balance Accumulated depreciation Beginning balance Increase in the period Depreciation expenses Liquidation in the period Liquidation Ending balance Ending balance Profit / Loss of liquidation Do Van Thai – 11123459 Depreciation costs Excellent 10 Auditing 54 Bachelor Thesis National Economic University APPENDIX Appendix No 1: Accepting old clients Quoting working papers no [1107] Wp 1107 Performer: DTMH [25/12/2015] Reviewer: NDT [28/12/2015] ACCEPTING OLD CUSTOMMER Client’s name: ABC Petroleum Company Client’s charging: (Deputy Director): Accounting period: 31/12/2015 Old client from: 2012 Operating industry and main activities: Selling petroleum; business of beer, wine, protein and mineral water Risk classification: Medium Effects to ABC Controlling Audit risk Is there any Questions environment of contract significant point? Is there any significant changes in No No NO managing systems that affects level materiality to financial statements? Did the internal control systems No change unreasonably in current situation of business? Do the business situation change in the bad direction? No No No No No Is there any reason that make us worry No about going concern of this firm? Is there any reason that make us No worry about our ability in providing services to client? Conclusion: Agree to accept old client Deputy Director (Signed) No No No No Under contract, VACO will provide auditing financial statement services for ABC and ABC has responsibility in providing related documents under VACO’s requirement, and ABC has to pay the fee on time (The sample contract for auditing will be presented in Appendix no 2.2 Contract Auditing) Appendix 2: Independent claim Do Van Thai – 11123459 75 Excellent Auditing 54 Bachelor Thesis National Economic University Sample: 001/VACO-QLKT INDEPENDENCE CLAIM Dear: Board of Director From auditing team: ABC Company Division: Auditing No We have read and understood about the independence of auditors as stipulated in Decree 105/2004 / ND-CP dated 03/30/2004 on Independent Auditing Standards and the accounting professional ethics issued under Decision No 87/2005 / QD-BTC dated 01/12/2005 of the Minister of Finance On this basis, we are hereby to declare, with all our absolute honesty, (a) comply with the rules on and (b) does not show any signs of being considered as violation to the provisions on Hai Phong, December 15, 2015 Do Van Thai – 11123459 76 Excellent Auditing 54 Bachelor Thesis National Economic University Table 2.17 Quoting working paper no 5641-Cheking depreciation on fixed assets Performer: DVT 27-01-2016 Reviewer: TTA WP [5641] 28-01-2016 Objective: Ensure reasonable depreciation calculation Sources: Table of Depreciation on Fixed Assets Related documents on fixed assets Jobs: Recalculate depreciation and determine the difference (explain the difference) Recalculation N o I … 75 76 77 Asset Name Houses, objects, structures Drilling well Mineral producing house … Online broadcasting device kit Host IBM - P TC – KT Fuel sale management software Total Original Cost Depreciation in period Expiry date of depreciation Number of months of depreciation in the year Number of months of depreciation in the period Differences / / 70 78 … 57 34 56.223.739.689 129.117.380 586.976.000 … 293.172.715 42.909.091 2.831.734.072 12.911.736 58.948.452 … 48.862.116 10.727.268 01/11/2018 01/07/2019 … 01/10/2017 01/11/2015 12 12 … 12 12 13.055.203 59.603.429 … 49.405.032 10.846.467 143.467 654.977 … 542.916 119.199 45 160.000.000 32.000.004 01/10/2016 12 32.355.554 355.550 81.609.823.864 5.136.399.472 5.154.607.950 18.208.478 Number ß months of depreciation Remaining time 01/12/2010 01/12/2010 … 01/10/2011 01/11/2011 / / 120 120 … 72 48 01/10/2011 60 Starting 564 Through recalculation differences found by the unit depreciation calculated and re-calculated by the different auditors is 18,028,478 allocated by accounting depreciation calculated monthly, auditors also allocate depreciation calculated in days This difference is less than 5% of PM so auditors will agree not to use the unit and adjustments Conclusion: Achieving audit objectives Do Van Thai – 11123459 77 Excellent Auditing 54 Bachelor Thesis National Economic University Appendix Figure 2.4: Quoting working paper no [1400]: Getting overall understanding about client Wp 1400 GETTING UNDERSTANDING ABOUT CLIENT Client: ABC petroleum company Accounting period: 2015 Year of auditing: Performer: ABC was established in Nam Dinh, which operates under the first business registration certificate No 1000808141 on 30/01/2010, and it was changed for the second time on 28/07/2011 issued by Planning and Investment Department of Nam Dinh province Business activities: - Wholesale of solid, liquid, gas materials and related products Such as: purchasing, selling petroleum products that was created such as petrol, oils, lubricants, liquefied petroleum gas (LPG), chemicals and other types of petroleum products - Constructing some kinds such as: Construction of civil works, buildings and other civil engineering - Other specialized wholesale such as: Wholesale of phosphate fertilizer, potash, NPK fertilizer And some additional retails - Advertising, introducing and promoting trade for organizations - Trading in real estate, the rights of using or owning land - Wholesaler or retailer petroleum, fertilizer for agriculture - Sales of biofuels (ethanol fuel, Biodiesel) - Mining, processing and selling mineral water and soft drink - Producing and selling equipment and supplies such as: chemicals, oil and gas equipment serving the oil and gas industry and other industries; - Services in searching activities, exploring and exploiting of oil and gas - Importing and exporting equipment, materials, and machinery and commercial Do Van Thai – 11123459 78 Excellent Auditing 54 Bachelor Thesis National Economic University services - Importing and exporting the means to serve processing oil products - Constructing tank system, distributing and selling oil products - Renting service such as: car tanks and warehouses - Sales of office Scale of investment: Total charter capital: 132 billion VND In words: One hundred thirty-two billion dong Legal representative: - Mr Bui Quang An - Date of birth: 30/06/1961 - Position: Chairman of the board Financial situation: Currently, the company has no subsidiaries or any capital contributions to other units The company has no short-term borrowings or long-term finance or other loans The financial situation of the company is quite stable, healthy and good solvency All amount of money that are imported or exported must have a receipt or payment bills with the approval of director The company prohibits the use of company’s funds for personal loans for the purpose beside business operations At the end of the year, you have to check inventory and records of cash with the signature of chief accountant, treasurer, and accountant Inventory records must be stored in records Payments with great value need to be paid through the bank.Before spending all payments by cash or bank deposits, the chief accountant is responsible to review the entire payment procedures as well as the reasonableness of expenditures Chief accountant has right to propose with Director about paying decision Operating environment: The main activity of business activity is regulated by the ministry of finance and the company will be announced about the changes in price in each period for each type of fuel This activity is influenced by the huge volatility of the petroleum market in Vietnam and in the world Producing and providing mineral water: this activity is to promote the imageof firm, Do Van Thai – 11123459 79 Excellent Auditing 54 Bachelor Thesis National Economic University output prices of the products are mainly made up from the price of input material of bottles (plastic) The price of this item is likely to increase in the coming period Other productsof business mainly not fluctuate much or affect production and business situation of the Company due to the small market share The influence of the external environment Business environment of the company is relatively favorable It has few competitors - About producing mineral water: Market share that is fixed belongs to Petroleum Corporation, but due to the huge competitive market, company often lose competitive advantages due to design and promoting products - Other business products: Because the business purposes of company is only for agent so it still have a lot of difficulties, but the proportion in sales of these items is small so it does not have significant influence UNDERSTANDING ABOUT ACCOUNTING SYSTEM IN BUSINESS - The financial statements are presented in Vietnam Dong (VND), under the historical cost it is match with accounting principles which are generally accepted in Vietnam - Applied documentation: general journal - Accounting method: on the computer - Fiscal year: from 01/01 to 31/12 in calendar year -Company applies the Accounting System issued under Decision No 15/2006 /QDBTC dated 20/03/2006 which has been amended and supplemented by the provisions under Circular 244/2009 /TT-BTC 31/12/2009 by the Minister of Finance SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Tangible and intangible fixed assets are recorded at cost In using period, tangible and intangible fixed assets are recorded at cost, accumulated depreciation and residual value The recognition of the tangible fixed assets and depreciation is complied with Accounting Standards No 03 and 04, Decision No 15/2006 /QD-BTC and Circular 45/2013 / TT-BTC of the Ministry Finance Depreciation is calculated based on a straight-line method KEY PERSONNEL - Chairman - Chief Accountant Do Van Thai – 11123459 80 Excellent Auditing 54 Bachelor Thesis National Economic University Conclusion: We can assess about the potential risk of fixed assets in general and in particular is very high because the main activity of petroleum business is greatly influenced by the changes in domestic fuel prices in the world, moreover some activities of firm is also increasing more powerful competitors Besides, according to the evaluation, the price of petrol at the end 2015 tends to reduce which also makes the revenue in 2015 decrease, while there is no change in expense In the period 2014-2016, the objective of the business is to participate the Stock Exchange, so auditors need pay attention to firm that may have made mistakes in reducing costs in order to increase profit after tax to attract shareholders and increase market share Therefore, when performing audit for fixed assets, auditors should focus on the calculation and allocation of depreciation expense Do Van Thai – 11123459 81 Excellent Auditing 54 Bachelor Thesis National Economic University Appendix 4: Audit contract SOCIALIST REPUBLIC OF VIETNAM INDEPENDENCE - FREEDOM - HAPPINESS No 171 /VACO-HĐ-NV2 Hai Phong, December 29, 2015 AUDITING CONTRACT About auditing financial statement of ABC Company for financial year ended on 31/12/2015 According to the Civil Code of the Republic of Vietnam Socialist announced on 27/6/2005 According to Decree 105/2004 / ND-CP dated 30/03/2004 of the Government on the independent audit Based on the Vietnam Auditing Standards No 210 on Contract Audit, issued together with Decision No 120/1999 / QD-BTC dated 27/09/1999 of the Ministry of Finance Based on the agreement have been agreed between JSC Oil Company Limited Audit ABC and VACO on auditing financial statements of the fiscal year ended 31/12/2015 This contract is made between: PART A: ABC PETROLIUM COMPANY Representative Position Phone Fax Do Van Thai – 11123459 : Mr : General director : +84 36 3831 463 : +84 36 3831 714 82 Excellent Auditing 54 Bachelor Thesis National Economic University Address Tax code : No 546 Tran Hung Dao, Nam Dinh City : 0900222647 PART B: VACO AUDITING COMPANY Represenative : Mr Position Phone : Deputy of director : Fax : Address : Account : 0011002835898 (Vietcombank Vietnam) Tax code : 0102546856 The two sides agreed to a contract with the following terms: Article 1: Content Services Party B agrees to audit the financial statements of Party A for the fiscal year ended 31/12/2014 that were prepared in accordance with Accounting Standards Vietnam, Vietnam Accounting System and the legal provisions Article 2: Law and Standards Audited financial statements for the fiscal year ended 31/12/2015 The objective of the audit is to express an opinion on the truthfulness and rationality, about the financial statements of Party A that are expressed in Vietnam Accounting Standards, Accounting System Vietnam and the legal provisions Party B will plan and perform the audit for the financial year ending 31/12/2015 to obtain reasonable assurance that the financial statements have no material misstatements due to error or cheat However, due to the nature of the fraud, an audit will be planned and implemented in a reasonable manner that may still not detect material misstatements Therefore, an audit has to gain reasonable assurance, but not absolute, that the financial statements have no material misstatements An audit also does not have intention to detect errors Do Van Thai – 11123459 83 Excellent Auditing 54 Bachelor Thesis National Economic University and fraud in non-critical to the financial statements Due to the nature and the inherent limitations of audit and accounting system and internal control system, there are unavoidable risks The introduction of an audit opinion as well as the presentation of the written opinion of Party of course will depend on the actual situation at the reporting date Party B If for any reason that Party B is unable to complete the audit or cannot provide an audit opinion, Party B will notify the Board of Directors Party A Article 3: Responsibilities of Party A and Party B Responsibilities of Party A: The Board of Directors shall prepare a financial report honestly and reasonably, in compliance with the Accounting Standards of Vietnam, Vietnam Accounting System and the legal provisions concerned In addition to other responsibilities, the Board of Directors A Party shall: (1) establish and maintain a system of effective internal controls for the preparation of financial statements and notify Party B about weaknesses and significant deficiencies detected during the establishment and operation of internal control systems for the preparation of financial statements, (2) detect and ensure that Party A has complied with the provisions applicable to all its activities and inform Party B any violations of law regarding the storage and management of documents, accounting books, financial statements and other documents related safely view, the secret as prescribed by the State, (3) reflect the operations arising honestly and reasonably in bookkeeping, (4) adjusted financial statements in the case otherwise misstatement, (5) the implementation of appropriate accounting estimates, (6) protection of property, (7) ensure timely provision of necessary information related to Party B, ( 8) to provide Party B the financial statements were signed and stamped validation and (9) staffing related work in collaboration with Party B during the audit In addition, the Board of Directors are responsible for Party A to establish and implement the program and the control procedures to prevent and detect fraud and responsibly inform Party B of fraud, has been released present or suspected, that affect a related party (1) the Board of directors, (2) the employee has an important role in the internal control system, and (3) other cases a material effect Do Van Thai – 11123459 84 Excellent Auditing 54 Bachelor Thesis National Economic University on financial statements The Board of Directors is also responsible for Party A to Party B announced the cause of the fraud has been detected or are suspected to have affected Party A that the Board of Directors learned through discussions with employees who are working, the staff was laid off, analysts, state agencies or other individuals Party B will make a specific request to the Board of Directors Party A for the information presented in the financial statements Party B requests Party A Letter provides explanations of the Board of Directors, one of the procedures of the audit process, stating the responsibilities of Party A's board of directors in the preparation of financial statements and confirmed that the photo effect of individual errors and total errors are not adjusted in the financial statements due to Party B synthesized during the auditor for the current period and the errors related to prior period activity is not essential for the overall financial statements Party B will also require Party A Board of Directors confirmed the explanations provided to Party B during the audit According to the Vietnam Standards on Auditing, to meet these requirements and explanation Message In A Board of Directors on matters related is one of the basis for Party B to give their opinion on the report Party finance A Because of the importance of the reconciliation of the Board of directors, Party A agrees to indemnify and guarantee to Party B and their employees from liability and related costs to the services specified in this contract arising from the wrong explanation by management Party A Responsibilities of Party B Party B shall perform the audit in accordance with Standards on Auditing in Vietnam and provide Party A report of the auditors on the financial statements of Party A Vietnamese and English by the end of the work accountant Party B will report directly to the Board of Directors or the appropriate management level of the party A about the problems noted during the audit that Party B are matters for that omission The problem is these shortcomings that Party B issues that need to be discussed with the Board of Directors or management Party A Party A's appropriate, because these issues can present significant shortcomings in establishing or operation of the internal control systems could negatively affect the process of recognition, processing, and report Do Van Thai – 11123459 85 Excellent Auditing 54 Bachelor Thesis National Economic University financial data consistent with the confirmation of the Board of directors on the financial statements Party B will notify Party A situations can lead to: Delaying the completion of the work of Party B during audit The expanded scope of work; or The increase in charges for the workload Under this contract, if Party B knows the confidential information of Party A, Party B is not entitled to disclose to any third party without the consent of Party A, except as required by law management and legal system, or in accordance with professional standards are being applied, or have a relationship with the lawsuits related disputes, or in cases where such information on (i) has been popular spacious (including any information that is filed with the State authorities and are widely available) and not by Party B breach disclosed this information, (ii) published by Party A to third parties without violating the limits mentioned above, (iii) disclosed to party B based not require security from a source not by party B party a believes that the disclosure of information this does not violate any binding terms with Party a, (iv) information Party B before the announcement from Party a without any limits on the confidentiality of such information, or (v ) party B information is more independent from party a source has disclosed to party B Article 4: Audit report After the year end audit, Party B will provide Party A 06 Financial Statements have been audited by Vietnamese for the period from 01/01/2014 to 31/12/2015 Article 5: Fees and payment methods 1) The total fee for the services referred to in Article is: 100,000,000 VND (One hundred and twenty million dong excluding value added tax) The fee is calculated based on the following assumptions: (1) Party A provides timely and complete documentation at the request of Party B, (2) without any delay during Test changing accounting or auditing scope by events beyond the control of Party B, (3) the internal controloperating effectively during the period under audit, (4) arises only adjustments negligible during the audit (adjusted or unadjusted), (5) the plan time and workload of Party B was reasonable estimate, Do Van Thai – 11123459 86 Excellent Auditing 54 Bachelor Thesis National Economic University and (6) Party A timely payments invoices issued by Party B Party B shall promptly notify any circumstances can severely affect these estimates and will deal with Party A Board of Directors any extra charges incurred, if any Audit fees will be influenced and adjusted by the following issues: The changes in the audit plan as required by Party A The change of plan implementation audits often lead to changes in the personnel to carry out an audit of Party B However, due to the classification of workers others perform the audit practice is not easy, this change could lead to the generation of a relatively large number of extra costs Complete documentation Audit (i) is not timely Party A provided at the request of Party B (ii) is not in accordance with Party A provides Party B forms accepted (iii) incorrect terms data, or (iv) does not conform to the accounting records of Party A (eg general accounting books) Party B will submit to Party A list of the documents required for implementation of the audit, the information required and the time those documents should be provided to Party B Delaying the response requests to provide information of Party B for example compare the difference or provide necessary documents (such as invoices, contracts and other documents) The quality of the accounting records of Party A decrease this year compared to last year Party A does not provide timely to Party B Balance Sheet Figure complete with reference to the analysis, documentation and financial statements Party A does not report its unaudited financial and accounting records that are reasonable and timely A party does not timely provide Party B the electronic accounting documents are prepared properly and bring the information required to serve the interview process of Party B Party B will provide Party A Name books and the time required to provide this document In the process of implementation of the Audit Office in Party A, the group carried out the Audit no high-speed Internet connection through existing computer networks at the office party A or DSL network for the purpose of performing the audit Do Van Thai – 11123459 87 Excellent Auditing 54 Bachelor Thesis National Economic University Party A does not provide or offer document is not suitable for Party B as agreed before The problem was discovered shortcomings in the control system of Party A can lead to having to perform additional audit procedures There are many adjustments in the course of implementation of audit There are several draft financial statements are unaudited provide Party B or Party B to review detected shortcomings in the draft financial statements New issues or significant changes, for example: The new accounting issues and key; Major changes in the accounting policies or accounting activities over the previous year; Major changes or transactions arising not in the contemplation of Party B; Major changes in the financial reporting process of Party A or the information technology system of Party A; Major changes in personnel perform the accounting work of Party A, responsibilities and time involved in the audits of these individuals; Major changes in auditing standards; Major changes related to the use of experts from Party A or their work does not meet professional standards in accordance with the auditing standards or is not a reliable basis for audit purposes; Changes in the scope of the audit due to factors that Party B can not be controlled Payment Terms Party B will issue payment requests as follows: Date for payment After sigining auditing contract 50% On the ended date in auditing of part A 30% On the date of issuing audit report 20% Do Van Thai – 11123459 88 Excellent Auditing 54 Bachelor Thesis National Economic University Total 100% Party B's bill will be issued after the final payment, the invoice and request for payment will be paid within 10 days of release Service fees will be paid in cash or by bank transfer directly to the account of Party B in Vietnam dong Party B has the right to charge the late payment at the highest level that the law allows, if Party A fails to pay in accordance with the terms of payment within 10 days from the date of issuance B requires vouchers B party A party VACO Company ABC Company Deputy of Director General Director Do Van Thai – 11123459 89 Excellent Auditing 54