đề án audit for cash items in financial statement

Audit Project TABLE OF CONTENTS INTRODUCTION In the trend of economic globalization, Vietnam has transformed itself and has earned achievements about the significant development of economics and society, those are admitted and appreciated internationally In the market Audit Project economy, the economic and financial activities are required to be equitable, transparent and public That is actually necessary for investors, entrepreneurs, traders and Government High reliability of the financial Information to use, consider to make investment decisions, business decisions or to decide economic issues relating to finance, local budget, Government Therefore, they can only be assured, boldly making economic and financial decisions when the information provided by the accountant is assessed and verified by a professional organization or independent specialist That is audit activities by the auditors complement Cash plays an important role in the enterprise, as a means of tool makes all business operations be ongoing and regular Cash relates to trading activities, payment and other financial operations of the business Thus, Cash items affect most of the items on financial reports, especially the accounting balance sheet, cash flow statement Also due to the characteristics of high liquidity, lightweight, easy transportation, large amount of cash in receipt and payment cycles, it is easy to have fraud and error Therefore cash items always contain potential risks and become one of the material items As the importance of audit financial statements and role of cash items I mentioned above, I choose the topic: “Audit the cash items in the financial statements” for my assignment to discover the phase to complement audit and discuss about the practical activities in Vietnam This project is divided into chapters:    Chapter 1: The conceptual responsibilities and framework, regulations to audit the cash balances in financial statement Chapter 2: Step to audit cash balances Chapter 3: Assessment and recommendation about the implementation of audit in Vietnam Due to my limited professional knowledge and time, there would be some inevitable errors and defects in the project Audit Project I sincerely thank xxx for the understanding and enthusiastic guidance for me to complete this project Audit Project CHAPTER I: THE CONCEPTUAL RESPONSIBLITIES AND FRAMWORK, REGULATIONS TO AUDIT THE CASH BALANCES IN FINANCIAL STATEMENT 1.1 Objectives for the audit of cash balances - - - The purpose of an audit is to provide financial statement users with an opinion by the auditor on whether the financial statement are presented fairly, in all material respects, in accordance with the applicable financial accounting framework The audit of cash is considered an important part of an audit mainly due to two reasons: • Almost all business transactions will be ultimately settled through the cash accounts, the audit of cash accounts also assists in the verification of other asset and liability accounts as well as revenue and expenses • Cash is the highly liquid asset in a company and it is an area of high inherent risk since there is a relatively high risk of misappropriation Therefore, auditors have to give comment about the truthfulness and fairness of the recorded information regarding to cash items through the accumulation of appropriate evidence to support the regarding assertion Assertions Descriptions Existence • Completeness • Accuracy • Cut-off • To ensure that the cash is actually in existence and belong to the company at a given date or at the year-end date To ensure that there is no unrecorded cash To ensure cash at bank stated on the reconciliation is accurate To ensure that cash receipts and cash disbursement transactions are correctly recorded in the proper period Audit Project Presentation and disclosure • Detail tie-in • To ensure that the cash balance and related statement of comprehensive income entries are correctly disclosed in the financial statements in accordance with legislation and accounting standards Cash in the bank as stated on the reconciliation foots correctly and agrees with the general ledger 1.2 The features of cash accounting in each enterprise: 1.2.1 - - Overview about cash items It is needed to discuss about the types of cash accounts commonly used by most company because the auditing approach to each varies Auditors are likely to learn about the various types of cash balance when they obtain an understanding of the client’s business Cash items relate to most of transactions such as purchasing, sales, payment and the financial operation of the company, so these cash items affect to assets items, and other items as revenue, expenses, payable , and vice versa Moreover, cash is used to calculate the important ratio to analyze and assess the solvency of the business Also, the fluctuation, decrease and increase of cash inflow or outflow due to occurred transaction reflects how the company use money efficiently or not SALES AND COLLECTION CYCLE CASH PAYROLL AND PERSIONEL CYCLE ACQUISITION AND PAYMENT CYCLE CAPITAL REQUISITION AND REPAYMENT CYCLE INVENTORY AND WAREHOUSING CYCLE - It is apparent to see the role of cash items through the relationship between cash and other cycle in the following table: Audit Project Audit Project - There are types of cash accounts:  Cash on hand (Account 111):  This account is used to record receipts, disbursements and balance of the enterprise‘s fund, including: Vietnamese dong, foreign currencies and monetary gold Only received, dispatched or inventoried cash, foreign currencies, monetary gold shall be recorded to account 111 – Cash  When receiving or dispatching cash fund, receipt slips, payment slips with signatures of payees and payers, competent persons are required in accordance with accounting source document Deposit order and payment order must be attached in special cases  Cash in bank (Account 112):  This account shall be used to record current amounts and increases and decreases in demand deposits of the enterprise in a bank Credit notes, debit notes or bank statements enclosed with original documents (payment order, collection order, depository transfer check, certified check, etc) shall be recorded to Account 112 "Cash in bank"  When receiving documents sent from the bank, the accountant must collate them with enclosed original documents If there is any difference between figures in enterprise's ledger, in original documents and in the bank‘s documents, the enterprise must notify the bank to collate, verify and promptly handle At the end of the month, if it fails to uncover the reasons for differences, the accountant shall record according to the bank's figures stated in debit notes, credit notes or bank's statements  Cash in transits  This account shall be used to record amounts of money which an enterprise paid to the State bank, the State Treasury, or transferred by post to a bank, but no credit note or confirmation of payment to other enterprises has been received; or the enterprise made wire transfer from their bank Audit Project account to other enterprises, but no debit note or bank statement has been received 1.2.2 - - - General criteria regarding of accounting for cash of the audit clients Cash item in the audit client is a large item and very important, it affects the liquidity as well as the solvency of the maturity debt, long term debt Cash item is an indispensable element in the operation of the business, so it has material influence on financial statements, audit reports Because of its susceptibility to theft and significantly misstatement, if the internal control is not efficient, that is an opportunity to exist loophole for fraud declarations of how much money spent, and withdrawn for personal purposes Therefore, to detect to fraud and errors that may incur in the company, it is needed to examine the cash accounting of clients to comply with the regulations or not The following standard is general for cash items in all companies that need to be comply with: Enterprises that use foreign currency in production and business activities, must be converted into Vietnam dong at the actual exchange rate or average exchange rate interbank that State Bank of Vietnam announced at the time when the transaction incurred When the foreign currency on hand or foreign currency in banks are disbursed, the exchange rate is determined based on the actual exchange rates of foreign currencies with a suitable method such as first in first out, last in first out , the average exchange rate At the end of the accounting year, the cash and bank deposits in foreign currency must be revalued at the average exchange rate in the interbank at the closing date The monetary gold shall be re-evaluated according to the buying prices on the domestic market at the time in which the financial statement is prepared The buying prices on the domestic market are prices announced by the State bank In case the State bank fails to announce gold buyingprices, the buying-prices announced by enterprise entitled to trade in gold as prescribed shall be chosen Audit Project - - - Cash in transit are accounted for in the following cases: Receiving cash or check is sent directly to the bank, payment via post office, collecting sales tax to the treasury The accounts for cash items will be debited regarding of the increase of cash, and be credited regarding of the decrease of cash The receipts and payments in enterprise’s funds are required to have collection orders or payment order with the signature of manager, or the authorized person, and chief accounting According to the collection orders and payment orders, the accountants make the receipt slips and the payment slips Then, these documents are sent to treasurers, based on them, treasurers proceed to receive or pay cash and sign, stamp the supporting documents (payment slips, receipt slips) These signed and stamped document are used to record in the cash book report and then submit report funds and fund documents attached to cash accounting Treasurer must regularly check the data on cash book compared with the actual cash amount and with the accounting data If you notice discrepancies to find the cause and take measures for timely handling For cash in bank, evidences for accounting to post entries to bank account are the debit note, credit note or bank statement accompanied by the original documents (certified checks, standing orders, encashment orders, ) When accountants receive incoming documents from banks, they need to compare with the original documents attached, identify receipts and payment content to post accounting entries accurately Accountant for cash in bank opens the detail of books for monitoring each type of bank deposits, foreign currency, gold, silver, precious stones at each bank in terms of quantity and value 1.3 Internal control for cash receipts and disbursements 1.3.1 - Fundamental requirements to control the cash items: Cash management is one of the important activities of the enterprise’s financial manager, related to the management of accounts receivable, inventory and accounts payable, thus related to financial solvency Cash Audit Project - - - - - management is actually using that money most effectively to meet all the other related demands of the business Integrity and ability of employees: is the first factor to ensure an effective Internal Control since employees directly perform the task of keeping money in a bank deposit, record entries in accounting books Besides there should be cross-checked the assignment of different tasks among employees to limit the fraud or intentional collusion to steal money from corporate funds Segregation of Duties: Separate the task of keeping cash with updating the accounting books Cash accountants not have to keep money, while cash treasurer not have to approach the accounting books Enterprises should establish the company policy about stocktaking, specific responsibilities for individuals in the term of cash controlling in the fund All transaction related to receipt and payment, preserve and conserve cash is the treasurer’s responsibilities Treasurer is appointed by director and be responsible for maintaining the cash fund Treasurer must not ask someone else to assist In a necessary circumstance, he(she) must authorize a person to the job that be agreed in signed document by the director of the enterprise Treasurer must regularly check the fund, guarantee that cash must be consistent with the balance in the cash book Every day, after the receipt and payment of cash, the treasurer shall record in the cash book immediately, and submit reports to the funds accountant at the end of each day There are policies to match the remaining cash budget with the financial situation of the company It is needed to separate the functions of payment approval and signing checks Focus on collecting clues: due to the sensitivity of the money so minimizing the ability of cash loss is to reduce the number of the cashiers Monitoring cash collection activities about time and place where to get cash by setting up a list of receipts Petty cash is only use for sundry expenses For the larger expenditure, it is required to issue the checks, pay by cash in bank, not pay by petty cash Audit Project Products and production line Information about the market (target customers, main competitors, market share,…)  Property, plant and equipment Learn about the client’s internal control and assess the general control system  Observation and inspection relating to client activities, operations, documents, reports and premises  Learning the policy, regulation of clients, and checking the documents and completed general ledger Preliminary analysis:  Analyze in a general way about the indicators or items on the financial statements, the indicators are used to analyze the direct or indirect influence to the operating cost targets Auditors conducted on both types:  Horizontal Analysis: auditors compare the amount of receipts and payment of the previous period to the present period or among the months in one period  Vertical Analysis: auditors compare the percentage of each receipts and payment in the present period over the previous year  Through the analysis the auditor can see abnormal fluctuations between the months of the year, the middle of this year compared to last year, budgeted versus actual result Otherwise, assessing the possibility of going concern assumption is also one of the important goals affect the completeness, effectiveness for audit cash items There are some factors that affect the going concern assessment as follow:  Financial symptom about bad situation or not  Signals about operating activities (retirement, market share,…)  Other signal related to compliance with regulations and policies Materiality assessment: the level of materiality is assessed for the whole overall financial statement and then allocates it for each item When performing allocation of materiality for cash items will help auditors determine the number of appropriate audit evidence should be collected Determination of materiality requires the auditor to consider both the size and nature of the items for each specific customer   - - - - Audit Project   For example, for new business without revenue, material levels of cash may be determined to be from 0.5% to 1% of total assets Because the operating activities are unstable, the initial investment is for non-current asset (especially property, plant and equipment) while the cash receipt is not high Materiality level is determined from minimum to maximum, the level of materiality of cash to be determined, then the auditors estimate and compare the discrepancy If discrepancy is smaller than initial estimate of materiality, the financial statements will be considered honest and reasonable Conversely, if the sum is greater than the maximum value, the financial statements are not considered realistic and reasonable 2.1.2 Assessing the client risk affecting cash - - - The cash balance is not material on many audits, but cash transactions affecting the balance are almost always extremely material Therefore, the potential often exist for material misstatement of cash Because cash is more susceptible to theft than other assets, there is high inherent risk for existence, completeness, and accuracy objectives These objectives are usually the focus in auditing cash balances Internal controls over year-end cash balances in the cash account can be divided in two categories:  Controls over the transaction cycles affecting the recording of cash receipts and disbursements  Independent bank reconciliation If controls affecting cash-related transactions are operating effectively, control risk is reduced as are the audit test for the year-end bank reconciliation A monthly bank reconciliation of bank account on a timely basis by someone independent of the handling or recording cash receipts and disbursements is an essential control over the ending cash balance If a business defers preparing bank reconciliations for long periods, the value of the control is reduced and may effect the auditor’s assessment of control risk of cash The reconciliation ensures that the accounting records reflect the same cash balance as the actual amount of cash in the Audit Project - bank after considering reconciling items More important, the independent reconciliations provide an opportunity for an internal verification of cash receipts and disbursements transactions Based on auditors’ comprehension to identify risks that may result in material misstatements in the financial statements  The level of risk on the overall review of financial statements  Risks to the assertion of a group of transactions, account balances and financial statement presentation (especially the assertion are involved)  The level of probable mistakes in the assertion / scope of ability to influence  Significant risk (affecting the audit) or related fraud  The risk if the substantive procedures are only applied 2.2 Design and perform audit program 2.2.1 Design and perform Test of control: - - Using specific controls as a basis for reducing assessed control risk, however, specific evidence must be obtained about their operating effectiveness throughout all, or at least most, of the period under audit The procedures to test effectiveness of controls in support of a reduced assessed control risk are called tests of controls Designing tests of controls involves the following: Nature of tests: As to the nature of tests of controls, the auditor’s has the following choices  Inquiring: Inquiring is designed to determine (1) an employee’s understanding of his/her duties, (2) the individual’s performance of those duties, and (3) the frequency, indicate improper application of a control  Observing: Observing the employee’s performance provides similar evidence  Inspecting: Inspecting documents and records are applicable when there is a transaction trail of performance in the form of signatures and validation stamps that indicate whether the control was performed and the individual who performed Audit Project Re performing: Re performing a control by the auditor provides the best evidence of its effectiveness Timing of tests: The timing of the test of controls refers to when they are performed and the part of the accounting period to which they relate Additional test of control are performed during interim work, which may be several months before the end of the year under audit Extent of tests: The extent of tests of controls is directly affected by the auditor’s planned assessed level of control risk More extensive tests of controls will ordinarily provide more evidence of the operating effectiveness of a control policy or procedure than less extensive tests More extensive testing will be needed for a low assessed level of control risk than for a moderate assessed level of control risk For each customer, based on professional judgment, Auditors will choose to follow different methods to collect evidence For example, they can:  Choose a sampling to examine from the documents to general ledger, or vice versa to test the actual operation activities  Observe employees to ensure the actual works, duties.( related to operating cost and administration cost)  Interview employee and employer directly or indirectly through questionnaires  - - - 2.2.2 Design and perform substantive test - Analytical procedures: The purpose of applying analytical procedures in planning the audit is to assist in planning the nature, timing, and extent of auditing procedures that will be used to obtain audit evidence for specific account balances or classes of transactions To accomplish this, the analytical procedures used in planning the audit should focus on (a) enhancing the auditor's understanding of the client's business and the transactions and events that have occurred since the last audit date, and (b) identifying areas that may represent specific risks relevant to the audit Thus, the objective of the procedures is to identify such things as the existence of unusual transactions and events, and amounts, ratios and trends that might indicate matters that have financial statement and audit planning ramifications Audit Project Since cash does not have a predictable relationship with other financial statement accounts because of its residual nature, therefore, the auditor’s use of analytical procedures for auditing cash balances is limited to:   - (a) Compare with prior years’ cash balances and to budgeted amount (b) Identify receipts of the next accounting period and investigate the long outstanding checks, determine whether they should be reflected in the balances at year end period The substantive procedures Audit Objectives Occurrence Existence Completeness Substantive Procedures /  Select samples of cash receipts from cash book and trace to remittance advices, pay-in slips, and bank statement  Select samples of cash payments from cash book and trace to payment vouchers (with supporting documents) and bank statements  Scan through the entries and trace all the unusual items, like contra items, stopped payment items and cancelled checks, to support documents and authorization  Trace a sample of remittance advices and pay-in slip to cash receipt journal  Trace a sample of payment vouchers (with supporting documents) to cash book Accuracy  Agree the total of cash receipts and payments to general ledger Valuation  Compare a sample of remittance advices with amount in cash receipts recorded in the cash Audit Project book  Compare a sample of (cancelled) checks with amounts in cash recorded in the cash book Cut-off  Compare the dates for recording a sample of cash transactions with the dates of cash deposited in bank or checks sent Classification  Examine a sample of cash receipts and payments transactions for proper classification The substantive procedures for test of details of cash balances Audit Objectives Substantive Procedures Occurrence, completeness and valuation  Agree balance on bank confirmation with bank reconciliation and cash book  Trade deposits in transits, outstanding checks and other reconciling items to cut-off bank statements Accuracy  Check calculation of bank reconciliation and agree with book balance on cash book and general ledger Cut-off  For cash receipts, observe cash count for the last day of the year end and trace deposits to cash receipts journal and cut-off banks statement  For cash disbursement, record the last check issued at the year end date and trace to cash payments in the cash book; and trace outstanding checks on bank reconciliation and investigate any Audit Project check clearing after a long delay Classification, presentation and disclosure  Review board of directors’ minutes, bank letter, loan agreement or other documents for any restrictions on cash  Ensure bank loans and overdrafts are not offset against positive bank balances in the financial statements 2.3 Complete the audit and prepare the audit’s report 2.3.1 Review the events occurring after the balance sheet date 'Events after the reporting period' are those events, favorable and unfavorable, that occur between the balance sheet date and the date when the financial statements are authorized for issue There are two types of events: - - Adjusting events:  An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of the enterprise is not appropriate These events affect client’s accounting estimates and are on the books (but not confirmed) as of the balance sheet date  If the confirming event (such as the bankruptcy) occurs after the balance sheet date, and before the financial statements are finalized, the client has to adjust its financial statements Non-adjusting event:  An event after the reporting period that is indicative of a condition that arose after the end of the reporting period These events, also called non-recognized events, aren’t on the books before the balance sheet date and have no direct effect on the financial statements under audit Audit Project  If these events are material, they have to be disclosed as footnotes in the financial statements, but the financial statements don’t have to be adjusted 2.3.2 Assess going concern assumption - - Going concern is a basic underlying assumption in accounting The assumption is that a company or other entity will be able to continue operating for a period of time that is sufficient to carry out its commitments, obligations, objectives, and so on Regular auditing procedures that may identify conditions and events that indicate a going concern problem include the following:  Review of subsequent events – Subsequent events, such as the bankruptcy of a major customer, confirm adverse conditions that existed at the balance sheet date Other subsequent events that indicate a possible going concern problem include: (a) collapse of the market price of the entity’s inventory; (b) withdrawal of line of credit by bank; and (c) expropriation of entity’s assets  Reading of minutes: Minutes of meetings of stockholders, board of directors, and board committees may indicate (a) potentially expensive litigation; (b) loss of lines of credit; (c) loss of a major supplier; and (d) changes in the operation of the business that could result in significant losses  Inquiry of legal counsel: Responses to inquiries of the entity’s legal counsel about litigation, claims, and assessments could indicate possible significant losses because of product liability claims, copyright or patent infringement, contract violations, and illegal acts 2.3.3 Assess the results - - Application of analytical procedures: The procedures assist auditor to determine which department that need to collect more evidence to support auditor’s opinion Assessing the sufficiency of Audit evidence: Auditors need to verify the audit procedures to certain whether all of parts have been completed properly and fully documented or not Auditors also need to consider the gathered evidences that are fully and reliably to be able to conclude that Audit Project - the client’s financial statements are true and fair based on Vietnamese Accounting System General evaluation of the detected errors: During the implementation of Audit procedures, the auditor may find errors in the client’s accounting data For material misstatement, auditors have made the right adjustments during audit such term of those errors, while other misstatements have not been adjusted However, each misstatement may be immaterial, but combining them together can lead to be material Therefore, auditors need to have integrated assessment for all unadjusted errors to consider that the combination of errors is material or not when accumulating all of errors 2.3.4 Review the audit record - The review of audit records is usually done straight after the phase of performing audit procedures That review is conducted as follow:  Senior auditor examines the audit record performed by associate auditors  Manager auditor examines the work of senior auditor and main part of associate auditors 2.3.5 Audit report - - Audit report is the last step in the process of auditing the financial statement It is important to note that auditor's reports on financial statements are neither evaluations nor any other similar determination used to evaluate entities in order to make a decision The report is only an opinion on whether the information presented is correct and free from material misstatements, whereas all other determinations are left for the user to decide There are four common types of auditor's reports, each one presenting a different situation encountered during the auditor's work The four reports are as follows:  Unqualified Opinion report: An Unqualified Opinion indicates the following o The Financial Statements have been prepared using the Generally Accepted Accounting Principles which have been consistently applied; Audit Project o The Financial Statements comply with relevant statutory    requirements and regulations; o There is adequate disclosure of all material matters relevant to the proper presentation of the financial information subject to statutory requirements, where applicable; o Any changes in the accounting principles or in the method of their application and the effects thereof have been properly determined and disclosed in the Financial Statements Qualified Opinion report: Qualified report is given by the auditor in either of these two cases: o When the financial statements are materially misstated due to misstatement in one particular account balance, class of transaction or disclosure that does not have pervasive effect on the financial statements o When the auditor is unable to obtain audit evidence regarding particular account balance, class of transaction or disclosure that does not have pervasive effect on the financial statements Adverse Opinion report: An Adverse Opinion Report is issued on the financial statements of a company when the financial statements are materially misstated and such misstatements have pervasive effect on the financial statements Disclaimer of Opinion report: A Disclaimer of Opinion is issued in either of the following cases: o When the auditor is not independent or when there is conflict of interest o When the limitation on scope is imposed by client, as a result the auditor is unable to obtain sufficient appropriate audit evidence o When there are significant uncertainties in the business of client Audit Project CHAPTER III: ASSESSMENT AND RECOMMENDATION ABOUT THE INPLEMENTATION OF AUDIT IN VIETNAM 3.1 Assessment 3.1.1 Advantages - - - Firstly, each audit firm has been gradually improving scientific audit process, which is based on the regulations and audit standards Vietnam Most of firms have meet the requirement based on integrated approach about audit program by building and performing substantive procedure, analytical procedure, and test of details in order to meet the objectives Secondly, before publishing the audit report, examination among auditors is done by experienced and competent auditor to assure the completeness and sufficiency of evidences and supporting documents Furthermore, crossing – checking also assist to reduce the errors during audit complementation and the lack of auditors’ responsibilities Thirdly, by complying with the standard and policy of each firm, the audit report is often brief, complete, closely argued, accurate and transparent According to that, auditor can give comment to clients to solve issues or develop their control Due to the objectivity and the rationality, truthfulness, audit firms can get the belief and appointment of clients 3.1.2 Disadvantages - - Firstly, relating to the audit planning: there are differences between the audit for big and small clients Actually, audit planning for big enterprises is more complete and accurate in details On the other hand, audit planning for small company or familiar company is reduced in updating the business line, identifying the accounting problem and risk due to saving money and time That can lead to the fraud and errors in some circumstances Secondly, relating to controlling the quality of audit: Audit season typically lasts for months from December to the end of March in Vietnam In that period, the audit firm often receive a lot of contracts in different places, so the work of the auditors often are busy and stressful due to large workload Audit Project - - must be completed in a limited time Therefore, it is difficult to avoid the errors Thirdly, Cash on hand – counting at the end of accounting period is essential in the process of audit cash items, so in almost the job, an auditor is needed to assign to observe directly the physical count of clients’ accountants However, in the audit report, it is sometimes mentioned that auditor not join in the observation step Fourthly, under the policy of a number of firms, the sampling is implemented by two methods: random sampling and sampling from special section, in which special section may contain great amount of cash or the amount exceed the cash quotation Actually, choosing sample is depended on auditors’ prediction and comprehension Some of them always may choose the transactions with larger amount of cash (receipts, disbursement, of both), the remaining transaction is chosen randomly to reduce the misstatements The adverse result of choosing sample like above is high sampling risk that the information from each sample is not represented for population in some cases 3.2 Recommendation to improve the audit process - - Relating to improve audit planning: In Vietnam recent condition, the policy and legal framework are incomplete and useful enough to assist the audit performance The content and plan of audit is lack of consistency and limit regulation about the quality of audit process Thus, it is needed to pay attention to prepare audit planning so well to avoid the illegal errors and misstatement Using foreigner expert: In some necessary circumstances as audit for a big corporation or foreign enterprises, it may have some lack of comprehension about clients, industry and foreigner regulations, so it is preferable if we engage to other organization or competent individuals to have assistant on solving our limitation For example, when audit for the jewelry business which has the expensive and luxury stock, it is needed to consider taking some external expert to valuate the cash equivalents and products However, increase of charge and inflexibility of time is necessary to assess appropriately and match with contract’s value Audit Project - - Relating to choose audit sample and sample size: auditor is required to have enough experiences and prediction to analyze the population to choose accordant sampling that can present for population Auditors can divide into sub-population to get the high effectiveness Applying the ratio analysis in analytical process: analytical procedure is used effectively to reduce detected risk related to assertions, so increase application of analytical procedure contributes to improve the quality of audit program In audit for cash items, this procedure is quite important, as mentioned above, vertical and horizontal is preferable to analyze the fluctuation and changes compare with prior year or other items in financial statement If have any, auditors need to identify the reason and trend to give valuable opinion and advice about that For audit cash items, auditors can use the following ratios:  The quick ratio is an indicator of a company’s short-term liquidity The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets  The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability to pay short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables) Audit Project The cash ratio is an indicator of a company's liquidity that further refines both the current ratio and the quick ratio by measuring the amount of cash, cash equivalents or invested funds there are in current assets to cover current liabilities Relate to control the quality of audit program: To avoid the high pressure on chairman of audit department and board of directors to control the quality of audit contract at the audit season, it is better to have independent committee to manage the quality of audit records The specialization can help firm avoid the errors when auditing a lot of clients’ financial statements with limited human resources  - Audit Project CONCLUSION In general, audit field (especially independent audit) has been growing along with the growth of Vietnam's economy The functions and responsibilities of the audit is to verify, to express an opinion on these financial and economic operations, the role of audit is increasingly proving to be an important, essential part through the efforts and maturity after more than 20 years Actually, since 2006, accompanied with the strong development of the stock market, the economic environment of Vietnam has been increasingly demanding transparency in financial information It is estimated that the demand from independent auditing services increased 10 times compared to 2006 Cash items always relate to almost cycle in all production and business enterprises, irrespective of forms of ownership, scale, or nature of the businesses, so in all audits program of financial statements, the audit cash items are needed to be done Through this assignment, theoretical comprehensions and research related to audit for cash items are expressed, so I brought out some recommendations to improve audit program in Vietnam to be more effective and increase the quality of audit Due to limited knowledge and limited reference, my assignment can not avoid some inevitable shortcomings I look forward to receiving the comments of lecturer to improve and complete the assignment Thank you so much for your time and your consideration ... making economic and financial decisions when the information provided by the accountant is assessed and verified by a professional organization or independent specialist That is audit activities... appropriate audit evidence o When there are significant uncertainties in the business of client Audit Project CHAPTER III: ASSESSMENT AND RECOMMENDATION ABOUT THE INPLEMENTATION OF AUDIT IN VIETNAM... following ratios:  The quick ratio is an indicator of a company’s short-term liquidity The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets