LITERATURE
Definition and classification
In the economy, Trade in commodities is the essential activity in the development stage
Historically, goods were exchanged directly through bartering, but as the variety and volume of goods and services increased, the need for a standardized medium of exchange became essential This led to the creation of money, which economists define as anything widely accepted for transactions involving goods, services, or debt repayment (Mishkin, 2016, p.95).
Mishkin (2016) pointed out 3 functions of money:
- Medium of exchange: money is used to make payments
- Unit of account: money is used to measure value in an economy
- Store of value: it is a repository of purchasing power available over time
Money has evolved over time and now exists in three primary forms: cash on hand, cash in bank, and cash in transit, each defined by its method of storage.
Cash on hand refers to the actual cash available within a business, used primarily for purchasing goods or paying employees This cash can take various forms, including Vietnamese Dong, foreign currencies, or Monetary Gold As the most liquid form of money, cash on hand allows for immediate payments without the need for conversion.
Cash in bank is the cash deposit in bank aims to reserve for payments or term deposits
Cash held in banks can include Vietnamese Dong, foreign currencies, or Monetary Gold For enterprises engaged in frequent trade with foreign partners or involved in import/export activities, the volume of transactions and account balances in cash is typically substantial, constituting a significant portion of their total cash reserves.
Cash in transit refers to funds that have been deposited in a bank or state treasury, or payments made through bank accounts on behalf of a firm, without the firm receiving corresponding bank statements or credit notes This can include amounts in Vietnamese Dong or foreign currencies.
The classification of cash and bank accounts, as outlined in Circular 200/2014/TT-BTC, is a standard method for presenting these assets on the Statement of Financial Position Each type of currency possesses unique characteristics, leading to variations in management practices and internal control systems for cash and bank accounts across different entities This diversity is crucial for auditors, as it influences the development of tailored audit strategies to gather sufficient and appropriate evidence for these accounts.
Rules for cash accounting
Cash and bank accounts are essential for enterprises, necessitating the implementation of a robust accounting system to effectively manage and monitor these assets Compliance with the accounting regulations set forth by the Ministry of Finance is crucial for maintaining accurate records of cash and bank transactions.
Firstly, consistency in moneytary unit – Accountants must use unified currency monetary unit for recording all transactions and account balances In Viet Nam,
In accounting, the primary monetary unit used is the Vietnamese dong (đ or VND), which is essential for bookkeeping and financial statement preparation Transactions involving foreign currencies must be converted to Vietnamese dong using the applicable exchange rate According to Article 4 of Circular 200/2014/TT-BTC, enterprises that primarily conduct transactions in foreign currencies must adhere to accounting regulations and select an appropriate monetary unit, while also notifying the supervisory tax authority Furthermore, the chosen currency must fulfill specific legal requirements.
The pricing strategy is crucial for businesses, significantly influencing sales and service fees, as it is primarily utilized for setting prices and processing payments Additionally, it plays a vital role in the procurement of goods and services, affecting labor, material, and operational costs, and is essential for managing these expenses effectively.
To ensure accurate financial management, it is essential to regularly update accounts by recording transactions related to cash and bank accounts based on bank statements, receipts, and payment slips Additionally, frequent monitoring of the petty cash book and detailed ledgers for each bank account is necessary For foreign currency accounts, accountants must track the original currency and perform revaluation at the end of each period according to the prevailing exchange rates.
Characteristics of cash and bank on Financial Statement
Cash and Bank accounts are the most liquid assets on the Balance Sheet, playing a crucial role in assessing a business's solvency through financial ratios like the current and quick ratios This significance may motivate entities to deliberately misrepresent their cash and bank balances in financial statements, leading intended users to misjudge the company's financial position Such practices are particularly common among businesses aiming to become publicly listed or seeking increased borrowing.
Cash serves as a crucial medium for purchase payments and is generated from sales, making it a vital mobile asset for enterprises Given the high volume and variety of cash and bank transactions within a fiscal year, ineffective internal control systems can lead to substantial risks, including fraud and errors that negatively impact financial statements.
CONCEPT OF AUDIT PROCEDURE FOR CASH AND BANK ACCOUNT
Audit objectives
To provide reasonable assurance about whether the FS as a whole are free from material misstatement, the auditor needs to obtain evidences about the financial statement assertions
According to ISA 315, paragraph A124 (a)-(b), financial statement assertions, which encompass assertions for classes of transactions, related disclosures, account balances, and their disclosures, must be detailed enough to support the assessment of risks related to material misstatements and inform the design and execution of additional audit procedures.
The assertions in audit cash and bank are set out in the table that follows:
A/ Assertions about account balances at the period end:
Existence Recorded cash balances exist at the period end
Completeness Recorded cash balances include the effects of all transactions that have occurred
Recorded cash balances are realisable at amounts stated
Rights and obligations The entity has legal title to all cash balances shown at the period
Presentation Disclosures relating to cash are adequate and in accordance with accounting standards legislation
B/Assertions about classes of transactions and events for the period under audit:
Occurrence All transactions and events relating to receving or paying cash that have been recorded have been actually occured and pertain to the entity
The accuracy of recorded transactions and events has been ensured, with all relevant data documented appropriately Additionally, the completeness of records is confirmed, as all transactions and events related to Cash and Bank have been accurately captured.
In financial reporting, it is essential to classify transactions and events accurately within the appropriate accounts Additionally, ensuring that these transactions are recorded in the correct accounting period is crucial for maintaining integrity Proper presentation involves aggregating or disaggregating transactions clearly, with relevant disclosures that are understandable within the context of the applicable financial reporting framework.
Resources and documentations for the audit
During the audit process for cash and bank transactions, auditors utilize a variety of resources and documentation to gather appropriate evidence Key sources include operational management records and relevant transaction documents, which are essential for ensuring a thorough and accurate audit.
- Policies, regulations related to cash management issued by government such as: regulations on bank payments, non-cash payments,
- The regulations made by Board of management about approval responsibilities, authorisations of payments, segregation of duties of treasurers and accountants, cash count, reconciliations,…
- Financial statements: Statement of finacial position, statement of profit or loss, Notes to financial statement, statement of cash flow
- Accounting books: Cash book, petty cash book, general ledger, general journal, detailed ledger,…
- Accounting documents related to cash and bank as: the receipt, payment slips, Credit note, Debit note, Debit advice, Accreditative,
- Other relevant documentations: cash count record, bank statements, bank confirmation, bank contract,…
Frequently misstatements
First, Relating to occurrence and existence assertions:
- The receipts and payment slips do not reflect the actual transactions or events
- Transfer money to the wrong person or recipient who has no economic relationship to the entity
- Misrepresent the amount transferred to the bank, transfer payment
- There is difference between cash fund exist to cash counts record
- Not reconcile the deposit cash balance to the balance in Bank
Second, Relating to accuracy and valuation and allocation assertion:
- At the end of period, the foreign currency balances are not valuated in proper exchange rate accordance with the banks
- The invoice are recordes twice, or paid in cash with amount greater than VND 20 millions
Third, Relating to completeness assertion:
- Inconsistence in recording the transactions relating foreign currency
- Lack of detailed ledger for each Bank accounts
- Not recording fully the bank deposit interest or the interest does not match with the amount presented in bank
Fourth, Relating to classification assertion:
- Refect inappropriately the cash in transit
- Refect inappropriately the bank overdraft, deposit cash,
Fifth, Relating to cut – off assertion:
Recorded according to debit advice and accreditative in wrong period
Sixth,Relating to presentation and disclosureassertion:
- There are many petty cash books
- Not monitoring the currency amount of foreign currency account
Misstatements can arise not only from inaccurate assertions but also from deficiencies in internal control systems For example, when the treasurer violates the segregation of duties by recording cash and bank transactions, it creates a risk of misuse, especially if there is a familial relationship with the Executive Director and Chief Accountant Additionally, the absence of proper approval for receipts and payment slips further exacerbates the potential for cash to be misappropriated for personal use.
FRAMEWORK OF AUDIT PROCEDURE FOR CASH AND BANK
Planning
According to ISA 300 Planning an Auditof Financial Statements (para 4), it is stated that theauditor shall plantheaudit so that theengagement isperformed inan effective manner
Audits are strategically planned to ensure that auditors focus on critical areas, identify and address potential issues promptly, and manage the audit process effectively This planning aids in selecting suitable team members and assigning tasks, while also facilitating the direction, supervision, and review of work Additionally, it supports the coordination of efforts among auditors and specialists involved in the audit.
The objective of planning phase is formulating an overall audit strategy which is translated into a detailed audit plan for auditor to follow
In planning phase, auditors perform including these tasks:
A/ Understanding client and its environment:
Before onboarding new clients, audit firms conduct thorough investigations to assess their suitability For existing clients, firms re-evaluate relationships to identify any reasons for potential disengagement Upon accepting clients, firms implement procedures for both client acceptance and ongoing evaluation, while also assessing audit risk by gaining a comprehensive understanding of the client and its operational environment.
In this task, auditors need to study and obtain documents which have following information:
- Industry, regulatory and other external factors, including the applicable financial reporting framework
- Nature of the entity, including operations, ownership and governance, investments, structure and financing
- Entity's selection and application of accounting policies
- Objectives and strategies and related business risks that might cause material misstatement in the financial statements
- Measurement and review of the entity's financial performance
Auditors must gather essential documentation and information regarding cash and bank accounts from the chief accountant This includes the statement of financial position, trial balance, cash count records, general journal, petty cash records, and the general ledger for account 111.
B/ Preliminary analytical procedures of cash and bank account:
Preliminary analytical procedures during the planning phase are crucial for audit risk assessment, enabling auditors to evaluate the risk of material misstatement in financial statements (FS) and establish a foundational audit strategy By employing horizontal or vertical analysis alongside non-financial factors such as operational environment, economic conditions, and industry trends, auditors gain an objective perspective on the FS to identify significant changes from the previous year Subsequently, auditors assess risks associated with cash and bank transactions, as well as any unusual fluctuations.
To effectively assess internal control systems, auditors must focus on both the design and implementation of these controls, which aids in determining the level of reliance on the internal control system and in formulating an appropriate audit strategy Gaining an initial understanding of the internal control system for cash and bank accounts requires auditors to apply professional judgment and execute procedures to evaluate control risk associated with these transactions This foundational understanding is crucial for auditors to assess audit risk, identify potential material misstatements related to cash and bank accounts, and subsequently estimate the scope, content, timing, and necessary audit tests Audit procedures aimed at obtaining this understanding are essential for a thorough evaluation.
- Request clients to provide the regulations about internal control system for cash and bank
- Inquire clients’staffs who have understanding about internal control
- Examine whether internal control system is operated as regulations
D/ Preliminary judgment about materiality v Assessing audit risk:
Auditor must perform risk assessment procedures for cash and bank account to have a basic to identify and assess risk of material misstatement on FS and Fianacial management assertions level
Auditor assess audit risk through audit risk model:
AR – “Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated” (ISA 200: para 13(c))
Inherent risk refers to the likelihood that a statement regarding a transaction, account balance, or disclosure may contain a material misstatement, either on its own or when combined with other misstatements, prior to taking into account any internal controls (ISA 200: para 13(nii)).
Control risk (CR) refers to the potential for a material misstatement in a transaction, account balance, or disclosure to go undetected or uncorrected by an entity's internal controls This risk is significant as it can lead to inaccuracies, either individually or when combined with other misstatements, impacting the reliability of financial reporting Understanding and managing control risk is essential for maintaining effective internal control systems.
Detection risk (DR) refers to the possibility that an auditor's procedures may fail to identify a material misstatement, whether it is significant on its own or when combined with other misstatements This concept is outlined in ISA 200, paragraph 13(e), emphasizing the importance of effective audit procedures in minimizing overall audit risk.
IRxCR refers to the risk of material misstatements in financial statements (FS) Auditors are required to evaluate this risk across all components of the FS, including assertions related to transactions and cash and bank balances.
To effectively identify inherent risks, it is essential to understand the client and their operating environment This involves examining relevant controls associated with these risks and conducting thorough inspections of transactions, account balances, and financial statement disclosures Once these risks are identified, it is crucial to assess their potential pervasive effects on the overall financial statements and their implications for the accuracy of assertions.
- Assess control risk through understanding of internal control system and consider what controls the auditor intends to test;
To effectively assess detection risk, auditors must synthesize inherent risk and control risk The level of detection risk, whether high or low, serves as a fundamental basis for auditors to estimate the volume of audit tests required and to develop an appropriate audit strategy Additionally, materiality plays a crucial role in this evaluation process.
In the ISA 320 (para 2), the definition of materiality is not expressed, but it is discussed in different terms by different financial reporting frameworks the following are generally the case:
- Misstatements are considered to be material if they, individually or in aggregate, could reasonably be expected to influence the economic decisions of users
- Judgements about materiality are made in the light of surrounding circumstances, and are affected by the size and nature of a misstatement or a combination of both
- Judgements about matters that are material to users of financial statements are based on a consideration of the common financial information needs of users as a group
The materiality has both quantity aspect (amount) and quality aspect (nature):
- Quantitative aspects, misstatement is considered to be material when it reached at specified benchmarks that can influence the decisions of intended users
- Qualitative aspects, some misstatements may fall under specified benchmarks, but are still considered material overall due to their nature effects
The materiality level significantly influences an auditor's decision-making regarding the quantity of items to test, the specific items to examine, and the associated risk of issuing an incorrect audit opinion.
Determining the materiality is dependent on professional judgment of auditor Auditor establish overall materiality for FS as a whole and performance materiality for overall
To ensure that the total of uncorrected and undetected misstatements does not exceed materiality for the financial statements, FS aims to lower this probability to an acceptable level (ISA 320: para.9) Subsequently, materiality is allocated specifically for cash and bank accounts, typically beginning with a percentage applied to a selected benchmark to establish overall materiality for the financial statements.
There are some factors might affect choosing appropriate brenchmark, including:
- Items on FS interested by intended users;
- Capital ownership structure of client
Identifying materiality in planning phase aims to determine appropriate audit procedures which easily to detect material misstatement or errors
E/ Audit strategy and audit planning for cash and bank
Audit strategy and audit plan must be designed for each audit, clients and in appropriate way in order to cover all material aspects of the audit
Audit strategy and audit plan must be monitored to update and change if necessary during conducting the audit
The overall audit strategy sets the scope, timing and direction of the audit, and guides the development of the more detailed audit plan (ISA 300: para 7)
“In establishing the overall audit strategy, the auditor shall:
(a) Identify the characteristics of the engagement that define its scope;
(b) Ascertain the reporting objectives of the engagement to plan the timing of the audit and the nature of the communications required;
(c) Consider the factors that, in the auditor’s professional judgment, are significant in directing the engagement team’s efforts;
(d) Consider the results of preliminary engagement activities and, where applicable, whether knowledge gained on other engagements performed by the engagement partner for the entity is relevant; and
(e) Ascertain the nature, timing and extent of resources necessary to perform the engagement” (ISA 300: para.8)
Base on the overall audit strategy, audtior develop an audit plan Audit shall include a description of:
- “The nature, timing and extent of planned risk assessment procedures, as determined under ISA 315.4
- The nature, timing and extent of planned further audit procedures at the assertion level, as determined under ISA 330.5
- Other planned audit procedures that are required to be carried out so that the engagement complies with ISAs “(ISA 300: para.9)
Executive
In the planning phase, procedures for understanding internal control may not yield adequate evidence of effective operation, necessitating the use of tests of controls to assess their effectiveness The primary objectives of testing the internal control system for cash and bank transactions are to determine the effectiveness of these controls and evaluate the level of control risk, which in turn helps estimate the scope of substantive testing and other procedures Tests of control typically concentrate on specific issues related to these controls.
A/ Possible tests of controls over cash payments:
- Observe the processing of cash payments and review the entity’s policies to evaluate whether proper segregation of duties is operating
- Review procedures for reconciling supplier statements
- review monthly reconciliation to confirm whether undertaken and independently reviewed
- inspect relevant documentation for evidence of approval by senior personnel
- select a sample of cheque payments and ensure that cheque numbers follow on in sequence
- Review reconciliation, to ensure performed, reviewed and any discrepancies followed up on a timely basis
- Review bank reconciliation for evidence it was done and independently reviewed Reperform a sample of bank reconciliations
- Review reconciliation, to ensure performed, reviewed and any discrepancies followed up on a timely basis
- Review assignment of general ledger account
B/ Possible tests of controls over cash receipts:
- Observe the processing of cash receipts and review the entity's policies to evaluate whether proper segregation of duties is operating
- Examine application controls for electronic cash receipts transfer
- Observe mail opening procedures, including endorsement of cheques
- Observe preparation of cash receipts' records
- Review documentation, reconciliations for evidence of independent check
- Review monthly bank reconciliations to confirm performed and reviewed Reperform a sample of the reconciliations
- Enquire of management about handling of customer statements
- Review entity's procedures for sending out statements
ISA 520 (para 5) states that when using analytical procedures as substantive tests, the auditor must:
- Determine the suitability of particular analytical procedures for given assertions
- Evaluate the reliability of data from which the auditor's expectation of recorded amounts or ratios is developed
- Develop an expectation of recorded amounts or ratios and evaluate whether this is sufficiently precise to identify a misstatement that may cause the financial statements to be materially misstated
- Determine the amount of any difference that is acceptable without further investigation
Analytical procedures are particularly effective for large volumes of transactions that exhibit predictable patterns over time The effectiveness of these procedures in identifying material misstatements is determined by the auditor's assessment, as outlined in ISA 520: para A6.
Analytical procedures can be performed using various techniques from simple comparisons to complex analyses, in which ratio analysis is one of the most useful technique
Auditors conduct financial ratio analysis on cash and bank accounts by evaluating liquidity ratios, which reflect a company's ability to meet short-term debt obligations As cash and bank accounts represent the most liquid assets on the financial position statement, the current ratio is a key metric in assessing this capability.
The current ratio assesses a company's ability to meet its short-term debt obligations, with a higher ratio indicating a strong liquidity position However, if the current ratio exceeds 3, it may suggest that the company is not utilizing its capital efficiently.
The quick ratio, similar to the current ratio, excludes current assets like inventories and prepaid expenses that are not easily convertible to cash, providing a more accurate reflection of an entity's liquidity A quick ratio of less than 1 indicates that the entity may struggle to cover short-term debts with its quick assets Additionally, if the quick ratio is lower than the current ratio, it suggests that the entity's current assets are heavily dependent on inventory.
' This ratio expresses how quickly the entity can pay its short-term debt, as cash and bank are the most liquid assests
B/ Tests of details v Cash on hand
To obtain evidences about cash on hand, auditors need to perform audit tests for assertions relating cash on hand account as follow:
Assertions Audit objective Audit test
Existence The cash on hand balances recorded is actual exist at the end of the fiscal year
Auditor observes client’s staffs count cash on hand Then, auditor will collect the cash count record which is fully signed by accountant, treasurer and that auditor
Reconciliation: Auditor compare the cash on hand balance recorded in trial balance to the actual amounts
Completeness The cash on hand existing is not recorded
Valuation Cash balances are record at realisable value
Revaluation: Examines whether the foreign currencies is recorded at correct exchange rate
The entity has legal title to all cash balances shown at the period
Verify unbanked cheques, cash receipts have subsequently been paid in and agree to the bank reconciliation by inspection of the relevant documentation
Disclosures for cash on hand are sufficient and complied with accounting standards and law
Read disclosures for cash on hand to determines whether notes relating to cash on hand is sufficient
During observing cash count, auditor should pay attention at some following matters:
- The petty cash books should be written up to date in ink or other permanent form at the time of the count
- All balances must be counted at the same time
- All negotiable securities must be available and counted at the time the cash balances are counted
- At no time should the auditors be left alone with the cash and negotiable securities
- All cash and securities counted must be recorded on working papers subsequently filed on the current audit file v Cash in Bank
To obtain evidences about cash in bank, auditors need to perform audit tests for assertions relating cash in bank account as follow:
Assertions Audit objective Audit test
Existence The cash in bank balances recorded is actual exist at the end of the fiscal year
Obtain standard bank confirmations from each bank which client conducted business with
Completeness The cash in bank balance and related transactions have been recorded fully
Verify balances per the cash book according to the bank reconciliation by inspecting cash book, bank statements and general ledger
Before finalizing the year-end bank reconciliation, it is essential to review the previous bank reconciliation This process involves testing to ensure that all items have been cleared in the last period or appropriately carried forward to the year-end reconciliation.
Obtain satisfactory explanations for all items in the cash book for which there are no corresponding entries in the bank statement and vice versa
Inspect the payments have been recorded but bank has not debited yet
Review all bank lodgements for which payment has been denied, ensuring they are resolved through re-presentation or by taking other necessary measures to recover the owed amounts.
Cut-off Transaction relating to deposit cash have been recorded at right period
Reconcile the transactions occured at year end and next year to bank statement to examines whether they are recorded at wrong period
Prior to the year-end audit, it is essential to trace outstanding cheques from the bank reconciliation to the cash book, as well as to the bank statements dated after the year-end Any significant or unusual items that remain uncleared should be investigated and explained to ensure accurate financial reporting.
Inspect paying-in slips that uncleared bankings are paid in prior to the year end
Cash balances are record at realisable value
Revaluation: Examines whether the foreign currencies is recorded at correct exchange rate
The entity has legal title to all cash balances shown at the period end
Consider whether there is a legal right of overdrafts against bank balances
Enquiries managements to determine whether the bank account are subject to any restrictions
Communicate to management to identify whether any accounts are secured on the assets of the entity
Disclosures for bank are sufficient and complied with accounting standards and law
Review draft accounts to ensure disclosures for bank are sufficient and complied with accounting standards and law
Completion
After performing test of control and substantive test to obtain sufficient and appropriate evidences about cash and bank, auditors synthesize and record on audit documentation as follow:
- Misstatement has been detected during audit test and assess the level of materiality of those
- Reasons lead to these errors (if any) and adjustments for those
- Audit opinions for errors and deficiency of internal control system for cash and bank
- The issues need to monitor in the next audit period (if any)
- Audit result for audit cash and bank play an important role for auditor to issue audit opion in next time
Chapter 1 has presented the concept and framework of audit procedures for cash and bank accounts on Financial Statements of enterprises Specifically, firstly, it is the literature of cash and bank accounts on Financial Statements; secondly, it is concept of audit procedures for cash and bank accounts on Financial Statements including objectives, basis and typical errors in audit procedures cash and bank accounts; finally, it is the framework of audit procedures for cash and bank accounts on Financial Statements Thereby, those are the basis for comparision and evaluations of the actual audit procedures for cash and bank accounts on Financial Statemens at Thang Long – T.D.K Auditing and Valuation company, Ltd in chapter 2 and giving proposals for completing the audit procedures for cash and bank accounts on Financial Statements in chapter 3
ACTUAL AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENTS AT THANG LONG T.D.K –
AUDITING AND VALUATION COMPANY, LTD
OVERVIEW OF THANG LONG – T.D.K AUDITING AND VALUATION COMPANY, LTD
General information
- Company name: Thang Long – T.D.K Auditing and Valuation Company, Ltd
- Address: KT Floor, 113 policeman apartment, Yen Hoa Ward, Cau Giay District, Ha Noi city
The company was granted a business registration license by Hanoi Authority for Planning and Investment and tax registration No 0104779158 on 29/06/2010 v Vision
- Sustainable development: striving to become the leader in accounting, auditing and tax market
- Prestige: Create the highest trust of customers in service quality and service style;
- Working environment: Building a professional and fair working environment to create conditions for employees to develop professional ethics, professional capacity and practical experience
- Human Resources: develop and improve skills, capacity, passion for accounting and auditing and wholeheartedly serve customers;
- Finance: Try to have a strong finance, creating high income and living standards for all employees v Mission
- For clients: Providing services of outstanding quality, reasonable price, serving their needs and legitimate interests
- For employees: Building a full, scientific, dynamic, professional working environment; create high income conditions and fair development opportunities for all employees v Core value:
Prestige – Intergrity – Professional competence – Enthusiasm Due care–
History of establishment and development of the company
Thang Long T.D.K Auditing and Valuation Company, originally formed from the merger of Thang Long Audit and Consulting Limited (established in 2003) and T.D.K Auditing and Software Services (founded in 2002), is a legally recognized professional audit firm in Vietnam specializing in financial and accounting consulting services.
Established in June 2009, T.D.K recognized the nascent state of public auditing within the Vietnamese economy and the evolving legal framework surrounding it With a commitment to fostering economic growth and advancing the auditing sector, the company focused on attracting skilled professionals in finance and accounting Over the past 18 years, T.D.K has grown to include 202 experienced staff members, comprising 25 auditors and 9 national appraisers, and has expanded its operations to 8 branches and 20 representative offices across Vietnam Upholding principles of independence, objectivity, and confidentiality, T.D.K not only ensures the accuracy of financial statements but also provides consultancy services to enhance clients' internal control and accounting systems, ultimately optimizing their value and benefits.
The company has consistently demonstrated its excellence in the industry, achieving recognition as one of the Top 100 enterprises in 11 service lines at the "Top Trade Services Awards" in 2008, 2010, and 2013 From 2012 to 2016, it ranked among the top 10 Vietnamese audit firms with the highest customer base Currently, the company holds the 6th position for the largest number of customers, ranks 2nd in revenue from audit services for completed projects, and is 13th in total service revenue in Vietnam, as reported by the Ministry of Finance.
Organizational structure
Figure 1.1: Structure of organizational mangement
Types of service of the company
ü Assurance service ü Accounting service ü Tax consulting service ü Finance consulting service ü Valuation service ü Assests valuation service ü Training service
The quality control of assurance services process
Figure 1.2: The quality control of assurance services process at T.D.K
The quality control of assurance service process at T.D.K is carried out in 4 steps:
Principal responsibility: Auditor in charge
The audit team, led by the auditor in charge and supported by audit associates, follows a structured audit plan to ensure thorough evaluations of clients At the end of each day, the auditor in charge reviews the working papers of each associate, providing feedback to enhance their performance If the evidence gathered and the information documented are deemed insufficient for forming an audit opinion, the auditor will instruct the associates to conduct additional procedures or expand their testing samples This process is designed to ensure that audit associates can effectively carry out subsequent tasks.
At the conclusion of the audit, the lead auditor reviews the working papers for each section of the executive summary and prepares a comprehensive report detailing the findings from the audit This report serves as a foundation for discussions with clients to reach consensus on the data and audit conclusions.
Audit working papers of audit associates
Principal responsibility: Audit manager who controls and signs the audit report Audit manager is a national auditor
Audit manager reviews the quality of quality control procedures in order to make an objective assessment of the important judgments and the audit opinion in the audit report
When significant issues impact the audit opinion, the audit manager must attend client meetings to collaboratively identify solutions The discussions held during these meetings should be documented, reported, and stored in the audit file for future reference.
Principal responsibility: Board of Director
The Board of Directors is responsible for thoroughly reviewing the audit file and ensuring compliance with the audit program, while assessing service quality based on the scale set by the Audit Quality Control of the Vietnam Association of Certified Public Accountants They must engage in discussions with the audit manager, the auditor in charge, and clients when necessary to clarify any issues, providing guidance on addressing concerns that may affect the completeness of audit files and opinions.
After the audit files have been reviewed, the board of directors notes any outstanding issues and returns them to the audit manager The audit manager is then responsible for completing and supplementing the necessary documents as required, in addition to preparing relevant materials for subsequent discussions with the board of directors.
Step 4: Control beforereleasing audit reports to clients, saving reports and audit files
After the draft reports are revised and returned to the board of directors for approval, they are forwarded to the Administration Department for official release Additionally, the finalized audit report is sent to the professional department for record-keeping and inspection as needed.
The official audit report is produced in six copies: four for clients and two for the company Prior to distribution, the head of the Administration Department conducts a final control check to verify the accuracy of the approved report.
THE AUDIT PROCESS FOR FINANCIAL STATEMENTS AT THANG
Planning phase
Figure 2.2: Phase 1- Planning (Sources: T.D.K documents)
T.D.K’s clients are categorised into two groups:
Frequent clients of T.D.K are those companies that have undergone audits in previous years At the end of each fiscal year, T.D.K engages in discussions with these clients regarding the draft audit contract, leading to the signing of an engagement letter once both parties reach an agreement For clients with long-term audit contracts, T.D.K conducts operational reviews and addresses any changes or issues related to the audit process and fees, facilitating discussions to amend or supplement the existing contract as necessary.
Secondly, potential customers and new customers: are customers who have never been audited by T.D.K For this group of clients, T.D.K will actively send offer letters The
Audit acceptance and assessment risk of audit contract
Engagement letter and choose audit team
An audit risk assessment offer letter serves as a key introduction to a company's service quality, prestige, and standing in the audit market, fostering trust among clients.
The auditing process begins with the company evaluating the contract's risk level through a preliminary understanding of the client, considering factors like industry, public interest, technology, and the Board of Directors' reputation Based on the firm's audit risk tolerance, T.D.K decides whether to accept or continue the client relationship and proceed with the audit engagement The audit team, consisting of an audit manager, auditors, and audit associates, is selected to ensure compliance with professional ethics, including integrity, objectivity, confidentiality, and competence Subsequently, the team gathers information about the client by analyzing internal and external factors such as industry trends, legal considerations, management structure, accounting policies, and key business cycles This comprehensive understanding helps identify significant events and unusual transactions that may impact financial statements or pose risks of material misstatement due to fraud or error.
Auditors conduct preliminary analysis procedures on financial statements, including the examination of fluctuations in the Balance Sheet and Statement of Profit or Loss, as well as financial ratio analysis This process helps identify abnormal balances compared to prior years or industry ratios, highlighting transactions that may lead to material misstatements Utilizing a risk-based audit approach, understanding the internal control framework is crucial during this phase This involves two key components: first, studying and evaluating the enterprise-level internal control system, which encompasses the design and performance of its five components; and second, assessing internal controls within primary business cycles and the processes of locking, creating, and presenting financial statements based on collected data.
Figure 2.3: Five components of internal control (Sources: T.D.K documents)
After evaluating the client's internal control system, the company assesses the risk of material misstatements and fraud in financial statements, which helps establish overall materiality, performance materiality, tolerable error, and trivial thresholds for account balances and transactions Materiality levels may be adjusted during the audit process Ultimately, the audit team compiles the gathered documents to evaluate audit risks and develop a suitable audit plan.
Execution
Figure 2.4: Phase 2- Execution (Sources: T.D.K documents)
Substantive test Test of control
Assess detection risk Assess the sufficiency and appropriateness of evidences Inspection of subsequent events
During the execution phase of an audit, auditors and audit associates follow the established audit plan to conduct testing of controls and substantive tests Given the high volume of transactions a company may have in a fiscal year, it is often impractical to audit every transaction Therefore, based on the materiality determined in the planning phase, auditors select appropriate sampling methods aligned with the audit objectives to ensure effective and efficient auditing.
During the planning phase, auditors assess the client's internal controls to determine their effectiveness, which is crucial as it significantly influences the scope of work and the extent of substantive testing required.
When auditors have confidence in the efficiency of internal controls, control risk is minimized, resulting in a lower likelihood of material misstatements This allows auditors to limit substantive testing while still obtaining adequate audit evidence Conversely, if auditors suspect that internal controls are ineffective, they will concentrate on substantive tests to ensure they gather sufficient and appropriate evidence to provide a reasonable audit opinion.
When conducting substantive tests, auditors have the authority to request adjustments from accountants upon discovering misstatements If the accountant refuses to make the necessary adjustments and the auditors deem the misstatement material, they will document this in their working papers as evidence for their audit opinions Furthermore, if auditors identify potential fraud, they will engage with the management board to determine the appropriate course of action.
After conducting substantive tests and gathering audit evidence, auditors analyze the adjusted financial statements to evaluate detection risk and the adequacy of the evidence for forming an audit opinion If the audit risk remains elevated, they will implement additional procedures to collect further evidence.
Auditors perform procedures to assess subsequent events occurring between the fiscal year-end and the issuance of the auditor's report, determining their impact on financial statement information and whether adjustments or disclosures in the footnotes are necessary.
Completion
Figure 2.5: Phase 3 – Completion (Sources: T.D.K documents)
After completing the audit of financial statements and gathering adequate evidence, the auditor manager will engage with the board of directors to address any necessary adjustments, material misstatements, or significant transactions lacking sufficient evidence The auditors will conduct a final analysis of the overall financial statements to identify unadjusted misstatements and key issues that users should be aware of, which will be documented in a written representation confirmed by the client's management Subsequently, the auditor manager will consult with the board to finalize the audit opinion and review the draft audit report with the client before issuing the official report.
However, following the the audit report issued, the audit team continued to monitor the subsequent events between the date of auditor’s report and issue of financial statements
Monitor subsequent events after the date of auditor’s report
Communicate with clients Audit opinion and audit report
Overal analysis of adjusted financial statement
Gather audit evidences and communicate with clients
Auditors consult with the Board of Directors to confirm that no changes have impacted the audit opinion If new information arises that could have altered the auditor's report, the auditor manager will engage with management and governance to assess whether the financial statements require amendments If amendments are necessary, discussions will focus on how management plans to address the issues in the financial statements, potentially leading to the issuance of a revised auditor’s report with an explanatory paragraph.
AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON
Planning
Audit plan for cash and bank are established by TDK according to audit plan for FS as whole and generalized through this diagram:
Execution
- Auditor works on audit documentation D111 to review applied accounting standard of clients to assure that the entity use consitently accounting standard
Auditors perform a reconciliation of cash and bank account balances, ensuring alignment with pertinent documentation such as the general journal, general ledger, cash book, and balance sheet This process is documented in working paper D140, which synthesizes the reconciled balances, while the financial statement disclosures are summarized in working paper D120.
Analytical procedures are often performed by auditor who has competence in analysis Auditor performs trend analysis and ratio analysis for cash and bank which shown on working paper D110
Auditor review general ledger of cash and bank accounts to identify abnormal transactions and find causes and perform suitable audit procedures and present on working paper D162
Auditor examines presentation and classification assertion of cash and bank account and presented on working paper D168
A310 – “Understanding clients and its environment”
A710 – “Overall materiality and Performance materiality”'
A910 – “Overall audit strategy and audit plan”
Auditors assess the accuracy of cash on hand by utilizing working paper D132, which involves comparing the cash count recorded on December 31, verified by the auditor, treasurer, and chief accountant, with the figures in the petty cash book for the same date They identify any discrepancies and request explanations from the accountant After evaluating the reasonableness of these explanations, auditors draw conclusions regarding the cash on hand balance, ensuring it is presented fairly and accurately.
- For cash in bank: Auditor collects bank confirmations of account balances in December
To reconcile the balances recorded in an entity's accounting books, auditors utilize bank confirmations, which serve as highly reliable evidence due to their third-party nature These confirmations establish an independent relationship with the client, allowing auditors to identify any discrepancies After assessing any differences, auditors document their findings regarding the cash in the bank on working paper D142 and retain the bank confirmations as supporting evidence.
• Test of valuation of foreign currencies at period end
As per Circular 200/2014/TT-BTC, Article 69, businesses are required to utilize the average real exchange rate from their banking institutions for the revaluation of accounts that are derived from foreign currencies at the end of each reporting period.
Auditor reconcile the real exchange rate searched by auditor to the rate that entity use to revaluate on FS, and record on working paper D167
The cut-off assertion test is crucial for verifying that transactions are recorded accurately, preventing any manipulation that could exaggerate the entity's liquidity Auditors select specific samples for examination, which are documented in working paper D166.
Completion
The audit of cash and bank accounts is completed once all audit procedures have been executed After conducting audit tests, the auditor finalizes the working papers and, based on the evidence gathered, provides comments and recommendations regarding the cash and bank accounts, including any necessary adjustments, which are documented in working paper D110.
Auditor in charge review and aggregates the audit results on working paper D100.
ACTUAL AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS
Planning
A/ Audit acceptance and Audit acceptance and assessment risk of audit contract
The ABC company is a close and frequent customer of T.D.K T.D.K has provided audit service for ABC for 4 years since 2016
Based on prior working papers and this year's necessary audit procedures outlined in working paper A120 (Appendix 1), T.D.K has confirmed that ABC Company possesses the professional capacity to fulfill the contract, allowing the auditor to trust the integrity of the client However, it is important to highlight significant transactions with stakeholders, including lending and collecting loans with terms of less than one year Consequently, T.D.K assesses the acceptance audit risk as medium and agrees to continue providing audit services to ABC Company.
B/ Understanding client and its environment
Through studying and filling the information on working paper A310 (Appendix 2) –
“Understanding client and its environment” auditor indicated that:
• Type of ownership: Joint Stock company
Designing and trading software to serve the domestic market and exporting software according to orders and contracts to Japan The company's products are mainly brought to export
• External factors affecting client’s operation:
In 2020, the economy experienced volatility due to the Sars-CoV2 pandemic, which resulted in prolonged social isolation and increased demand for online activities This shift contributed to the growth of the information technology market, while Japan managed to control the pandemic effectively, leading to a more stable market economy Consequently, ABC's unit revenue remained largely unaffected; however, software exports to Japan constituted 99% of ABC's total revenue, highlighting significant risks associated with foreign currency exchange rates and an unreasonable assessment of these rates at the end of the period.
C/ Preliminary analysis of Financial statement
The auditor conducted analytical procedures on the cash and bank accounts in the Balance Sheet, revealing significant fluctuations in financial assets for ABC Company Horizontal analysis of working paper T.D.K – A510 indicated abnormal increases in key indicators: Cash rose by 59%, Deductible Value Added Tax increased by 175%, and undistributed after-tax profit surged by 64% Additionally, vertical analysis showed that cash and bank accounts constitute 87% of total assets, while equity represents 88% of total capital This high proportion raises concerns regarding the risk of misstatement in the existence assertion of cash and bank balances.
By gaining insights into customer behavior and the operational landscape, along with conducting a preliminary analysis of ABC's financial statements, the auditor identifies a high risk of material misstatement concerning cash and bank accounts Consequently, the auditor evaluates the detection risk as high to effectively meet the audit objectives.
Auditors establish materiality for clients by utilizing various benchmarks, including net revenue, profit after tax, total costs, total owner's equity, or total assets, tailored to the specific type and characteristics of the business organization.
When assessing cash and bank account materiality, it is essential to consider both overall materiality and the specific nature of economic activities For comprehensive guidance, refer to working paper A710, which discusses "Overall Materiality and Performance Materiality."
Portion for accounting overall materiality
Portion for accounting performance materiality (f) 50,0% 50,0%
Portion for accounting trivial threshold (h) 2,0% 2,0%
Sources: Working paper of T.D.K – A710 E/ Audit planning for cash and bank
Based on my observations, auditors typically rely on their professional experiences and prior findings to develop an audit plan for cash and bank accounts, as outlined in working paper D130 This plan details specific audit procedures for each cash and bank account, aimed at obtaining sufficient and appropriate evidence to form a reasonable opinion regarding the integrity of cash and bank transactions.
Client ABC: Joint Stock company
Name AUDIT: PLANNING – CASH AND BANK ACCOUNTS
Check Accounting Standards applied whether is consistent with previous years and compliance with law and regulations
Obtain Cash and Bank account balances and reconcile with general ledger
1 Synthesize account balances on Balance
Statement with audited amount previous year
To ensure accurate financial reporting, obtain comprehensive details of cash and bank account balances, including the bank's name, account numbers, currency, and interest rates Subsequently, reconcile these figures with amounts recorded in detailed ledgers, the general ledger, and audit working papers from previous years.
To ensure a thorough financial analysis, three key analytical procedures should be conducted: First, compare current year account balances with those of the previous year, providing explanations for any abnormal changes observed Second, review any amounts exceeding performance materiality or identify unusual changes that may require further investigation Lastly, analyze liquidity ratios and assess the proportion of cash and bank accounts relative to current assets, comparing these figures with the previous year and offering explanations for any discrepancies.
5 Review general ledger to identify unusual accounts or transactions, to find the reasons and implement suitable procedures (if any)
1 Send the request bank confirmation about account balances to Bank Institution
2 For confirmation requests that do not receive a response, ask the cients communicate with banks and consider whether the replacement procedure will collect sufficient audit evidence
If so, carry out alternative audit procedures
To ensure accurate bank account records and proper cut-off, it is essential to reconcile bank confirmations by checking for deposits not credited in the subsequent period and verifying supporting documents for approval Gather explanations for any delays in reflecting these transactions in bank records Additionally, collect and identify all significant adjustments to bank reconciliations, and verify that all accounts are recorded in the correct period by reviewing relevant supporting documents to confirm transaction dates.
1 a Inspect Cash counts with treasurer and Chief
To ensure accurate financial reporting, accountants must obtain a cash count record signed by both the treasurer and the Chief Accountant During cash count inspections, whether before or after year-end, a sample of receipts and expenditures should be selected for verification, focusing on transactions occurring around the inventory cut-off date This involves performing forward and backward reconciliations to align the actual cash balance with the cash book, adjusting for any revenue and expenditure discrepancies Additionally, it is essential to reconcile the actual cash balance with the general ledgers and examine the adjusted cash amounts presented in the current period's financial statements.
2 Check large or unusual receiving and payment in cash before and after the year end, checking the reasonableness and cut-off in recognition.
When assessing cash origins, it's crucial to determine if the funds belong to the entity, are in transit, or are located elsewhere This evaluation should include identifying any potential fraud risks that could impact the cash balance Engaging with relevant personnel through interviews can provide valuable insights into the source of the money.
1 Examine that cash balances and cash equivalents in foreign currencies are translated at appropriate exchange rate at period end
2 Check the exchange rate applied fortransactions arising during period is appropriate
Ensure that cash and cash equivalents are accurately reported in the financial statements in line with the relevant financial reporting framework, and gather adequate and appropriate audit evidence to substantiate all disclosures made.
Execution
In an interview with the auditor responsible for the audit procedure, it was revealed that he did not conduct tests of control for the internal controls related to cash and bank accounts This decision was based on previous audits conducted by T.D.K, which found that the internal controls for cash had remained unchanged Consequently, the auditor continues to rely on the earlier results of the control tests.
Firstly, Auditor review whether the Accounting policy applied for current year is consistent to previous year and present on working paper D111 (appendix 4)
The auditor examines working paper D110 to gather detailed account balances for cash on hand and cash in bank for 2020, comparing them with the audited amounts from 2019 This process involves reconciling these balances with the figures recorded in the general ledger, detailed ledger, and prior year audit documentation, as outlined in working paper D140, "Detailed Account Balances."
11221 Foreign cash in bank – VCB 7.691.590 10.256.353
11222 Foreign cash in bank – techcombank
Auditor performed analytical procedures for Cash and Bank accounts as follow:
31/12/2020 31/12/2019 Change % Change Cash on hand
The auditor's substantive analytical procedures for ABC's cash and bank accounts revealed that the cash on hand increased by 12,262,773 VNĐ, representing a modest 0.86% rise from the previous year, indicating normal activity In contrast, the cash on deposit in bank accounts showed significant changes, with Vietnamese cash increasing by 480,600,335 VNĐ (115.43%) and foreign cash rising by 1,301,294,464 VNĐ (108%) from December 31, 2019, to December 31, 2020 While these fluctuations suggest abnormal activity, supporting documentation indicates that ABC achieved high operating profits in 2020, leading the auditor to conclude that there were no unusual changes in the cash and bank accounts.
According to the liquidity ratio analysis in working paper D110, ABC Company demonstrates a robust capacity to meet its short-term debt obligations, evidenced by a current ratio of 8.0, a quick ratio of 7.98, and a cash ratio of 6.98 The minimal differences among these ratios indicate that ABC is less reliant on inventory for debt repayment, allowing it to cover all short-term liabilities with cash Despite a current ratio exceeding 2, ABC effectively utilizes its capital, as its balance sheet shows that only 12% of its financial resources are derived from debt Additionally, as a software company, ABC lacks significant non-current assets From 2019 to 2020, ABC's liquidity ratios increased by approximately 21%, driven by substantial growth in cash and bank accounts, reflecting the company's strong business performance and high revenue during 2020.
The auditor reviews the general ledger for cash on hand and bank accounts, selecting samples from related transactions to identify any unusual activities This process aims to uncover the causes of these anomalies and verify the occurrence of the transactions Detailed results are documented in working paper D162.
CÔNG TY TNHH KIỂM TOÁN VÀ ĐỊNH GIÁ
Tên khách hàng: Công ty cổ phần ABC
Ngày kết thúc kỳ kế toán: 31/12/2020
Người soát xét 1 NHH 02/02/2021 Người soát xét 2 ĐVC 02/02/2021
Nội dung: KIỂM TRA ĐỐI ỨNG BẤT THƯỜNG
A Mục tiêu: Đảm bảo các khoản tiền và tương đương tiền là hiện hữu; thuộc quyền sở hữu của DN; được ghi nhận và đánh giá đầy đủ, chính xác, đúng kỳ kế toán; và trình bày trên BCTC phù hợp với khuôn khổ về lập và trình bày BCTC được áp dụng
BCTC đã được kiểm toán năm trước; Sổ chi tiết tài khoản; Báo cáo tài chính
C Thủ tục kiểm toán Đọc lướt sổ cái để xác định các nghiệp vụ bất thường (về nội dung, giá trị, tài khoản đối ứng ) Tìm hiểu nguyên nhân và thực hiện thủ tục kiểm tra tương ứng (nếu cần)
Số dư đầu kỳ: 1.431.736.867 ĐƯ Ps Nợ Ps Có
Số dư đầu kỳ: 1.616.981.855 ĐƯ Ps Nợ Ps Có
Không có đối ứng bất thường
Theo quan điểm của tôi, dựa trên các chứng cứ thu thập được từ việc thực hiện các thủ tục nêu trên, các mục tiêu kiểm toán đã được trình bày ở phần đầu chương trình kiểm toán đã được hoàn thành.
- Test of detailed balance for cash on hand account:
During an audit, I observed the cash count conducted by ABC's treasurer, where the auditor collaborated with ABC's chief accountant to verify the existence and accuracy of the cash on hand The auditor documented the cash count results in the working paper T.D.K – D132.1, titled "Cash Count Record," and obtained signatures from both the treasurer and chief accountant to confirm the findings.
CÔNG TY TNHH KIỂM TOÁN VÀ ĐỊNH
Tên khách hàng: Công ty cổ phần ABC
Ngày kết thúc kỳ kế toán: 31/12/2020
Người soát xét 1 NHH 02/02/2021 Người soát xét 2 ĐVC 02/02/2021
Nội dung: PHIẾU CHỨNG KIẾN KIỂM KÊ TIỀN MẶT Địa điểm kiểm kê: Công ty cổ phần ABC
Thời điểm kiểm kê: 15 30h ngày 02 tháng 02 năm 2020 Đại diện doanh nghiệp tham gia kiểm kê: Ông: Vũ H N Kế toán trưởng
Stt Loại tiền Số lượng
Lý do chênh lệch: Chênh lệch do tiền lẻ
Các loại giấy tờ khác được kiểm kê bao gồm (tên, số lượng, số tiền):
Xác nhận số tiền trên thuộc sở hữu của DN: Có
On February 2, 2021, the auditor conducted a cash count inspection following the year-end, selecting random samples of cash payments and receipts that occurred prior to the cash count date This was done to perform substantive testing for the occurrence assertion of those transactions.
Số dư theo sổ quỹ (2) Đến phiếu thu số 71 Ngày 01/02/2021
Và phiếu chi số 409 Ngày 02/02/2021
Chênh lệch (1) – (2) (102) transactions according to working paper D132 (Appendix 8) Particularly, auditor test two transactions:
On January 19, 2020, a cash payment of 1,400,000,000 VNĐ was made for Loan Contract No 01/HĐMT/2021 The auditor confirmed this transaction by reviewing comprehensive documentation, which included a one-month interest-free borrowing contract valid from January 19, 2021, to February 19, 2021, a meeting record signed by all managers, a cash receipt statement, and payment statement PC399.
On January 19, 2020, a cash payment advance of 2,000,000 VNĐ was made for the purchase of a quat tree for the New Year celebration To verify the legitimacy of this transaction, the auditor reviewed the business advance statements and cash out statement no PC407, which serve as evidence of the transaction's occurrence.
Next auditor then reconcile amount balance on cash book by adjusting debit and credit amount follow cash receipts and cash payments:
- Test of detailed balance for cash in Bank:
In January 2021, the auditor identified that ABC Company maintains bank accounts at Vietcombank - Ba Dinh Branch and Techcombank - NKT Branch The auditor subsequently sent requests for bank confirmations, which were documented as evidence for the cash in bank balances recorded in working papers D142.1 and D142.2.
JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM
521 Kim Ma, Ba Dinh, Ha Noi, Viet Nam
Cables address: Vietcombank – Ba Dinh Branch
To: ABC Joint Stock Company
Joint Stock commercial Bank for Foreign Trade of Vietnam – Ba Dinh Branch bed to inform you of your account balance in our books at Dec 31th, 2020 as follows:
Account No Currency Debit Credit
You are kindly requested to reconcile the above mentioned balance(s) and send back to us no later than Jan 15th, 2021 as following address:
Department of Customer Services - Joint Stock commercial Bank for Foreign Trade of Vietnam – Ba Dinh Branch, 521 Kim Ma, Ba Dinh, Ha Noi
After this date, the above mentioned balance(s) is acknowledged
JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM
CỘNG HOÀ XÃ HỘI CHỦ NGHĨA VIỆT NAM Độc lập – Tự do -Hạnh phúc
Ref: Confirmation of transaction data at the end of fiscal year
To: Customer ABC JOINT STOCK and/or whom it may concern
We, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) NKT – NGUYEN KHANH TOAN Branch hereby certify that:
Customer: ABC JOINT STOCK COMPANY
Address: SỐ 24 HOANG QUOC VIET, P DICH VONG, Q.CAU GIAY, TP HA NOI
The transaction at our bank on the end of date 31 Dec 2020 is as follows
Outstanding balance in current accounts(s):
No Account number Currency Balance Exchange rate Converted to VND
Total amount converted to VND : 3,164,021,452
In words: Three billion one hundreded and sixty four million twenty one thousand four hundered and fifty two dong
For and on behalf of TECHCOMBANK
When receiving bank confirmations, auditor reconciles with amount presented on general ledger and financial statement, bank statement…, which is shown on working paper D142
Refer to working papers D142 “Reconciliation of cash in bank balance”
CÔNG TY TNHH KIỂM TOÁN VÀ ĐỊNH GIÁ
Tên khách hàng: Công ty cổ phần ABC
Ngày kết thúc kỳ kế toán: 31/12/2020
Người soát xét 1 NHH 02/03/2021 Người soát xét 2 ĐVC 02/03/2021
Nội dung: ĐỐI CHIẾU SỐ DƯ TÀI KHOẢN NGÂN HÀNG
A Mục tiêu: Đảm bảo các khoản tiền và tương đương tiền là hiện hữu; thuộc quyền sở hữu của DN; được ghi nhận và đánh giá đầy đủ, chính xác, đúng kỳ kế toán; và trình bày trên BCTC phù hợp với khuôn khổ về lập và trình bày BCTC được áp dụng
- BCTC đã được kiểm toán năm trước
- Sổ chi tiết tài khoản
1 Lập và gửi TXN cho các ngân hàng Tổng hợp kết quả nhận được, đối chiếu với các số dư trên sổ chi tiết Giải thích các khoản chênh lệch (nếu có)
1.1 Lập bảng tổng hợp theo dõi gửi thư xác nhận tiền gửi ngân hàng
Tên đối tượng Số dư 31/12/2020 Hình thức Ngày gửi Tham chiếu Ngày nhận
Ngân hàng Vietcombank 220.915.479 Bưu điện 28/01/2021 D142.1
Ngân hàng Techcombank 3.177.961.175 Bưu điện 28/01/2021 D142.2
1.2.Đối chiếu thư xác nhận, sao kê ngân hàng với sổ chi tiết:
Tên đối tượng Sổ sách
Xác nhận số dư của ngân hàng
Chênh lệch Tham chiếu Tiền gửi Ngân hàng (VND)
Tiền gửi Ngân hàng (JPY)
Completion
Based on the analysis of working papers and supporting evidence, the auditor concludes that the cash and bank account is presented fairly and accurately in all material respects, with no adjustments required for these accounts.
Finally, auditor synthesizes audit results on working paper D100 as below:
THANG LONG – T.D.K AUDITING AND VALUATION COMPANY, LTD
Client: ABC Joint Stock Company
Name: AUDIT RESULTS FOR CASH AND BANK
WP No Description Yes No Not applied
D110 Synthesize account balances and perform substantive analytical procedures ü
D130 Audit planning for cash and bank accounts ü
D140 Detailed cash and bank accounts balances ü
D142 Reconcile bank account balances with bank confirmations ü
D162 Inspect transactions relating cash and bank accounts ü
D166 Test of cut-off assertion ü
D167 Reconcile foreign currency account balances ü
Check presentation and classification of cash and bank accounts on Financial
Chapter 2 outlines the audit process for financial statements and cash and bank accounts conducted by Thang Long – T.D.K Auditing and Valuation Company, Ltd It includes a case study of the audit procedures performed for ABC Company By comparing these procedures with the concepts discussed in Chapter 1, the thesis provides insights and recommendations for enhancing the audit processes related to cash and bank accounts in financial statements at Thang Long – T.D.K Auditing and Valuation Company, Ltd.
PROPOSALS FOR COMPLETING THE AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENT AT THANG LONG T.D.K AUDIT– ING AND VALUATION COMPANY, LTD
