Assessments of the organization and operations of KPMG Vietnam Co., Ltd...233.1.1.. Recommendations for improving the organization and operations of KPMG Vietnam Co., Ltd...28 CONCLUSION
CHARACTERISTICS OF THE ORGANIZATION
History of development of the company
KPMG is one of the largest professional services companies in the world and one of the Big Four auditors, along with Deloitte, EY and PwC Its global headquarters is located in Amstelveen, the Netherlands (KPMG official website,
2020) KPMG international operates as a network of member firms offering audit, tax and advisory services The local firm works closely with clients, helping them to mitigate risks and grasp opportunities KPMG employs 162,000 people worldwide in 155 countries, sustaining and enhancing the quality of this professional workforce is KPMG's primary objective.
“KPMG Outstanding professionals, working together to deliver value. Auditors offer Audit, Tax and Advisory services Three complementary areas of knowledge and insight that enable us to meet the needs of our clients Auditors turn knowledge into value for the benefit of our clients, our people and the capital markets.”
The KPMG vision is that auditors want to be leaders in the markets that auditors serve Our aim is to have the best reputation in our industry Auditors want to be recognized as a market leader in our professional services, because of our knowledge of the developments and issues in the markets, industries and sectors in which our clients operate.
1.1.2 History of KPMG and establishment of KPMG Vietnam
KPMG was formed in 1987 with the merger of Peat Marwick International (PMI) and Klynveld Main Goerdeler (KMG) and their individual member firms. Spanning three centuries, the organization's history can be traced through the names of its principal founding members - whose initials form the name "KPMG."
K stands for Klynveld Piet Klijnveld founded the accounting firm Klynveld
Kraayenhof & Co in Amsterdam in 1917.
P is for Peat William Barclay Peat founded the accounting firm William
Barclay Peat & Co in London in 1870.
M stands for Marwick James Marwick founded the accounting firm
Marwick, Mitchell & Co with Roger Mitchell in New York City in 1897.
G is for Goerdeler Dr Reinhardt Goerdeler was for many year chairman of
Deutsche Treuhand-Gesellschaft and later chairman of KPMG He is credited with laying much of the groundwork for the KMG merger.
In 1911, William Barclay Peat & Co and Marwick Mitchell & Co joined forces to form what would later be known as Peat Marwick International (PMI), a worldwide network of accounting and consulting firms.
In 1979, Klynveld Kraayenhof & Co joined forces with Deutsche Treuhand- Gesellschaft and the international professional services firm McLintock Main Lafrentz & Co to form Klynveld Main Goerdeler (KMG).
In 1987, PMI and KMG and their member firms joined forces Today, all member firms throughout the world carry the KPMG name exclusively or include it in their national firm names.
In 2019, KPMG Vietnam celebrated 25-year anniversary of establishing,coincidently I personally was in the internship in this special period with variety of events and occasions KPMG Vietnam has granted acceptance by local government,opening a representative office in 1992 In 1994, KPMG Vietnam Limited Liability founded according to Investment License No.863/GP approved by Ministry ofPlanning and Investment on May 17 1994 Consequently, company classified as one- hundred percent foreign investment with initial investment of 1 Million dollars, operating in twenty years from signing letter Due to the expansion needs,the company raised capital to 4 Million dollars in April 1998 The main activities of the companies were providing services, including: tax, audit, business advisory and management advisory.
Operation of KPMG Vietnam
1.2.1 Products, market and target customers
KPMG in Vietnam is committed to three imperatives: quality, insight, and integrity They are what drive the firm’s professionals to provide audit, tax and advisory services that reflect global consistency and unwavering integrity KPMG Vietnam’s passion to cut through complexity enables it to lead by example taking proactive approach to finding facts and turning knowledge into value for the benefit of firm’s clients KPMG Vietnam fully appreciates the dedication of people, who are the driving force behind the quality of the services and integrity of practice. Member firms' clients include business corporations, governmental and public sectors, agencies and not-for-profit organizations They look to KPMG for a consistent standard of service based on high order professional capabilities, industry insight and local knowledge.
KPMG Vietnam team includes both Vietnamese and expatriate partners and staff with experience in Europe, America and the Asia Pacific This allows company to have a team with a variety of experience to address required needs. People are driven to innovate, protect and create value for clients: “Auditors listen, auditors ask the right questions.” Insights and recommendations are straightforward, clear and add value Deep knowledge and clarity helps clients save valuable time and build competitive advantages On top of this, KPMG recognizes that the Vietnamese business environment is constantly changing and the strong relationships with the government and local networks enable the firm to assist businesses effectively as and when needed.
KPMG Vietnam is one of the largest audit service providers in the country It contributes to the development of national accounting standards as well improves the true and fair business environment in Vietnam KPMG has set a triangle hub inVietnam–Cambodia area In Hanoi office, the number of employee accounts for more than four hundred staff Ho Chi Minh office proportionate slightly larger, total up the number of employees in Vietnam more than 800 people, providing professional service for more than 1,000 clients in the country Hanoi office mostly made up by Vietnamese staffs, of course there are expatriates from England, Korea, Japan and Malaysia All employees in KPMG has earned a Bachelor Degree, some have worked in local enterprises, governmental office, or foreign investment project The majority of staff earned practicing qualifications such as CPA Vietnam, ACCA, and granted Vietnam’s Accountancy and Auditing certification by Ministry of Finance Several high- performed outstanding employees have opportunities to take part in KPMG Go Program, the Global Mobilized program for excellent employees They have opportunities to travel and work in 2 years in any place in the world, as long as they pass the entrance exam relating to the destination’s accounting requirements and practices.
Figure 1.1: Distribution of labor proportion in KPMG Hanoi Office
The largest proportion of Hanoi office’s employee contributed by Audit assurance departments, made up to 58% number of the company staff Tax and advisory departments are small in number but generating quite high income for the office Other employees come from DPP Departments, the department which in- charge for updating new Circular release, new regulations or enacting from government and local authorities Also, company’s reporting department composes
25% final audited financial statements, occupied by qualified staffs specialized in MS Word and back-office software Other basic department are HR Department, IT Specialists and Passionate Team.
As one of the first international auditing firms appearing in Vietnam, KPMG Vietnam has built a strong belief in customers' hearts With effective services, the Company has cooperated with reputable customers in many different fields Beside traditional customers, KPMG Vietnam constantly focuses on developing a network of potential customers The leading strength of KPMG is high quality of services provided and professional working style that makes its’ customers expanded constantly in number and variety of fields of activity (mainly foreign-invested enterprises), including:
-Producing beverages and soft drinks: Southeast Asia Brewery, Company Cocacola Vietnam, Pepsi Vietnam
- Producing food: cooking oil, monosodium glutamate, spices: Cailan, Miwon Vietnam
- Producing cars, motorcycles, and spare parts for motor vehicles: Honda, Yamaha,
- Providing telecommunication services, manufacturing electronic components: FPT,
- Construction business, real estate, consulting company: Song Da Jurong, Davis Lang don & Seah
In addition, KPMG Vietnam is providing audit services banks in Vietnam, especially foreign banks Regular customers of KPMG are the leading banks such as Vietcombank, Citi bank, Lienviet Post Bank, Malayan Banking Berhad, MUFG Bank, Oversea Bank, The Siam Commercial Bank Public, AnBinh, Shinhan, CTBC, Saigon Bank…together with major credit institutions such as Vietnam Debt Fund SPC, Vietnam Property Fund Limited…
In addition to providing audit services for projects and non-governmental organizations is also a field that brings big revenue for KPMG: Rural Development
Project, Norwegian Red Cross Association Besides, KPMG also provides consultancy for international organizations such as UNDP, UNICEF, FAO
In recent year from 2017 to 2019, with professional working style, experience and high professional qualifications, KPMG Vietnam's experts have contributed to the financial situation and business results as wel as reputations The financial result is as followed:
Table 1-1: KPMG’ financial results from 2017 to 2018
From the above data table, we realize that KPMG’s business results increased gruadually in 3 consecutive years Especially, the company's profit after tax increased 3.5 times in 2019 (from VND 772 million in 2017 to VND 2,775 million in 2019 Along with that the professional quality and salary of employees is constantly improving This is reflected in the high increase in costs (mainly training costs and labor costs) from VND 446,697 million in 2017 to VND 480,680 million in 2018 and by 2019 to VND 503,046 million.
Following a number of years of stagnation, the business once again recorded growth in revenues The net results for the year were satisfactory This was the result of strong growth in Advisory and better than expected results in Audit, where they were able to counter the decline in revenues in the national practice More than ever before, the emphasis on the Audit front was on raising quality levels in every single aspect of the organization and the execution of the work Something that has been recognized and appreciated by the market.
Over the past year, that focus on delivering outstanding service to clients, wherever KPMG people are located, has enable KPMG to serve 86% of the Fortune
In FY 2019/18 the key outcome was that 95% of KPMG’s clients were satisfied with the overall quality of their work performed KPMG can surmise that there is a high likelihood that they are being considered or recommended for follow- up programs and activities The company can still improve in terms of proactive knowledge sharing and sharing their points of view based on both sector expertise and solution developments Therefore, KPMG has strengthened their markets and client organization through their rigorous focus on these value adding components.The voice of the customer is focusing their efforts daily.
Management of KPMG Vietnam
Company structure is a crucial criterion for any enterprise to make a successful business KPMG Vietnam structure has synchronized with global networks, however, several adjustments needed to tailor local responsiveness and requirements:
Figure 1.4: Organizational structure of KPMG Vietnam
This company structure allows company to work effectively with all layers,more simple and concentrated system design, the clearer mission and goals definition assigns for each department.
ORGANIZING AUDIT PRACTICE AT KPMG VIETNAM
Organizing an audit team
The independent audit work done by a professional auditor does not create additional information about the financial statements, it only increases the reliability of the financial statements Users of audit results trust and appoint auditors by the independent practice of auditors and the ability of professional expertise as well as objective integrity ethics in their work.
In order to practice auditing, auditors need to ensure the requirements:
This requirement is seen as a necessary condition to achieve the goal of auditing activity, independence is the principle of basic practice of the auditor. Audit results will not be valid when audit result users believe that the audit lacks independence even if the audit is conducted by a highly qualified person The requirement for independence requires the honesty and responsibility of the auditors for those who use the audit results, and the auditors are not bound in contacting the documents and reports of the business During the audit process, auditors must really not be influenced or affected by any material or mental benefits affecting their objective and independent honesty Any questions about the business situation or accounting records in business transactions should be answered fully and ensure that auditors are not restricted in collecting audit evidence.
In order to ensure this requirement, in addition to the subjective aspect of the moral quality of the auditors, it is necessary to maintain and ensure the independence in the audit process, the law requires that auditors not perform the audit customers whose auditors have family, kinship or economic interests.
People are always an important and decisive factor in economic and social activities Especially in the field of audit services, when the products of this activity do not have a predetermined pattern and depend on the subjectivity of the auditors. The important thing is that auditors must always maintain the independence and objectivity when conducting their work as well as when considering and evaluating audit evidence as a basis for giving opinions on financial statements Auditors must have a professional conscience, always work with the highest caution with a spirit of hard work During the audit process, they must ensure honesty and honest opinion At the same time, auditors must be fair, respect the truth and not biased bias.
Auditors must regularly train adequately carefulness of all the skills and diligence required when performing their duties Any carelessness can lead to auditing risks, thereby affecting audiences using audit reports and the auditor's legal responsibilities.
The auditor must respect the confidentiality of the information collected during the audit process, not to disclose any economic information relating to the customer to a third person without the permission of the authorized person rights unless it is an obligation to make it public as required by law or to the extent of its professional powers.
Auditors must respect the law Respect for law shows the responsibility of auditors for auditing users Auditors must strictly abide by the regimes, rules, principles and laws of the State and the recognized principles and standards of auditing Comments of auditors are legally valid and auditors are responsible before the law for their evaluation.
2.1.1.3) Requirements on competence and profession
The basic principle governing the audit requires the auditor to perform the job with the necessary expertise In order to ensure adequate and appropriate audit evidence is obtained, the auditor must:
• Having strong professional expertise and understanding of customers' business areas
• Having skills and experience in auditing
In order to achieve the above requirements, auditors must first achieve a solid professional qualification in accounting, knowledge of financial, accounting and legal policies and at the same time to become auditors Operators and able to perform independent work must be accompanied by experienced auditors in practical audits On the other hand, auditors must be obliged to maintain professional skills and qualifications throughout the course of their practice, always updating information on accounting and financial comparisons related to auditing. Legally, auditors can only practice when they have registered with the competent authority and in Vietnam, the Ministry of Finance after winning the national exam on auditor certificate.
2.1.2 Principle of organizing an audit team at KPMG Vietnam Co., Ltd
Organization of audit teams is carried out based on the objectives and requirements of the work, ensuring the work associated with the capacity, qualifications and specialized training of auditors The engagement partner will consider such factors as: Audit contract value, size of the customer, audit risk assessment model, to decide participants audit team.
Typically, an audit team will include components as follows:
Figure 2-1: Structure of audit team organization
Engagement partner Engagement manager Senior In-charge
The number of people at each level will depend on the size and level of customer risk.
Engagement Partner: The engagement partner is the partner or other person in KPMG who is responsible for the audit engagement and its performance, and for the auditors' report(s) that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body Being the person in charge of the audit under his / her responsibility, only checking and evaluating the performance of the team members, negotiating and contributing comments during the meetings with customers, taking appropriate action to eliminate such threats to independence or reduce them to an acceptable level by applying safeguards or, if considered appropriate, to withdraw from the audit engagement, where withdrawal is possible under applicable law and regulation.
Engagement Manager: Responsible like the director of the audit but mainly assists the director of the audit.
Senior in-charge: Working directly with the client's accounting vouchers, directing and managing audit assistants to gather sufficient and appropriate audit evidence to help the Supervisor The audit director may comment on the truthfulness and reasonableness of the financial statements prepared by the customer.
Figure 2-2: Example of an audit team:
Luong Chi Vinh Engagement partner Director Nguyen Thanh Tung Engagement manager Senior Manager
Participants Nguyen Tien Hung Engagement in charge Assistant Manager involved: Pham Thanh Hoa Other team member Audit Assistant 1
Do Anh Tuan Other team member Audit Assistant 2Nghiem Thanh Huong Other team member Audit Assistant 2
Audit process at KPMG Vietnam
Main characteristics of audit process at KPMG Vietnam:KMPG’s audit process follows its own long developed KAM (KPMG Audit Manual), the valuable assets of the company KAM has been long developed globally, however when engage in local firm, KAM requires tailored-made adjustments for Vietnam Market. KAM has been stored up under electronic e-book and developed by many key experts, seniors from the company and also audit specialists around the world In the essential summary, an audit engagement can be illustrated as follow:
The objectives of Planning are to:
Obtain an understanding of the entity’s business and its industry and environment, its accounting policies and practices, and its financial performance
Understand and evaluate the design and the implementation of entity level controls relevant to the audit
Assess risks of material misstatement of the financial statements, including risks of error and fraud
Develop our audit strategy in response to those risks, and
Develop our planned audit approach for significant accounts and disclosures.
Planning is described in the chart at: Figure 2.2.1
As such, the main purpose of planning is to identify the risks of business strategies and the risks of material misstatements on the basis of an understanding of the audit object by Control Evaluation The objective of Control Evaluation is to gain an understanding of the entity’s accounting activities and to evaluate controls so that auditors can assess the risk of significant misstatement for each audit objective and plan our substantive procedures.
Control Evaluation is described in the chart: Figure 2.2.2
Figure 2.3 : Control Evaluation x` Tests of detail
The extent of our control evaluation work varies, in planning auditors evaluate the design and implementation of entity level controls and consider the impact of entity level controls on our audit strategy and planned audit approach For every audit objective, auditors obtain an understanding of, and document in the
Audit Program, the relevant accounting activities with respect to the underlying financial information In short, when auditors evaluate each company’s internal control strength and classify at different level: high, moderate and low; audit scope and the amount of work conducts would be adjusted for each case Audit strategy and procedures requires might be different with different business sectors, different companies due to their inherent risks from internal control strength.
Frankly, it would be the most “direct” part and require compulsory loads of work for every auditor At planning and testing for internal control, auditors just gauge the risks and develop an audit strategy, the main part of staff is performing procedures to make it done After that, substantive audit procedures is performed to respond to our assessment of the risk of significant misstatement for each audit objective.
Consider if audit evidence is sufficient and appropriate Consider
• Risk of management override of controls
Risk AssessmentPlan substantive procedures
The objective of completing the audit is to form an audit opinion Before auditors form an audit opinion, the engagement team:
• Performs and documents results of audit procedures performed during Completion
• Evaluates on an overall basis the results of audit procedures performed and findings for audit objectives associated with significant risks, including the risk of fraud
• Evaluates significant findings and issues resulting from the audit, actions taken to address them (including additional evidence obtained) and the basis for the conclusions reached Significant findings and issues are matters that are important to the procedures performed, evidence obtained or conclusions reached.
• Evaluates independence and ethical issues, and
• Forms an audit opinion after reviewing the financial statements and evaluating all audit findings.
Audit files
During the audit process, the audit team conducts the collection of documents - audit evidence as a basis for making their own comments All of these documents are archived as evidence of the work performed in the audit as well as documentation for subsequent audits with the same customer An audit record is also a legal basis for implementing auditing in accordance with current standards.
Audit records prepared and archived according to KPMG standards are established and implemented throughout the company The preparation and storage of this record is also specified in the KAM audit method to serve the presentation and read the audit records quickly and effectively.
The audit record is divided into sections marked from A to Z corresponding to the individual parts, as follows:
B: Report C: Auditors' exchanges D: Strategic analysis E: Standard audit program F: Cycle analysis and basic audit procedures
From part G onwards, audit records may vary depending on the auditor and the customer's company requirements Each section will record documents for a part of the audit.
The audit file pages are marked in order by both numbers and letters corresponding to each part of the audit file For example, the K section of the record relating to sales and collection operations, from page K300 to K305, records the work and results of intersection tests (Sales cut-off test).
In the audit file, it is necessary to record the sources of the cited data, whether calculated by the auditor or from the client's documents, between the related record pages that need to indicate the links to look up Cross reference, this is to facilitate reading and understanding the audit work quickly.
Activity / Sub-activity Activity / Sub-activity reference no reference no.
P1.1.1.0010 SAN P4.2.1.0010 BOM meeting minutes in final
P1.1.1.0030 Signed Engagement letters 4.5.7 Summary of audit misstatements
2 Risk Assessment P4.6.3.00XX Signed subsequent events checklist
P2.5.1.0010 BOM meeting minutes in interim P4.7.1.0010
Signed checklist for each reviewer(s) – LSQCR checklist
3.2.XX.1 Audit Program name P4.7.3.00XX summary of uncorrected audit misstatements attached Final auditor’s report, Final audited
3.2.XX.4 Procedure P4.7.3.00XX financial statements with related footnote disclosures, schedules and other information
3.2.XX.4.1 Confirmations – XX P4.7.3.00XX Management Letter issued
P3.2.XX.4.1.0010 Confirmations received P4.7.3.00XX Signed audit reporting checklist
P3.2.XX.4.2.0010 contract, construction contract, bank loan 5.2.1 Summary of Reporting to Group guarantee)
Reporting deliverables to group auditors
(for component auditors); or Reporting deliverables received from component auditors (for group engagement team)
The use of audit records helps auditors to plan jobs that must be performed and organized in a scientific manner, while helping those who read the information on the audit records can understand The audit work has been conducted and the results obtained.
At KPMG, audit records are scientifically stored in the form of documents in the library and on the internal computer network, including all records of an audit in chronological order This storage is very helpful for the company's employees in looking up when auditing groups perform audits for the same customer is different.
Audit Quality control
Quality of service provided is always focused on KPMG and it has made KPMG brand for customers as well as audited financial users.
KPMG's philosophy is to turn its knowledge and insights into values for customers, for people and for the capital market This gives KPMG a clear position and responsibility in the business community, which is a bridge and creates mutual trust between businesses and investors KPMG's Declaration is intended to be viewed according to what the company offers with outstanding professionalism and quality.
To maintain this, KPMG always carries out quality control on the basis of five principles, namely:
• Strategic analysis: Understand customer goals and strategies in the industry context and the business environment in which customers operate
• Business process analysis: Focus, make conclusions about key business risks
• Risk assessment: Consider a full assessment of business risks with critical processes and related controls as well as customer attitudes towards them Identify the remaining risks related to audit angles, additional procedures to achieve audit objectives
• Evaluate business activities: Include a comprehensive understanding of the company about customers This includes analysis of customer performance through financial and non-financial indicators, in order to achieve assurance that audit objectives have been achieved and sufficient audit evidence has been gathered suitable for making conclusions on audit
• Continuously improving quality: The quality of customer and KPMG's operations is always improved throughout the audit based on appropriate knowledge of KPMG.
In addition to the above principles, the employees in the company thoroughly grasp the spirit of responsible and thoughtful work Audit records are prepared and checked by company members from low level to high level in order to ensure the quality of the audit Typically, an audit team consists of staff at all levels: Audit Assistant 2 (A2), Audit Assistant 1 (A1), Audit Team Leader (S1 or S2) In each audit team, the members' work is examined by the team leader After that, the audit report is reviewed by the Manager (Manager) and submitted to the Board of Directors The members of the board of directors are the owners, who directly assess the audit risk, decide to sign an audit contract, perform the final review of all audit records and represent company sign, issue audit report and management letter.
In addition, twice a year, KPMG's internal audit department re-checks the entire audit record of the company to ensure that the audit is carried out in accordance with KPMG's standards and methods.
Thanks to the application of a quality control system, KPMG has constantly improved its position in the field of auditing, consulting, asserting its quality brand.The unified implementation of this system across all global KPMG companies as well as flexible application of business conditions and laws of each country helpsKPMG to further improve its services, creating belief for those who use financial information That is also essential for all companies for their existence and development in the current market economy and KPMG is one of the most successful companies in the implementation of the strategy This, increasingly improving its position in the national economy.
3CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING ORGANIZATION AND OPERATIONS OF KPMG
Assessments of the organization and operations of KPMG Vietnam Co., Ltd
KPMG together with Price Waterhouse and Cooper, Deloitte Touch Tohmatsu and Ernst Young are the four leading auditing companies in the world currently in Vietnam From the early days of auditing appeared in Vietnam, KPMG has been present and contributed greatly to the development of Vietnam's audit background The strength of KPMG is the audit method which is summarized through many years of experience and widely applied in all KPMG offices worldwide In the presented section, KPMG's audit method is the KAM method, which gives the Auditors a proper, meticulous and effective way to get the audit to get quick results.
KPMG's audit method is based on basic audit theory and current international accounting and auditing standards When this method was introduced into Vietnam, it was built and improved to comply with Vietnam's accounting and auditing regulations and policies Besides, depending on the type of customer, market, business conditions, audit conditions, the auditing programs are flexibly applied These programs are based on the business aspects of the business to ensure that the main processes of the customer are audited, the most complete detection of possible risks.
Basically, KAM is still built according to a unified model of financial report audit: planning auditing, implementing plans and ending auditing But at the same time, KAM still showed its caution in approaching customers, focusing on new auditing situations, thus ensuring high efficiency in every audit performed byKPMG.
3.1.1.1 About the organization of an audit team
After accepting audits for each customer, the first job that KPMG performs is to assess the risk level of each specific customer, thereby making choices about the team of Auditors who will participate in the work the audit is appropriate Usually a group of Auditors has from 4 to 5 people, including an auditor, a team leader is a Principal Auditor, one to two Auditors and an auditing assistant The selection of this assignment on the one hand facilitates the assistants of Auditors and the new auditors to learn a lot of practical experience from the main Auditor in the process of working together, ensuring the develop, inherit and train new Auditors in a methodical way On the other hand, it requires all members of the audit team to understand and have a full understanding of the business situation of the customers, the structure and organization of each customer, from that, there is a specific and effective job assignment for each audit process.
This demonstrates the interest of KPMG Vietnam's Board of Directors to the quality and efficiency of each audit, quality and professional qualifications of each Auditor for each specific audit.
3.1.1.2 About the organization of audit
The basic difference of the audit process carried out by KPMG compared to the general theory of auditing financial statements is the division of the audit planning process into two steps: Determining the audit strategy (plan strategy) and detailed audit planning and design of the audit program.
When making strategic plans, Auditors collect information about the industry characteristics, business situation, financial situation, internal control system of customers, thereby determining the importance of the audit (for the entire financial report) Auditors must also identify the main audit processes that correspond to customer business cycles, allocate critical levels for cycles and plan cycle analysis.
Based on that information, Auditors develop detailed audit plan and design audit program for each specific cycle.
Since most of the company's customers are regular customers, records have been stored so this understanding is the process of updating operational goals this year and the effects of those goals on activities The main dynamic of the customer company Thus, with only one customer, KPMG's audit program can change from year to year.
As for new customers, Auditors must carefully study customers, assess possible risks and mistakes, based on professional judgment and the highest possible cautious attitude to real effective auditing.
This period was divided into two parts by KPMG: (A.) Evaluating the system before the end of the year and (B.) Performing the remaining audit work.
A The evaluation of the system before the end of the year:
Consider the accounting and internal control system that exists in the client company In which, the audit team goes into the items that are considered crucial to:
• Gain understanding of business risks and control activities.
• Gain an understanding of how key cycles work through identifying strategic business risks and critical operations at the above stage.
• Implement appropriate control tests and assess the risks of material misstatements.
• Plan the remaining audit procedures
At this stage, the Auditors use knowledge of economic analysis, accounting and auditing to detect items or operations with high importance that need to be considered in depth and to make conclusions about effectiveness of internal control system for the main process of the customer The control risk level is re-evaluated to be based on that, designing basic tests with the level and scale of appropriate implementation so as to achieve both audit objectives and ensure the high efficiency of the audit.
B Perform the remaining audit procedures:
On the basis of the established plans on the time, scope of implementation, the pre-built auditing procedures, KPMG conducted a comprehensive audit, in accordance with the planned plan In this step, KPMG will review the internal accounting and control system again to make a final assessment In auditing Financial Statements, the formality check is separate but Auditors always consider them in internal relationships that affect auditing The auditor has combined a detailed examination with a summary, a combination of analysis and analysis, a review of the overview and a thorough investigation of sampling, maximizing the available records and conclusions Thereby, the Auditor identifies, inspects and analyzes audit differences and evaluates the collected results When conducting the work, the Auditor always keeps a high caution to fully detect risks and mistakes, reducing the risk of auditing and improving the quality of work.
In addition, the use of working documents of the Company helps the audit work done with the highest efficiency.
- The final phase of audit
After completing the audit, the head of the audit team must complete the annual audit file and submit it to the inspection auditor, the auditor shall review and request the head of the audit team to complete the documents work parts are unclear After that, the audit file was reviewed by the owner Finally, based on the requirements of the owner of the audit, the Auditors summarize the results, complete and prepare the Audit Report and Management Letter sent to the customer An audit report is prepared in accordance with Vietnamese Standards on Auditing and international auditing standards accepted by Vietnam Post-finishing work always contributes to making customers' financial situation healthier, more clear and scientific record keeping. sually audit work ends when the Audit Report is issued However, when there are some problems related to the adjustment or revision of the financial statements of the customers, the Auditor is still responsible for reviewing, thereby drawing experience for the tests later math.
In summary, the process steps and stages of conducting a KPMG financial reporting audit represent the high scientific, compliance and up-to-date methods of KPMG's global approach.
Through research and understanding from reasoning to actually participating in the auditing process of financial statements conducted by KPMG, I would like to propose some suggestions to improve the audit of these items:
KPMG's customers are diversified in many different areas, but there is no designed questionnaire about the internal control system of customers To ensure consistency across the company in the general process, auditors almost use their experiences to judge.
About the implementation of analytical procedures
While carrying out analytical procedures, to be able to bring higher convincing evidence, find the key points for detailed inspection procedures, auditors needs to combine several analytical procedures such as analysis horizontal, vertical analysis However, in an audit carried out by KPMG, auditors usually only calculate the fluctuation level of the item this year compared to the previous year, which is sometimes not effective in analyzing and evaluating
About client’s policy, market development
Sometimes the misunderstanding of the key priority customer of client, client’s policy also market development could lead to apply ineffective procedures or waste time in useless points
In order to ensure and improve the quality of the company's audits, the company has organized training courses to improve the knowledge of employees and information, but almost courses are general and not specific in some weakness which needed to improve.
Recommendations for improving the organization and operations
In 1998, Vietnam became an official member of APEC Asia-Pacific Economic Cooperation Forum On November 7, 2006, Vietnam was officially admitted as the 150th member of the World Trade Organization WTO These are important milestones marking Vietnam's international economic integration process.
In order to join these large economic organizations in the past, Vietnam has actively and fully implemented the process of opening and transparency of the financial system.
The Accounting and Auditing Law has been approved and promulgated by the National Assembly, although there have been certain innovations, our accounting system has many limitations or inconsistencies Therefore, the accounting regime is also one of the policies that auditors need to innovate The immediate requirement is that must make more efforts to promote the renovation process The accounting regime achieves the right objectives as committed This task is not easy to implement but is a task that auditors need to implement immediately and definitely, creating conditions for accounting in units and organizations to be easy and consistent with rules and standards of the region as well as of the world.
The development of science and technology, information technology has a great influence on people's lives and like other professions, accounting and auditing are also significantly affected The development of science and technology also requires people to possess it and master the science and technology, to apply science and technology to their actual work For accounting and auditing, the application of specialized software, especially accounting software, is indispensable, bringing high efficiency for businesses to help businesses create more profits At the same time, it reduces the cost of facilitating the reinvestment and expansion of production for its businesses.
Along with the development of Vietnam's economy, the audit profession has been constantly evolving and recognized as an indispensable factor in a dynamic developing economy, from only 2 jobs up to now, auditors have more than 170 domestic and international auditing companies, especially the presence of 4 leading auditing companies in the world, showing the potential of The development of this service is huge In addition, competition for quality service contracts is one thing most companies are aiming for.
Because of the above factors, it is required that the Company's managers must outline strategies to constantly innovate procedures, operations, and auditing processes in order to achieve the highest efficiency and the most economical way to win, gain competitive advantage in the market of auditing services in Vietnam.
Through research and understanding from reasoning to actually participating in the auditing process of financial statements conducted by KPMG, I would like to propose some suggestions to improve the audit of these items:
Because KPMG's customers are diversified in many different areas, it is necessary to design an audit program as well as a questionnaire about the internal control system of customers It will ensure consistency across the company in the auditing process of client companies with different specific types.
The collection of customer information will ensure auditors to know about new information arising during the year so that auditors can timely monitoring and capture of important changes that may be related to the audit
A general questionnaire should be developed and u
About the implementation of analytical procedures
Analytical procedures is nessessary for overall also specifics sections The company should apply analytical procedures appropriately in specific cases to bring more efficiency to the audit.
About customer policy, market development
Enhance the quality of services, stabilize and maintain traditional customers, and develop and expand the service provision for customers who are foreign invested enterprises, projects with funded foreign capital The company also needs to identify key priority customers who are still state-owned companies, joint-stock companies, and large and branded companies.
The company needs to improve the quality regular training courses to improve the knowledge of employees and information By improving the qualifications of auditors, the company can improve the quality of auditing In addition, the company can improve the quality of auditing by the process of recruiting more qualified employees.
Rubbing reality is the best condition for every student to apply the accumulated knowledge in the learning process at the school into practical work. The harmonious combination of theory and practice helps students to better understand their profession and expertise In the first phase of the internship process at KPMG Limited Company, I have learned some major fundamental issues about the company such as understanding the history of formation and development of the Company and the organization management apparatus, organization of audit work to make recommendations on the advantages and disadvantages in organizing the audit of the company In this report, I have tried to present those basic issues with my knowledge both in theory and practice throughout the school and internship at the company However, due to time constraints and understanding, the article will be unavoidable I look forward to receiving comments from teachers, as well as colleagues in the company to make my report more complete.
Finally, I would like to express my deep gratitude for the guidance and help of the Teacher: Phd.Tran Trung Kien, the Board of Directors and colleagues inKPMG Company, especially my mentor and performance manager in the AuditRoom II of the Company, who helped me during the internship as well as writing reports.