Audit procedures for salary and r nsalary deductions by southern r nauditing and accounting financial r nconsulting services company limited r nat abc company

Bui Anh Thanh Internship Company: Southern Auditing and Accounting Financial Consulting Services Company Limited Address: 29 Vo Thi Sau Street, Da Kao, District 1, Ho Chi Minh City Depar

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

HCM UNIVERSITY OF ECONOMICS AND LAW

Ho Chi Minh City, 2022 – 2023

To complete this graduation thesis, it is thanks to the help and support of the agency, teachers and colleagues who have helped me during my internship I would like to express my gratitude to all of you for giving your precious time to teach me

First and foremost, I want to express my gratitude to the instructors at the Faculty of Accounting - Auditing at the University of Economics and Law - VNU-HCM who have applied both their expertise and passion In particular, I would like

to express my gratitude to Mr Bui Anh Thanh for her enthusiastic guidance and suggestions to complete the graduation thesis in the best way He helped me recognize things to pay attention to and promote my strengths

At the same time, I would also like to express my deep gratitude to Southern Auditing and Accounting Financial Consulting Services Co., Ltd for creating the best conditions for me to learn and apply what I have learned in practice Thank you to the members of the company for always enthusiastically teaching and helping me overcome difficulties during my internship

Due to time constraints and lack of expertise, this graduation report contains flaws I'm eager to have the lecturers' advice and critique so that I can improve my thesis better

Finally, I would like to wish everyone a lot of health, happiness and success

in their work

Instructor: Mr Bui Anh Thanh

Internship Company: Southern Auditing and Accounting Financial Consulting Services Company Limited

Address: 29 Vo Thi Sau Street, Da Kao, District 1, Ho Chi Minh City

Department/Line: Assurance – Financial Audit

Internship position: Intern

Internship period: From 19 December 2022 to 31 March 2023

Content of internship diary

No Week Internship content Students’ assessment

1 05/12/2022 –

25/12/2022

Participated in Southern Auditing and Accounting Financial Consulting Services Company Limited– HCMC training course for assurance intern

Learn the rules and the use of the working system

Attended all training sessions Understand the core values and importance

of the auditor's information security

Completion level: Good

2 26/12/2022 –

01/01/2023

Participated in auditing team, including the following sections: Cash, Receivables, Payables, Equity, Prepaid Expense, Accrual Expense, etc

confirmation letters, making reports

Get familiar with the operations used in Excel Completion level: Good

08/01/2023 count for an ice cream

company

smoothly because of the cooperation from the client as well as from the thorough preparation of the auditor Completion level: Good

4 09/01/2023–

18/01/2023

Participated in auditing team, including the following sections: Cash, Receivables, Payables, Equity, Prepaid Expense, Accrual Expense, etc

confirmation letters, making report

Completion level: Good

Completion: Good

Họ và tên SV thực tập: Văn Công Danh

Tế -Luật

Đã thực tập tại Phòng: Kiểm toán 3

Từ thời gian: ngày 01/12/2022 đến ngày 31/03/2023

Nhận xét chung:

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TP.HCM, ngày 10 Tháng 02 Năm 2023

Xác nhận của đơn vị thực tập

Ghi chú: Có thể đóng dấu treo ở góc trên bên trái

PHIẾU ĐÁNH GIÁ KHÓA LUẬN TỐT NGHIỆP

TABLE OF CONTENTS ACKNOWLEDGEMENTS i

INTERNSHIP DIARY ii

NHẬN XÉT CỦA ĐƠN VỊ THỰC TẬP iv

PHIẾU ĐÁNH GIÁ KHÓA LUẬN TỐT NGHIỆP v

TABLE OF CONTENTS viii

OVERVIEW CHAPTER 1

CHAPTER 1: GENERAL INTRODUTION TO SOUTHERN AUDITING AND ACCOUNTING FINANCIAL CONSULTING SERVICES

COMPANY LIMITED 4 1.1 General information about Southern Auditing and Accounting Financial

1.2 History of establishment and development of Southern Auditing and

CHAPTER 2: THE SITUATION OF THE AUDIT PROCESS OF

FINANCIAL STATEMENTS SALARY DEDUCTIONS AND SALARY AT SOUTHERN AUDITING AND ACCOUNTING FINANCIAL

CONSULTING SERVICES COMPANY LIMITED 13 2.1 Overview of the financial statement audit process at Southern Auditing and

2.3 The reality of audit process of salary and salary deductions at Southern

Auditing and Accounting Financial Consulting Services Co., Ltd at ABC

3.2 Self – assessment of the report and the internship process 49

LIST OF FIGURES AND TABLES

Content Page

Table 1: Business situation of AASCS in the period of

2020-2021

6

Figure 1: Organization structure of AASCS company 5

Figure 2.1 Audit contract between Southern Auditing and

Accounting Financial Consulting Services Co., Ltd and ABC

Figure 2.3 Compare the data of salary and salary deductions

of ABC company in 2022 and 2021

27

Figure 2.4 Determine the materiality of ABC company 29

Figure 2.5 Audit program of salary section and salary

deductions of ABC Company

30

Figure 2.6 Check the accounting policices of ABC Company 32

Figure 2.7 Employee payroll at ABC company 33

Figure 2.9 Reviewing the distribution of salary and salary deductions into the expenses of ABC Company

35

Figure 2.10 Reviewing ABC Company's employee payroll 35

Figure 2.11 Compare Payroll expenses on the books and Payroll of ABC Company

OVERVIEW CHAPTER

1 The necessity of the report

Auditing is one of the important industries for the Vietnamese economy today

In recent years, the demand for auditing, consulting and valuation services of companies inside and outside Vietnam has increased, as well as the need to use financial statements

of companies more and more investors, banks Auditing activities through the audit of financial statements have actively participated in the examination, evaluation, and confirmation of the reliability of economic and financial information, making a significant contribution to the arrangement change of financial information, equitize enterprises and attract foreign investment activities, creating favorable conditions for the economic development of the country Therefore, to achieve the purpose of comprehensive audit of financial statements, auditors need to consider and examine their parts separately

In businesses, salary is always an item that plays a very important role, because

it is a big expense of the business and it is also a source of motivation to encourage employees to work On the other hand, the features of each business are different, so each business will have a different salary policy to suit their business How to have a reasonable salary policy, encourage employees to work and contribute effectively and save maximum costs for the business is always a big question of every business Therefore, in any audit of financial statements, salary is always considered a material item

During my internship at Southern Auditing and Accounting Financial Consulting Services Co., Ltd I have been exposed to and learned about issues related to cash items and the feature of cash , so I selected topic “Audit procedures for salary and salary deductions by Southern Auditing and Accounting Financial Consulting Services Company Limited at ABC Company” as the subject of graduation report

2 Subject and the scope of the report

Subject of research topic: The audit process to audit the salary item and salary deductions in the audit of financial statements

Scope of research topic: The scope of the report is the process of auditing salary and salary deductions as a part of the general process of an audit of financial statements

by Southern Auditing and Accounting Financial Consulting Services Company Limited

3 Report method

With the experience accumulated through the internship period at the company and the knowledge acquired while in school I completed the report by using accounting and auditing of techniques and methods so the following research methods:

- In terms of the methodology: The report is researched and implemented based

on dialectical materialism, historical materialism combined with logical scientific thinking

- In terms of methods and techniques: The report has used a combination of methods such as direct actual survey at the customer entity, comparison, synthesis of results

4 Objectives of the thesis:

The graduation thesis aims at the following 3 objectives:

(1) Systematize the basic theories of the audit process of salary and salary deductions in the audit of financial statements

(2) Clarifying the reality of the audit process of salary and salary deductions at Southern Auditing and Financial Consulting Services Co., Ltd to have a clearer and more accurate perception of knowledge theoretical

(3) Identify the advantage and limitations of auditing salary and salary deduction

at the company Learn from those advantages while also identifying the causes and proposing solutions to overcome the limitations

5 Structure of the report

In addition to the introduction, conclusion and list of references, the main content

of the thesis consists of 3 chapters:

Chapter 1: General introduction about Southern Auditing and Accounting

Financial Consulting Services Co., Ltd

Chapter 2: The reality of the audit process of the financial statements of the

salary account and salary deductions Southern Auditing and Accounting Financial

Consulting Services Co., Ltd

Chapter 3: Comments and recommendations

CHAPTER 1: GENERAL INTRODUTION TO SOUTHERN AUDITING AND ACCOUNTING FINANCIAL CONSULTING SERVICES COMPANY LIMITED

1.1 General information about Southern Auditing and Accounting Financial Services Consulting Co., Ltd

Company name: SOUTHERN AUDITING AND ACCOUNTING FINANCIAL CONSULTING SERVICES COMPANY LIMITED

Abbreviations of company name: AASCS CO., LTD

Tax code: 0305011729

Address: 29 Vo Thi Sau, Da Kao Ward, District 1, Ho Chi Minh City, Vietnam Legal representative: Mr Ta Quang Tao

Type of business: Limited liability company with 2 members

Company size: Medium sized business

In order to obtain service quality that meets the expectations of customers, AASCS always attaches great importance to the qualifications and experience of a team

of professional auditors and staff Currently, AASCS has a large staff of nearly 100 auditors, professional staff with university and postgraduate degrees majoring in Finance - Accounting - Auditing - Banking - Construction Every year, AASCS often

cooperates with domestic and international auditing organizations to provide training and professional development for the team of auditors or to send some AASCS staff to attend

Since its establishment, formerly the branch of AASC Auditing Company in Ho Chi Minh City Every year AASCS has been awarded certificates of merit by the Prime Minister or the Minister of Finance for outstanding achievements in Finance, Accounting, and Auditing Many officers and auditors of AASCS have also been continuously awarded with many certificates of merit and the title of emulation warrior

in the financial industry by the Minister of Finance

Currently, the company is always working towards the following goals and operating principles:

With the view to the best interests of customers, AASCS's operational goal is to provide specialized services and reliable information to help customers make management, financial and economic decisions without delay most effective way

Moreover, with high expertise, deep practical experience and professional working spirit, we understand the requirements and problems that customers face when conducting production and business in Vietnam

Based on this basis, the company will support customers to best solve problems that few specialized consulting organizations can do

In order to ensure the provision of the best quality services, all of our activities always respect the principles: independence, objectivity, honesty and confidentiality, compliance with the provisions of the law, Vietnamese Accounting and Auditing Standards issued by the Ministry of Finance as well as generally accepted international auditing standards Aside from that, the company always puts the legitimate interests of customers first

1.3 Income Statement of AASCS

Excerpt from the transparency report showing the company's production and business situation as follows:

Table 1: Business situation of AASCS for the period 2020-2021

2020 compared with 2021

1.Total revenue 36.233.987.953 32.572.359.568 -3.661.628.385 -10% Revenue from audit of

Corporate income tax 126.106.776 77.360.727 -48.746.049 -39%

5 The situation of provision

(Excerpt from the transparency report for the year 2020-2021)

From the summary of AASCS's 2021 income statement , we can see that revenue

in the year has decreased by 10% compared to the previous year Besides, expenses during the year also decreased significantly, down 5% compared to 2020, which shows that the company's investment is less effective However, this can also be understood because in 2021, the evolution of the Covid-19 epidemic has been complicated, which has also significantly affected the company’s operations

1.4 Services offered by AASCS

AASCS Company provides services in the field of accounting, auditing and tax

as follows:

❖ Independent audit service

With a wealth of experience and reputation, AASCS has been a companion with the development and growth of enterprises in the field of auditing

The company's audit services include:

- Audit financial statements

- Audit for tax purposes

- Audit operations - compliance - internal

- Audit the completed project settlement report

- Review financial statements

- Audit of financial information

❖ Financial and Tax consulting services

AASCS has experience in applying consulting processes and suggesting practical solutions on tax finance suitable for clients:

- Business valuation consulting

- Equitization consulting: elaborating equitization plan, business method, company charter, consulting on holding general meeting of shareholders, finalizing equitization costs

- Tax consulting

- Business management consulting

- Accounting and financial consulting, financial analysis

❖ Accounting service

- Bookkeeping services and financial statement preparation

- Tax reporting service

- Building an organizational model of the apparatus & organization of accounting work

❖ Professional training and other services

- Organizing courses and fostering professional skills in finance, accounting, auditing, business administration, computer application in accounting work

- Provide and guide the use of accounting software

- Provide legal documents, economic-financial information, books, forms and documents

- Recruitment support

1.5 Organizational structure of AASCS

The organizational structure of the company is shown in the following chart:

Figure 1: Organization structure of AASCS company

(Excerpt from transparency report 2021)

- The head of the company is the Board of Members The Board of Members of company consists of 17 members, which is the highest decision-making body The Board of Members consists of members who contribute capital

to the company, have a leading position in the company, and decide on important issues in the company The Board of Members shall hold an annual meeting at least once a year Chairman of the Board of Members is Mr Ta Quang Tao

- Board of Directors: including one Managing Director and 7 Vice Managing Director The Vice Managing Director is authorized by the Managing Director to take charge of related tasks in organizing and providing services to customers

- Board of Supervisors: Elected by the Board of Members, has the role of reviewing all activities in the company and is responsible to the Board of Members

- Administration-Accounting Department: a division directly under the Board of Directors of the company, advising and assisting the Board of Directors in managing staffing, personnel organization, administrative work; building and setting up a company management model; take care of the lives of employees in the company; organize asset protection, supervise goods during import and export The administrative division has an important task in

The Board of Members

Professional Room 2

Professional Room 3 Board of Supervisors

implementing policies and regimes for employees – the most important factor in the field of auditing, especially in the current shortage of high – quality audit personnel Simultaneously, conduct accurate and timely recording and calculation of all activities and incurred transactions of the company, monthly determination of business results and financial planning for the company's operations With the characteristic of being an enterprise operating in the service sector, the number of economic incurred transactions is quite large but simple and uncomplicated, focusing on operations related to business trip expenses of audit delegations, calculating salary for employees in the company

- Professional rooms: AASCS Company has 06 professional rooms with the main task of providing audit services of financial statements for companies Providing audit services for settlement reports of capital construction investment capital, work items, investment projects; enterprise valuation; Consulting and supporting customers on Finance, Accounting

1.6 Internship at AASCS company

At AASCS, interns will be assigned by the head of the accounting team the main tasks related to inventory, understanding customers, observing and evaluating customer internal control and participating in supporting colleagues auditor Auditors perform basic operations such as cash and cash equivalents, fixed assets, prepaid expenses, wages and salary deductions The specific tasks of interns at an entity are as follows:

Table 2: Description of internship at AASCS

Task Content

information, the auditors learn basic information such as business lines, audit objectives of the financial statements, main control processes of the client To be able to collect the above information, the auditor will directly contact the client to collect basic information about the client,

business lines and financial information of the client After that, the auditors will contact the previous auditors to grasp the problems that customers still have in previous years about cash items and make recommendations to improve accounting efficiency The auditor may also collect information from sources such as: The previous annual report of the business owner; Minutes of meetings of the Board of Directors of the Board of Directors and important meetings of guests; The previous year's auditor's notes and other relevant documents; General audit file (if any); Discuss directly with the Board of Directors and Chief Accountant as well

as the officer in charge of this item of the enterprise

inventory of assets at customers such as: Cash, fixed assets, inventory Before performing an inventory, the auditor will ask the client to provide a list of goods and assets to be inventory

At the same time, the auditor collects the customer's inventory plan and method of inventory, and asks the customer to prepare necessary documents such as ledger, catalog

When witnessing an inventory, the auditor acts as an observer of the accuracy of the inventory, especially in the cash inventory, when there is a deviation in the facts and books, the auditor requires the client to explain and record uncle After witnessing the completion of the inventory, the auditor will make an inventory report

of the customer, sign the inventory record and give his/her opinion on the inventory, collect relevant documents

to keep the audit file maths

Performing audit In the process of performing audits,

interns are often assigned by auditors to assist in auditing basic operations The intern will then ask the client to provide the necessary documents for implementation When performing this assignment, the intern will rely on the audit program provided and the materiality of the items to perform relevant audit procedures such as observation, interview, confirmation letter

Review the report After completing the audit practice

sections, the intern will assist the auditors in completing the audit report The assigned tasks are usually: Transferring the previous year's report

data, checking the data of items on the client's financial statements and on the audit report, closing the audit report

CHAPTER 2: THE SITUATION OF THE AUDIT PROCESS OF FINANCIAL STATEMENTS SALARY DEDUCTIONS AND SALARY AT SOUTHERN AUDITING AND ACCOUNTING FINANCIAL CONSULTING SERVICES COMPANY LIMITED

2.1 Overview of the financial statement audit process at Southern Auditing and Accounting Financial Consulting Services Co., Ltd

Stage 1: Audit planning

When receiving a customer's request, the company will send an officer who is a member of the company's leadership or an auditor to directly meet the customer to learn about the customer such as: business lines, revenue, audit performance of the previous year

On the basis of the survey report received, the professional department calculates and proposes the cost level and accepts the audit

When approved by the client, the audit contract will be drafted and signed, the head of the professional department will assign personnel and the auditor to carry out the implementation

In terms of the structure of the Audit team:

❖ The assignment of recognition for the audit is done by the Board of

Directors

❖ Normally, the audit team is organized as follows:

✔ Manager: head of department or deputy head of professional department

✔ Senior : usually an auditor with experience in performing audits before the client

✔ Junior

✔ Other staff

❖ The requirement for the organization of the company's audit team is to maximize the working efficiency of experienced auditors and a team of young audit assistants in order to improve the capacity of the next team as well as to provide provide the best service to clients

After organizing the audit team, the auditors will make the audit plan as follows:

❖ Collecting information about customers: learning about customers before setting up an audit program is a very important step Customers of AASCS are divided into 2 categories:

⮚ Regular customers

⮚ First year audit client and potential client

❖ Perform preliminary analytical procedures

❖ Find about the internal control system: help the auditor design appropriate audit procedures for the items, assess the volume and complexity of the audit, thereby estimating the time , the scope of the audit, the amount of audit evidence, and the focus of the audit

❖ Materiality and risk assessment: a mandatory procedure that needs to be performed before an audit The purpose of the audit risk assessment is to determine the level of detection risk as a basis for planning the audit tests

to be applied

❖ Prepare a detailed list of issues that AASCS has to work on Design audit program

Stage 2: Audit execution

AASCS will commence an on-site audit immediately upon completion of the information collection

In this stage, the auditors assigned to perform the audit must carry out their work according to the detailed plans that have been made for each audited department That detailed plan has specified the audit procedures and specific procedures and work steps that will have to be performed such as checking and comparing documents, checking accounting books and reports, comparing contract, debt reconciliation, bank reconciliation, inventory of assets and supplies, valuation, calculation and analysis of financial ratios Usually, these jobs are very flexible in order to minimize inconvenience

to customers and get the best results

❖ Review and evaluate the quality of the internal control system

During the audit, AASCS will review and evaluate management procedures, organizational structure, personnel issues, management information systems and policies and procedures, detect risks in each item, each work in order to determine or

adjust audit procedures that are appropriate to eliminate or reduce those risks The review of internal control is intended to achieve the following objectives:

⮚ Master the internal control processes at the audited entity

⮚ Ensure that the control systems and processes in place are working effectively

⮚ Evaluate organizational structure, decision-making mechanism and reporting regime

⮚ Assess the quality of internal control of managers and key employees

⮚ Through this work, AASCS hopes to help the entity overcome and limit

the shortcomings of its internal control system

❖ Review and assess legal compliance

Along with the process of checking and reviewing the financial statements, AASCS will inspect and evaluate the legal compliance in the business operations of the entity at the following levels:

⮚ Assess compliance with State regulations in the implementation of financial, accounting and statistical regimes

⮚ Assess the compliance with regulations of all levels of management in the entire business process of the entity and its affiliated entity

❖ Auditing of Financial Statements

The scope of AASCS's audit is to audit the entity's financial statements AASCS will review and give the most appropriate opinion on the entity's annual financial statements, following specific steps as follows:

⮚ Step 1: Collect audit documents

✔ Collect financial statements of the entity

✔ Collect general and detailed accounting books

⮚ Step 2: Check the Financial Statements

✔ Checking the financial statements of the entity, ensuring that the reports have been prepared in accordance with the provisions of the Law on Accounting and the Accounting Standards

✔ Check the basis for making financial statements

✔ Check the accounting at the entity

❖ Perform analytical procedures

Analytical procedures are performed for the following purposes:

✔ Help the auditor determine the content, timing, and extent of other audit procedures

✔ As a basic test to complement the detailed test (sometimes even more effective than the detailed test procedure)

✔ Detect material misstatements through the design of analytical procedures

to check the reasonableness of numbers

✔ Check the entire Financial Statement in the final review by the auditor The auditor performs analytical procedures for each item:

⮚ Horizontal analysis:

✔ Make a table to compare aggregate data (differences, ratios)

✔ Make a monthly comparison table (debt, credit, proportion)

✔ Analysis of volatility

⮚ Vertical analysis: using itemized rate groups

❖ Check details of incurred transactions, check account balance details

The detailed examination of incurred transactions is carried out on the basis of applying the auditor's sampling method The selected sample will be considered and calculated by the auditor to be representative of the whole population and to ensure that through the examination of sampling transactions, sufficient and reasonable audit evidence can be collected as the basis for the auditor's opinion

✔ A detailed check of balance will be made with all items with balance on the Balance Sheet necessary to be tracked in detail by object or economic content of the transaction The detailed checking of the balance will be performed on the following levels:

✔ Check the management, tracking details on the accounting books of the entity

✔ Review and compare documents provided by 3rd parties such as: Bank balance statement, Debt reconciliation minutes, Debt confirmation letter, documents sent

by 3rd party

Some of the work performed by auditors:

✔ Perform test of controls: only be done after understanding the internal control system and evaluated as effective

✔ Make a summary of accounts, contra accounts

✔ Check details, compare data (make a detailed summary of transactions according to the vouchers of each month) Pay special attention to errors in the accounting period split

✔ Check original documents

✔ Interviewing customers and observing

✔ Send confirmation mail

Stage 3: Audit completion

❖ Consider the events after the balance sheet date:

The audits were conducted after the balance sheet date, so events that may affect the financial statements may occur The auditor is responsible for reviewing events occurring after the balance sheet date

The auditor uses the following procedures:

⮚ Interview with the Management Board

⮚ Review the internal reports after the date of the financial statements

⮚ Check the minutes issued after the date of the financial statements

⮚ Reviewing the books made after the date of the financial statements

⮚ Check details of incurred transactions, liabilities, revenue and expenses

⮚ Consider fixed assets that are unused and sold after the cut-off date

⮚ Customers who have large outstanding balances but have not yet had a record of

debt confirmation

❖ Review meeting, exchange recommendations and combine audit data

During the audit, if errors are detected, AASCS will discuss directly with the Accounting Department of the enity At the end of the audit work at the entity, AASCS will hold a meeting to summarize the audit process, to discuss with the Board of Directors, the results of AASCS’s work and to resolve issues during the audit process

❖ Issue of Audit Report

After meeting to approve the audit results, AASCS will prepare a draft audit report and send it to the entity and discuss with the Board of Directors the following reports:

❖ Audit report on the entity’s annual financial statements:

⮚ Includes: Audit report; Accounting balance sheet; Income statements; Statements

of cash flows; Notes to the financial statements

⮚ The auditor’s opinion shall be clearly stated in the auditor’s report on:

✔ Compliance with Vietnamese accounting standards, compliance with financial and accounting principles of Vietnam and the consistency of this compliance with the financial information prepared and presented in the Financial Statements main

✔ The financial position of the entity is reflected through the information presented

in the financial statements

✔ Compliance with current laws in the financial and accounting work of the entity

❖ Management letter

⮚ Management letter is prepared for the entity

⮚ This letter will mention the process of auditing the financial statements of the preparer, including the following:

✔ Summarize the audit process and will specifically explain the issues that arise during the audit process

✔ The points that AASCS believes that it is necessary to improve the accounting system and internal control system to contribute to promoting the good performance of financial and accounting management of the entity

Complete recommendations and solutions For recommendations, AASCS will classify AASCS recommendations in order of priority into 3 categories: high, normal, and low, to facilitate agreement between the two parties

2.2 Theoretical framework related to the topic

The audit procedures are applied:

- Performing general procedures:

+ Check that the accounting policies have been applied consistently with the previous year and in accordance with the applicable financial statement preparation and presentation framework

+ Collect the classification of payables to employees and deductions according to salary and compare with the ledger

- Performing analytical procedures:

+ Compare the balance of salary payable, salary deductions payable this year with the previous year, the size of these payables in total liabilities this year with the previous year Find out the causes of large fluctuations and unusual transactions

+ Compare this year's analysis of salary cost fluctuations with the previous year, month-on-month and by department (office manager, workshop manager, sales, direct labor), combined with fluctuations about personnel and salary change policy, revenue, profit, finished products to evaluate the reasonableness and detect unusual problem

+ Compare the fluctuation of deductions to expenses of trade union, social insurance, health insurance and unemployment insurance to see whether they have the same rate of change with salary;

+ Estimate social insurance, health insurance, unemployment insurance according to regulations and compare with the data in the books Find out and explain the differences

- Performing test of details:

+ Review items that are greater than materiality, or unusual items, find out the cause, and perform appropriate audit procedures

+ Review the ledger to identify unusual items and transactions, find out the cause, and perform the corresponding audit procedure

+ Interview relevant employees to learn about the company's salary process + Check the details of a number of months' payroll, take a sample of some employees to check the details of the labor contract, salary sheet as well

as deductions according to salary

+ Check the company's human resources policy, collective labor agreement, ensure that the payables to the employees have been fully and timely recorded such as bonuses and commissions

+ Reconciling year-end salary payable with approved payroll or salary payment documents arising after the end of the accounting period, assessing differences

+ Check and compare with the corporate income tax finalization declaration

to ensure that the taxable expenses have been deducted for the salary deducted but not yet paid until the deadline for submitting the annual tax finalization dossier

+ For salaries denominated in foreign currencies: Check the application of exchange rates, determine and account for exchange differences for transactions arising during the period and the ending balance

+ Check whether the collective bargaining agreement is registered with the labor management agency

+ Check if the foreign worker working at the entity has a work permit + Consider whether the number of foreign workers at the entity exceeds the provisions of law, whether the labor contract is appropriate

Check the presentation of payable salaries and salary deductions on the financial

statements

General audit objective: With regard to salary and salary deductions, the auditor

needs to collect evidence to confirm the real and reasonable generality of salary transactions and salary deductions, all material financial information relating to this item

is presented fairly, in accordance with applicable rules and regulations

The specific audit objectives are as follows:

Management Assertions Content

actually happened and existed

fully recorded Otherwise, the salary

expenses and payables as well as related accounts will be wrong and not true to reality

for payroll transactions are valid and correct

deductions must be correctly calculated, recorded and transferred

Presentation and disclosure Salary payments and deductions must

be presented to the appropriate account Misrepresentation of accounts

in salary expenses such as Direct labor costs, Overhead production costs, Insurance expenses, General administration expenses will affect the value of inventory as well as other related assets of the enterprise

Rights and obligations Salary and deductions are properly

reflected as assets of the enterprise

2.3 The reality of audit process of salary and salary deductions at Southern Auditing and Accounting Financial Consulting Services Co., Ltd at ABC Company

+ Tax code: 0313297662

+ Company headquarters: 105/7/28 XX Street, YY Quarter, Thanh Loc Ward, District 12, Ho Chi Minh City, Vietnam

+ Business form: Non-state limited liability company

+ Charter capital: 30.000.000.000 VNĐ

- Business lines: The company mainly operates in the field of manufacturing

leather footwear such as: High heels, doll shoes, flat shoes, turtleneck boots, leather shoes, western shoes, all shoes, Prada shoes, children's shoes, double shoes

- Information about the salary cycle and salary deductions:

+ By the end of 2021, the total number of employees of ABC Company is

2188

+ Procedure for tracking working time:

➢ Each employee has a unique employee number Every day, before going to work, employees will use the timekeeper to time attendance and leave to show the actual number of working hours The Human Resources Department of ABC Company will rely on the results from the timekeeper to collect the payroll for employees

➢ Working time is 8 hours/day for office staff and 8 hours/shift for workers Number of working days is 26 days/month Security will manage the time in and out of employees The monthly payroll will

be sent to the payroll accountant to calculate the employee's salary.From the timesheet, the accountant will track and classify and then calculate the employee's salary

➢ Every month, the employee’s salary will be calculated in detail on Excel by each component: basic salary, overtime salary, social insurance, health insurance, allowances

Salary deductions: ABC Company is complying with the latest regulations on salary deductions according to legal documents

2.3.2 Audit planning

The audit plan can be said to be the key factor that determines whether the quality

of the audit meets the requirements of the client or not The fact that the auditors develop

a complete and realistic plan with the content, reality as well as the objectives of the

audit and the way to perform the audit will create favorable conditions for the auditor to achieve the results audit objective In the audit planning step, AASCS company also follows the following steps:

❖ Review client acceptance and contract risk assessment

This is a step taken before the audit of AASCS Company, has an extremely important role, is performed to determine whether the audit can be continued for the old customer or not or whether the audit is accepted for the new customer or not.As a result

of this review, AASCS Company will develop an audit in accordance with the client's requirements as well as in accordance with the situation of AASCS Company

Every year, Southern Auditing and Accounting Financial Consulting Services Co., Ltd sends letters to all customers (both old and potential new customers) to introduce the Company's services provided by the company, and based on it to establish the terms of the audit contract

Before signing the contract, the Company will send experienced auditors to work with customers Depending on the situation of the audit client, the company will send 1

or 1 group of auditors to the client to collect the most general information of the audit client such as: business characteristics, competitors, organizational structure of the management apparatus

For the example mentioned in the article, ABC Company Limited is a former audit client, the Company has performed audits in previous years Therefore, based on the audit records of the previous year as well as the business situation in 2021, the company makes a risk assessment of accepting the audit contract with this customer ABC

❖ Prepare audit contract and select audit team

For each audited period, the company's auditors need to discuss and agree with the client on the terms of the contract before conducting the audit These terms must be presented in writing and must be signed and stamped to show the agreement of both the audit party and the audit client

Based on the signed audit contract, Southern Auditing and Financial Consulting Services Company will consider the client's audit requirements, thereby making an audit plan and assigning appropriate personnel The number and experience of auditors

involved will depend on the complexity of the work, the size and specific requirements

of each client as well as the company’s personnel situation

Figure 2.1 Audit contract between Southern Auditing and Accounting Financial

Consulting Services Co., Ltd and ABC Co., Ltd

For the audit of ABC Company, the Company assigns 2 main auditors and 3 assistant auditors to form a group to perform this work The company’s audit team will together with the review department including the deputy head and the deputy director