Khóa luận tốt nghiệp Luật kinh tế: Audit procedures for salary and salary deductions by southern auditing and accounting financial consulting services company limited at abc company

a VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY HCM UNIVERSITY OF ECONOMICS AND LAW 0303 Laos GRADUATION THESIS AUDIT PROCEDURES FOR SALARY AND SALARY DEDUCTIONS BY SOUTHERN AUDITING AND

a

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

HCM UNIVERSITY OF ECONOMICS AND LAW

0303 Laos

GRADUATION THESIS

AUDIT PROCEDURES FOR SALARY AND

SALARY DEDUCTIONS BY SOUTHERN AUDITING AND ACCOUNTING FINANCIAL

CONSULTING SERVICES COMPANY LIMITED

AT ABC COMPANY

Instructor: Mr Bui Anh Thanh

Student: Van Cong Danh Student ID: K194050741

Grade: K19405CA

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

First and foremost, I want to express my gratitude to the instructors at theFaculty 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 andsuggestions to complete the graduation thesis in the best way He helped merecognize 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 containsflaws I'm eager to have the lecturers’ advice and critique so that I can improve mythesis better

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

in their work

INTERNSHIP DIARY General information

Full name: Van Cong Danh

Class: K19405CA

Student’s ID: K194050741

Date of birth: 20/07/2001

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 — | Participated in Southern Attended all training

25/12/2022 | Auditing and Accounting | sessions Understand the

Financial Consulting core values and importance

Services Company of the auditor's information

Limited— HCMC training | security

course for assurance Completion level: Good intern.

Learn the rules and theuse of the working system

2 26/12/2022 - | Participated in auditing | Get familiar with the

01/01/2023 | team, including the | operations used in Excel

following sections: Cash, | Completion level: Good

02/01/2023- |Participate in inventory) The inventory count went08/01/2023 |count for an ice cream) smoothly because of the

company cooperation from the client as

well as from the thorough

preparation of the auditor.

Completion level: Good09/01/2023- | Participated in auditing |Completion level: Good

18/01/2023 team, including the

following sections: Cash,

30/01/2023 — | Participate in the audit | Completion: Good

5/02/2023 process for the food

company: fixed assets,salary, check document,selling expenses

NHAN XÉT CUA DON VỊ THUC TAP

Ho va tên SV thực tập: Văn Công Danh

MSSV: K194050741 Lop: K19405CA Trường Dai hoc Kinh

Té -Luat

Đã thực tập tại Phong: Kiểm toán 3

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

PHIẾU ĐÁNH GIÁ KHÓA LUẬN TÓT NGHIỆP

PHIẾU DANH GIA KHÓA LUẬN TOT NGHIỆP - đề tài Kiểm toán - HỘI DONG

Không đạt yêu cau

Nội dung chương mở đầu không đấy

đủ không xác định được mục tiêu, đối tương và pham vi của đề tải.

0-02

Giới thiệu về doanh nghiép không day

đủ

0-02

Khang trình bay những van đề lý

thuyết cơ bản của van dé nghiên cứu hoặc trình bảy không có sự tông hop

0-04

Chỉ sao chép giấy làm việc Khổng có quan sắt diễn giải của người viết.

HOẶC

Cả trình bảy các thủ tục kiểm toán,

nhưng không đây đủ và logic.

Chưa có sự liên hệ giữa mục tiêu kiểm

ton, các thủ tục thực hién va kết quả

thực hiện các thủ tục.

Không cỏ giấy làm việc minh họa.

0-08

Nhân xét, kiến nghị không liên quan

đến vanđề nghiên cửu HOẶC Nhận

xét, kiên nghị còn chung chung chưa

cụ thé Chưa liễn quan trực tiếp đến

van dé nghiên cứu.

Can cải thiện Đạt yêu cầu

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Tuy nhiền, một vải điểm chưa có sự

kết nổi tốt Còn một vải lỗi sai trong

nội dung.

0.5-0.6

Trinh bay tương |đối đây đủ các thủ

tục kiểm toán, có sự liên hệ với mục

tiêu kiếm toắn và các nội dung lý

thuyết 5ã trình bày nhưng còn thiéu

lowedở một vai diem.

Không giải thích được tai sao KTV

thực hiện/ hoặc không thực hiện

Một số giấy làm việc và số liệu

không được minh họa.

Nhiều số liệu được trình bay thừa, thiêu hoc chưa khớp.

1—1.2

Nhận xét có lién quan đến van đề

nghiên cửu nhưng có mang tính rập

khuôn Phân tích liên hệ một số.

nhưng chưa trọn ven các van đề

giữa thực trang với tý thuyết_ Kiến

nghị còn chung chung, chưa thực.

Trình bay cơ sở lý thưyết có chọn lọc, phủ hợp với đề tải nghiên

cứu Gó sự kết nồi rễ rang trong

các van đề trình bay Rất it lỗi sai

nội dung.

0.7-0.8

Trinh bày đây đủ các thủ tuc kiêm

ton, có sự liền hệ với mục tiêu

kiếm toán và các nội dung lý

thuyét đã trình bay.

Có giải thích tai sao KTV thực hiện/ không thực hiện một thủ tục

hoặc có trình bảy thd tục kiếm

toan thay thé trong trưởng hop

kết quả thủ tục không đạt muc

tiêu kiếm toan Tuy nhiên, van con một số điểm chưa logic: hoặc mệt

số nội dung chưa cải thiện hat

theo yêu cau của GV ma không được giải thích lí do.

Giấy làm việc và số liệu được

minh hea day đủ Một vải ché hơi

thira, thiểu hoặc chưa khớp.

1.4 — 1.8

Nhân xét có liên quan đến vẫn đề

nghiên cửu cụ the Có sự kết nổi,

so sánh giữa thực trang ‹diễn ra ở

doanh nghiệp va lý thuyết Mat số kiến nghị gắn liễn với vẫn dé cu

Trình bày đầy đủ các van dé liên

quan đến nội dung nghiền cứu Có

sự tông hợp, so sánh, phản tích

hợp lý và mang tính thuyết phục.

can.

0.8 — 1.0

Trình bày đầy đủ cắc thủ tục kiêm

ton, có sự liên hệ với mục tiêu

kiêm toán và có kết nói với những néi dung lý thuyết đã nêu.

Cỏ giải thích tai sao KTV thực hiện!

không thực hiện một thủ tục và có

trình bảy thủ tục kiếm toán thay thể

trong trưởng hợp kết quả thd tục

không đạt mục tiêu kiếm toán với rat it sự hỗ trợ của giảng viên.

Giấy làm việc và số liệu được minh

họa đây đủ, logic, phủ hợp với nội

Tinh sang tạo Noi dung dé tai trùng lắp vào sao chép | Van dé nghiên cứu lặp lại, nhưng có điềm một vải Gém mới trong Cá nhiễu điểm mới trong van đề

tử các nghiên cứu trước phương pháp nghiên cứu hoặc cách dé xuất và giải quyết van đề thiết | nghiên cứu, phạm vi, doi tượng

Kỹ năng thuyết trình Nội dung slide không có sự chọn lọc

và logic từ nội dung viết.

Không thé hiện sự tự tin, không giao tiếp bang mat với khan giả.

Chỉ đọc nội dung thuyết trình tử slide

hoặc tai liệu

bảo vệ được ý trước cầu¡hồi

phan biện cảu (+ đồng.

thực, sang tạo.

hợp Bổ cục phd hợp Còn một số lỗi chỉnh tả, Idi trình bay.

Nội dung slide có sự chon lọc, phủ

phủ hợp Bồ cục logic Rất ít lỗi chính tả, lỗi trình bảy.

Nội dung slide cd sự chọn lọc, phủ

hợp với nội dung trinh bày Một vai hợp với nội dung trình bay Có sự

điểm thiếu kết nếi va liễn mach.

Tương đổi tư tin, nhưng đải lúc

mật giao tiếp bang mat hoặc lúng

tung trong diễn đạt ý.

Đâi lúc đọc nội dung thuyết trình

nhưng chưa tron ven, chưa thé

hiện sự am hiệu về van đề nghiền

kết nối va liền mạch trong toản bỏ

slide

Thẻ hiện sự tự tin, nhưng đôi lúclung tingtrong ¢diễn đạt ý Giữ giao

tiếp bằng mắt tốt.

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lập luận tương đối chắt chế và có

ví du minh hoa.

vẫn đề n tiền cửu Tuy nhiên, một

vai vẫn dé cần sự gọi ý tử hội

nghiên cửu hoặc phương pháp nghiên cứu Cách đề xuất và giải

quyết van đề thiết thực, sang tạo.

Hình thức trình bay phi hợp, không

có lỗi chính tả va lỗi trình bảy Bồ

cục phủ hợp, hải hỏa giữa các

Nội dung slide có sự chọn lọc, phủ

hợp với nội dung trình bay Co sự

kết nổi và dé hiểu trong toàn bộ

slide.

Tự tin dẫn dat busi thuyết trình Giữ

giao tiếp bằng mắt tắt và ngôn ngữ

cử chỉ phủ hợp.

Cách trình bảy thuyết phuc với lập

luận chat ché va ví dụ minh họa chi

tiết sinh đông.

về vấn đề nghiễn cửu.

CHAPTER 1: GENERAL INTRODUTION TO SOUTHERN AUDITING

AND ACCOUNTING FINANCIAL CONSULTING SERVICES

COMPANY LIMITED 41.1 General information about Southern Auditing and Accounting Financial

Services Consulting Co., Ltd 4

1.2 History of establishment and development of Southern Auditing and

Accounting Financial Consulting Services Co., Ltd +1.3 Income Statement of AASCS 5

1.4 Services offered by AASCS 61.5 Organizational structure of AASCS 7

1.6 Internship at AASCS company 9

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 132.1 Overview of the financial statement audit process at Southern Auditing and

Accounting Financial Consulting Services Co., Ltd 132.2 Theoretical framework related to the topic 18

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 21

2.3.1 Customer Overview 21

2.3.2 Audit planning 222.3.3 Audit execution 302.3.4 Audit completion 38

2.4.5 Summarizing the audit results of the salary section and salary

deductions 40

CHAPTER 3: COMMENTS AND RECOMMENDATIONS 42

3.1 General comments 42

3.1.1 General comments on the process of auditing Financial Statements at

Southern Auditing and Accounting Financial Consulting Services CompanyLimited 42

3.1.2 Comments on the audit process of salary and salary deductions at

Southern Auditing and Accounting Financial Consulting Services CompanyLimited 433.2 Self — assessment of the report and the internship process 49

3.2.1 Advantages of the report 49

3.2.2 Comments on the practice process 49

CONCLUSION 51

REFERENCES 52

APPENDIX 53

LIST OF FIGURES AND TABLES

Table 1: Business situation of AASCS in the period of

2020-2021

Figure 1: Organization structure of AASCS company 5

Table 2: Description of internship at AASCS

Figure 2.1 Audit contract between Southern Auditing and | 25

Accounting Financial Consulting Services Co., Ltd and ABC

Co., Ltd

Figure 2.2 Commitment to independence of Audit team | 26

members

Figure 2.3 Compare the data of salary and salary deductions | 27

of ABC company in 2022 and 2021

Figure 2.4 Determine the materiality of ABC company 29

Figure 2.5 Audit program of salary section and salary | 30

deductions of ABC Company

Figure 2.6 Check the accounting policices of ABC Company | 32

Figure 2.7 Employee payroll at ABC company

Figure 2.8 Payroll ledger of ABC Company

Figure 2.9 Reviewing the distribution of salary and salary | 35deductions into the expenses of ABC Company

Figure 2.10 Reviewing ABC Company's employee payroll | 35

Figure 2.11 Compare Payroll expenses on the books and

Payroll of ABC Company

Figure 2.12 Analysis of expense fluctuations with revenue of

company ABC

G3) œ

Figure 2.13 Results of test of details of payroll of some

employees of ABC Company

Figure 2.14 Checking the post-year salary payment of ABC

Figure 2.16 Audit conclusions of salary item and salary

deductions of ABC Co., Ltd

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 companiesinside 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 offinancial statements have actively participated in the examination, evaluation, andconfirmation of the reliability of economic and financial information, making asignificant contribution to the arrangement change of financial information, equitizeenterprises 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 areasonable salary policy, encourage employees to work and contribute effectively andsave 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 salarydeductions 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 salarydeductions 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 andthe knowledge acquired while in school I completed the report by using accounting andauditing of techniques and methods so the following research methods:

- Interms 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 salarydeductions 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 andproposing 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 FinancialConsulting Services Co., Ltd

Chapter 3: Comments and recommendations

CHAPTER 1: GENERAL INTRODUTION TO SOUTHERN AUDITINGAND ACCOUNTING FINANCIAL CONSULTING SERVICES COMPANYLIMITED

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 businessTelephone: 8205944-8205947

the Auditing Organization — International Law MSI Global Alliance with over 250

independent companies in more than 100 countries around the world

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 100auditors, professional staff with university and postgraduate degrees majoring inFinance - 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 toattend

Since its establishment, formerly the branch of AASC Auditing Company in HoChi 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 beencontinuously 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 andoperating 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 makemanagement, 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 problemsthat few specialized consulting organizations can do

In order to ensure the provision of the best quality services, all of our activitiesalways 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 internationalauditing standards Aside from that, the company always puts the legitimate interests ofcustomers first

1.3 Income Statement of AASCS

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

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

2020 compared with 2021

Items 2020 2021

Absolute %

1.Total revenue 36.233.987.953 32.572.359.568 — |-3.661.628.385 |-10%

Revenue from audit of

financial statements of[6.339.590.909 8.367.545.136 2.027.954.227 32%

entities with public interest

Corporate income tax 126.106.776 77.360.727 -48.746.049 -39%

5 The situation of provision

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:

s* Independent audit service

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

The company's audit services include:

- Audit financial statements

s*

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 servicesAASCS 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 anddocuments

(Excerpt from transparency report 2021)

- The head of the company is the Board of Members The Board ofMembers 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 importantissues in the company The Board of Members shall hold an annual meeting atleast once a year Chairman of the Board of Members is Mr Ta Quang Tao

- Board of Directors: including one Managing Director and 7 ViceManaging 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 ofMembers

- 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

implementing policies and regimes for employees — the most important factor in

the field of auditing, especially in the current shortage of high — quality auditpersonnel Simultaneously, conduct accurate and timely recording andcalculation of all activities and incurred transactions of the company, monthlydetermination of business results and financial planning for the company'soperations With the characteristic of being an enterprise operating in the servicesector, the number of economic incurred transactions is quite large but simpleand uncomplicated, focusing on operations related to business trip expenses ofaudit 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 customerinternal control and participating in supporting colleagues auditor Auditors performbasic 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

Find out customer information When researching customer

information, the auditors learn basicinformation such as business lines,audit objectives of the financialstatements, main control processes of

the client To be able to collect the

above information, the auditor willdirectly contact the client to collectbasic information about the client,

business lines and financial

information of the client After that, the

auditors will contact the previousauditors to grasp the problems that

customers still have in previous years

about cash items and make

recommendations to improve

accounting efficiency The auditor mayalso collect information from sourcessuch as: The previous annual report ofthe business owner; Minutes ofmeetings of the Board of Directors ofthe Board of Directors and importantmeetings of guests; The previous year'sauditor's notes and other relevantdocuments; 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 ofthe enterprise

Normally, AASCS will performinventory of assets at customers such

as: Cash, fixed assets, inventory.Before performing an inventory, theauditor will ask the client to provide alist 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

Performing audit

Review the report

11

When witnessing an inventory, the

auditor acts as an observer of the

accuracy of the inventory, especially inthe cash inventory, when there is a

deviation in the facts and books, the

auditor requires the client to explainand record uncle After witnessing the

completion of the inventory, the

auditor will make an inventory report

of the customer, sign the inventoryrecord and give his/her opinion on theinventory, collect relevant documents

to keep the audit file maths

In the process of performing audits,interns are often assigned by auditors toassist in auditing basic operations Theintern will then ask the client to providethe necessary documents for

implementation When performing this

assignment, the intern will rely on theaudit program provided and_ the

materiality of the items to performrelevant audit procedures such as

observation, interview, confirmationletter

After completing the audit practicesections, the intern will assist theauditors in completing the audit report.The assigned tasks are usually:Transferring the previous year's report

data, checking the data of items on theclient's financial statements and on theaudit report, closing the audit report.

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 amember of the company's leadership or an auditor to directly meet the customer to learnabout 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, thehead of the professional department will assign personnel and the auditor to carry out

the implementation

In terms of the structure of the Audit team:

s* The assignment of recognition for the audit is done by the Board of

Directors

s* Normally, the audit team is organized as follows:

Vv Manager: head of department or deputy head of professional department.

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

Vv Junior

Vv Other staff.

s The requirement for the organization of the company's audit team is to

maximize the working efficiency of experienced auditors and a team ofyoung audit assistants in order to improve the capacity of the next team aswell as to provide provide the best service to clients

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

follows:

s* Collecting information about customers: learning about customers before

setting up an audit program is a very important step Customers of AASCSare 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 ofaudit evidence, and the focus of the audit

s Materiality and risk assessment: a mandatory procedure that needs to be

performed before an audit The purpose of the audit risk assessment is todetermine 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 workaccording to the detailed plans that have been made for each audited department Thatdetailed plan has specified the audit procedures and specific procedures and work steps

that will have to be performed such as checking and comparing documents, checkingaccounting books and reports, comparing contract, debt reconciliation, bank

reconciliation, inventory of assets and supplies, valuation, calculation and analysis offinancial ratios Usually, these jobs are very flexible in order to minimize inconvenience

to customers and get the best results

s* 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 andpolicies 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 reportingregime

> 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

s* 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 theentity 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 entirebusiness 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

v Collect financial statements of the entity.

v Collect general and detailed accounting books.

> Step 2: Check the Financial Statements

v 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.

v Check the basis for making financial statements.

v Check the accounting at the entity.

s* Perform analytical procedures

Analytical procedures are performed for the following purposes:

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

procedures

v As a basic test to complement the detailed test (sometimes even more

effective than the detailed test procedure)

v Detect material misstatements through the design of analytical procedures

to check the reasonableness of numbers

v Check the entire Financial Statement in the final review by the auditor.

The auditor performs analytical procedures for each item:

> Horizontal analysis:

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

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

Vv Analysis of volatility

> Vertical analysis: using itemized rate groups.

s% Check details of incurred transactions, check account balance details.

The detailed examination of incurred transactions is carried out on the basis ofapplying 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

Vv 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 ofthe transaction The detailed checking of the balance will be performed on thefollowing levels:

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

Review and compare documents provided by 3" parties such as: Bank balance

statement, Debt reconciliation minutes, Debt confirmation letter, documents sent

by 3" party.

Some of the work performed by auditors:

V Perform test of controls: only be done after understanding the internal

control system and evaluated as effective

V Make a summary of accounts, contra accounts

w# Check details, compare data (make a detailed summary of transactions

according to the vouchers of each month) Pay special attention to errors inthe accounting period split

V Check original documents.

V Interviewing customers and observing.

VY Send confirmation mail.

Stage 3: Audit completion

s* Consider the events after the balance sheet date:

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

s* 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.

s* 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

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 financialand 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 entityManagement 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 accountingsystem and internal control system to contribute to promoting the goodperformance of financial and accounting management of the entity

Complete recommendations and solutions For recommendations, AASCS willclassify 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:

+

19

Check that the accounting policies have been applied consistently with the

previous year and in accordance with the applicable financial statementpreparation and presentation framework

Collect the classification of payables to employees and deductionsaccording 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 liabilitiesthis year with the previous year Find out the causes of large fluctuationsand 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 personneland salary change policy, revenue, profit, finished products to evaluate thereasonableness and detect unusual problem

Compare the fluctuation of deductions to expenses of trade union, social

insurance, health insurance and unemployment insurance to see whetherthey have the same rate of change with salary;

Estimate social insurance, health insurance, unemployment insuranceaccording to regulations and compare with the data in the books Find outand 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 timelyrecorded 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 salarydeducted 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 salarytransactions 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:

Existence The recorded payroll transactions

actually happened and existed

Completeness All payroll transactions that occur are

fully recorded Otherwise, the salary

expenses and payables as well asrelated accounts will be wrong and nottrue to reality

Valuation Salary values and recorded deductions

for payroll transactions are valid and

correct.

Salary account balances and

deductions must be correctlycalculated, recorded and transferred

Presentation and disclosure Salary payments and deductions must

be presented to the appropriateaccount Misrepresentation of accounts

in salary expenses such as Direct laborcosts, Overhead production costs,

Insurance expenses, General

administration expenses will affect thevalue of inventory as well as otherrelated 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 SouthernAuditing and Accounting Financial Consulting Services Co., Ltd at ABC Company

2.3.1 Customer Overview

To clearly present the audit of salary and salary deductions at the company Iwould like to take an example of a client that AASCS audits:

- General information:

+ ABC Co., Ltd (due to privacy terms, the customer's name has been

changed to match) is an enterprise established under the BusinessRegistration Certificate No 02488857xx on June 10, 201x

+ 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 VND

- 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 timeattendance 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 thencalculate 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 onsalary 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 alsofollows the following steps:

s* 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 ServicesCo., Ltd sends letters to all customers (both old and potential new customers) tointroduce the Company's services provided by the company, and based on it to establishthe terms of the audit contract

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

or | group of auditors to the client to collect the most general information of the auditclient 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, thecompany 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 withthe client on the terms of the contract before conducting the audit These terms must bepresented in writing and must be signed and stamped to show the agreement of both theaudit party and the audit client

Based on the signed audit contract, Southern Auditing and Financial ConsultingServices 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

CÔNG TY TNHH DICH VỤ TU VAN CONG HOA XÃ HỘI CHỦ NGHĨA VIỆT NAM TÀI CHÍNH KÉ TOÁN VÀ KIỀM Độc lập - Tự do - Hanh phúc

TOÁN PHÍANAM 6 ——————

Số:01/HĐKT Bồ Chí Minh, ngày 15 tháng 01 năm 2022

HỢP DONG KIỀM TOÁN

(4: Kiểm toán Báo cáo tài chính nam 2021 từ ngày 01/01/2021 đện 31/12/2021 của Công ty

TNHH ABC)

Nam sQ 1000 - Kiem toán báo cáo quyệt toán dự án hoàn thành:

Bên A: CÔNG TY TNHH ABC

Địa chỉ : 105/7/28 Đường XX, Khu phố YY, Phường Thanh Lộc Quận 12 Thành phó Hồ Chí, Minh, Việt Nam

Điện thoại: 0988452076 Fax: (24) 884 52076

Mã sốthuế: 0313297662

Tài khoản số: 1258487514 - Tại ngân hàng Thương mai Vô phân Ngoai thương Việt Nam

Vietcombank — Chi nhánh Thành pho HO Chi Minh

Bên B: CÔNG TY TNHH DỊCH VU TƯ VAN TÀI CHÍNH KE TOÁN VÀ KIEM TOÁN

PHÍA NAM

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