BANKING ACADEMY FACULTY OF ACCOUNTING & AUDITING BACHELOR THESIS TOPIC: IMPROVING THE AUDIT PROCESS OF GENERAL AND ADMINISTRATIVE EXPENSES IN THE FINANCIAL STATEMENT AUDIT CONDUCTED BY
The urgency of the topic
In the context of strong economic growth and deep global integration, financial statement audits are playing an increasingly important role in ensuring the transparency, accuracy, and reliability of financial information Stakeholders such as investors, banks, regulatory authorities, and businesses rely heavily on audited financial statements to make critical economic decisions Among the items subject to audit, General and Administrative Expenses (G&A Expenses) hold particular significance, as they reflect the effectiveness of a company’s management and operations, and directly impact business results and profitability
G&A expenses often include a wide range of costs such as management salaries, office expenses, administrative costs, outsourced services, and more Due to their diverse nature and frequent occurrence, this item poses several risks if not properly monitored, recorded, and controlled Auditing G&A expenses not only helps verify the completeness, accuracy, and legitimacy of these expenses, but also assists in detecting and preventing potential misstatements or fraud As a result, improving the audit process for G&A expenses is essential to enhance the overall quality and reliability of financial statement audits
During my internship at BDO Audit Services Company Limited (hereinafter called “BDO Audit Services Co., Ltd” or “BDO”), I observed the company’s continuous efforts to innovate and improve its audit procedures in response to the growing demands of the market—particularly in the era of digital transformation and international integration As a reputable and rapidly growing audit firm in Vietnam, BDO places great emphasis on audit quality by applying modern technology, international standards, and practical experience to its audit engagements, including the audit of G&A expenses
From this practical experience, I have chosen the topic: "Improving the Audit Process for General and Administrative Expenses in Financial Statement Audits Conducted by BDO Audit Services Company Limited" for my graduation thesis This topic not only provides theoretical insights but also carries significant practical value, contributing to the enhancement of the audit process at BDO in particular, and to the development of audit service quality in an ever-evolving economic environment.
Research overview
In the context of growing demand for transparency and reliability in financial reporting, the audit of general and administrative expenses (G&A expenses) has drawn increasing attention from both researchers and practitioners As a key component of operating costs, G&A expenses often make up a large portion of total expenses, making their accuracy and completeness essential to ensuring the reliability of financial statements In recent years, various graduation theses and academic studies have explored this topic from both theoretical and practical angles These works have helped clarify the foundational concepts of auditing G&A expenses and analyzed the application of audit procedures in different firms By evaluating current practices, researchers aim to identify limitations and propose practical solutions to enhance audit quality Several studies also highlight the need to tailor audit programs to client characteristics, improve audit documentation, and strengthen the use of data analysis tools in auditing G&A expenses
In the graduation thesis by Đào Thu Hương (2024), titled “Auditing Selling and Administrative Expenses in Financial Statements by UHY Auditing and Consulting Company Limited,” the author provided an in-depth analysis of the audit procedures for these expense items at the firm The study’s strength lies in its clear presentation of the current auditing practices and the practical recommendations proposed However, the research did not thoroughly compare or evaluate previous studies to highlight the distinct value and contributions of the thesis
Similarly, in her 2022 graduation thesis titled “Improving the Audit Process of General and Administrative Expenses in Financial Statement Audits Conducted by Ernst & Young Vietnam Ltd.,” Vũ Thị Linh Chi offered a comprehensive and systematic overview of the audit process for administrative expenses at E&Y The author suggested several practical solutions to existing limitations, such as refining audit programs tailored to each expense type, upgrading audit-support software, and enhancing analytical and substantive procedures Nevertheless, the thesis did not clearly address the role of stakeholders or educational institutions in effectively applying the proposed solutions
Meanwhile, Nguyễn Duy Anh (2024), in his bachelor thesis “Audit of General and Administrative Expenses in Financial Audits Conducted by BDO Audit Services Company Limited,” submitted to the National Economics University, presented a well-structured theoretical foundation and a practical audit process at BDO The research contributed valuable recommendations for improving the audit procedures However, it lacked specific implementation conditions and did not include actionable suggestions from training institutions or auditors, which are essential to ensure the feasibility and long-term effectiveness of the proposed improvements
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Research objectives
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- Assess the current audit procedures for G&A expenses at BDO Audit Services: Analyze how BDO conducts audits of general and administrative expenses for selected clients, identifying strengths, existing limitations, and the underlying reasons
- Recommend improvements to the audit process for G&A expenses: Based on the current audit practice evaluation, propose specific recommendations to improve the audit process, aiming to enhance audit effectiveness, ensure compliance with standards, and increase the overall reliability of financial reporting.
Research subject and scope
Research subject: The Audit Process of General and Administrative expenses in the Financial Statement Audit conducted by BDO Audit Services Company Limited
Reseacrch scope: This thesis focuses on studying the audit process of general and administrative expenses (G&A expenses) in financial statement audits conducted by BDO Audit Services Company Limited The research specifically examines the audit procedures related to G&A expenses as an integral part of the overall financial statement audit performed by BDO at a client company for the fiscal year from January 1, 2024, to December 31, 2024 The audit was conducted during 2025 The study analyzes the application of audit procedures within this specific context in order to evaluate the effectiveness of the current process and propose appropriate recommendations for improvement.
Research questions
- What steps are involved in the audit process of general and administrative expenses at BDO Audit Services Company Limited?
- What standards and methods are currently being applied by BDO in auditing general and administrative expenses?
- What are the strengths and limitations of the audit process for general and administrative expenses at BDO?
- What adjustments or improvements are needed to enhance the quality of auditing general and administrative expenses at BDO Audit Services Company Limited?
Research methods
- Quantitative Data Analysis: The study utilizes actual data from the audit process of general and administrative expenses (G&A expenses) in the financial statement audit conducted by BDO Audit Services Company Limited The data is collected from audit working papers, audit reports, and financial statements of a client audited for the fiscal year 2024 (from 01/01/2024 to 31/12/2024), with the audit conducted in 2025 These data sources provide a foundation for analyzing how audit procedures were applied in practice
- Comparative Method: This method is applied to compare theoretical concepts related to the audit of G&A expenses with their practical implementation at BDO The comparison highlights the similarities and differences between the auditing standards and how they are applied in real audit engagements, thereby identifying strengths and areas that need improvement in the current audit process
- Analytical and Synthetic Methods: Analytical methods are used to examine each step of the audit process for G&A expenses, focusing on procedures such as risk assessment, test of controls, and substantive testing The synthetic method is then employed to summarize the results, evaluate the overall audit approach, and propose comprehensive recommendations to enhance the audit process and ensure compliance with auditing standards
- Literature Review: The study reviews relevant documents such as
Vietnamese Standards on Auditing (VSA), Vietnamese Accounting Standards (VAS), legal documents (circulars and decrees), and published audit materials These sources provide a theoretical and legal basis for understanding and evaluating the audit process of general and administrative expenses
- Interview and Observation Methods: Interview and observation methods are used to gather information from auditors and companies Through interviews, the author gains a deeper understanding of the audit process, procedures, and the practical challenges auditors face when auditing fixed assets.
Struture of the Thesis
In addition to the introduction and conclusion, the thesis consists of three main chapters:
- Chapter 1: Theoretical Basis for Auditing General and Administrative expenses in Financial Statement Audits conducted by Independent Auditors
- Chapter 2: Current Audit Procedures for General and Administrative expenses In Financial Statement Audits conducted by BDO Audit Services Company Limited
- Chapter 3: Solutions and Recommendations for Improving the Audit Process of General and Administrative Expenses in Financial Statement Audits performed by BDO Audit Services Company Limited.
THEORETICAL BASIS FOR AUDITING GENERAL AND
Overview of General and Administrative Expenses in Financial Statements
According to Vietnamese Accounting Standard No 01, "General Standard”, section 31: "Expenses represent the aggregate value of expenses that diminish economic benefits within the accounting period, encompassing expenses incurred, asset depreciation, or the creation of liabilities leading to a reduction in owners' equity, excluding distributions to shareholders or owners."
In order for a business to operate efficiently, it needs a management infrastructure that includes both staff and facilities The costs necessary to maintain this infrastructure are referred to as General and Administrative (G&A) expenses These expenses are crucial to the overall functioning of the business While they are indirect costs and not directly associated with the production of goods, G&A expenses have a significant effect on the bottom line, requiring management to focus on cost-saving strategies to improve competitiveness while maintaining smooth business operations
G&A expenses typically encompass costs associated with the general functioning of a business and are not directly attributable to any one particular department or activity Moreover, based on the specific needs of different sectors or enterprises, these expenses may be classified into additional subcategories However, they commonly include the following types of expenditures:
- “Employees costs: Reflects amounts payable to management staff, such as salaries, allowances, social insurance, health insurance, trade union funds, unemployment insurance for the Board of Directors, and management staff in various departments of the enterprise
- “Tools cost: Reflects the cost of materials used for business management activities, such as office supplies, materials used for the repair of fixed assets, tools, and equipment (including VAT or excluding VAT)
- Stationery cost: Reflects the cost of tools and office supplies used for management purposes (including VAT or excluding VAT)
- Depreciation of Fixed Asset: Reflects the depreciation of fixed assets used by the enterprise, such as office buildings of departments, warehouses, architectural structures, transportation and communication equipment, machinery, and office management equipment
- Taxes, fees and charges: Reflects expenses related to taxes, fees, and charges such as business license tax, land lease fees, and other relevant fees and charges
- Provision cost: Reflects provisions for doubtful receivables and other provisions related to liabilities, included in the enterprise’s production and business expenses
- Outsourced service cost: Reflects expenses for services purchased from external providers for business management purposes; costs for purchasing and using technical materials, patents, etc (which do not meet the criteria for fixed asset recognition), allocated gradually to management expenses; rental expenses for fixed assets, costs paid to subcontractors
- Other cash expenses: Reflects other expenses related to the general management of the enterprise, excluding the previously mentioned expenses, such as conference costs, entertainment, business trip expenses, transportation, and expenses for female employees, etc.”
1.1.2 Characteristics of General and Administrative Expenses on the Financial Statements
First, G&A expenses are costs not directly related to manufacturing, making them separate from production expenses, or non-manufacturing expenses However, they play a vital role in determining profits and calculating corporate income tax
(CIT) Fluctuations in G&A expenses can directly impact profit margins and CIT liabilities Additionally, both profits and CIT are subject to fraud and errors For example, companies may manipulate G&A expenses to reduce taxable profit Conversely, they may understate these expenses to inflate profits for investment or loan purposes As a result, auditing G&A expenses is essential Auditors must examine these expenses to detect fraud, errors, and assess related risks in their management
Second, the recording of G&A expenses is governed by company policies, regulations, and financial guidelines, such as standards for business travel expenses and recurring costs Auditors must understand these policies and collect relevant audit evidence to support their conclusions
Third, G&A expenses are key indicators on the Statement of Profit of Loss and are closely linked to balance sheet metrics, including cash, bank deposits, and potential fraud indicators such as employee payables (wages owed to management), tools and equipment, and accumulated depreciation and amortization of fixed assets Therefore, it is crucial to coordinate G&A expense audits with other relevant sections to ensure accurate conclusions and improve audit efficiency
Fourth, G&A expenses account for a significant portion of total operating costs for BDO Vietnam's clients, especially in the commercial and service sectors These expenses directly impact profit determination, CIT, and other financial statement indicators Given the inherent risks, auditors conduct detailed inspection procedures to assess materiality, audit scope, and focus A thorough understanding of G&A expenses enables auditors to identify risks and set appropriate audit objectives and workload distribution
1.1.3 Recognition and Accounting of General and Adminstrative expenses
In line with Circular 200/2014/TT-BTC dated 22/12/2014, businesses utilize various types of documents Additionally, they may generate the following documents:
- Documents related to administrative staff expenses: These include labor contracts, employment termination documents, timesheets, salary sheets, salary payment records, bonus records, and similar documents
- Documents related to fixed asset expenses: When fixed assets are used for administrative purposes, their depreciation expenses are allocated to the corresponding administrative expenses of the enterprise As a result, the fixed asset depreciation allocation table is used for this purpose
- Documents reflecting expenses for externally procured services:
These include service procurement/sales contracts, sales invoices/value-added tax invoices, service completion records or handover minutes, service delivery settlement contracts, and similar documents
- Documents related to the acquisition and usage of supplies: These include warehouse receipts, warehouse release records, and related documents
- Payment-related documents: This includes payment slips, payment authorizations, and similar records
Circular 200/2014/TT-BTC, states that "Account 642 - Enterprise management expenses, with the following structure and content, is used to record G&A expenses."
- General administration expenses actually incurred in period;
- Provision for bad debts, provisions for payables
- Items reduced general administration expenses;
- Returning provision for bad debts, provisions for payables
- Transferring general administration expenses to account 911 “ Income Summary”
Account 642 does not have an ending balance
Account 642 - General administration expenses, is divided into 8 sub-accounts:
- Account 6424 - Depreciation of Fixed Assets
- Account 6425 - Tax, fees and charges
1.1.3.3 The accounting records system applied and the accounting process a, Bookkeeping system
In a business, the records and reports associated with G&A expenses vary depending on the method of recording However, typically, the following books are included: General journal and detailed ledgers for account 642 - General and Administrative Expenses b, G&A expenses recording procedures
Role and objectives of auditing General and Administrative expenses in Financial
G&A expenses are essential to business operations, especially for commercial enterprises, manufacturing companies, and construction firms These expenses have a direct effect on profit figures in the financial statements As such, any errors in recording G&A expenses can distort important financial indicators like EBT, CIT, and EAT, ultimately affecting the decisions made by users of the financial statements Due to the importance of G&A expenses, auditing this item receives considerable focus Auditors must conduct a detailed review to ensure that significant misstatements are not missed
In accordance with Vietnamese Standards on Auditing (VSA) 200, titled
"Overall Objectives of Auditors and Auditing Firms," issued under Circular No 214/2012/TT-BTC dated December 6, 2020, by the Ministry of Finance, the primary objectives of auditors and auditing firms when conducting an audit of financial statements are:
- Obtain reasonable assurance that the financial statements are free from material misstatements, whether due to fraud or error This enables the auditor to provide an opinion on whether the financial statements have been prepared in accordance with the applicable financial reporting framework, in all material respects
- In compliance with Vietnam Standards of Auditing, prepare an audit report that reflects the auditor's findings
The main goal for auditing G&A expenses is to collect sufficient evidence to evaluate their accuracy and reasonableness in the financial statements Furthermore, it serves as a foundation for auditing other related items and processes
The specific aim of auditing the G&A expenses item is to gather adequate and relevant financial evidence to validate assertions regarding transactions and the balance of G&A expenses This involves reviewing the details presented in Figure 1.2 below:
Figure 1 2: Objectives of Auditing G&A expenses
Audit basis for General and Administrative expenses at BDO Audit Services Company
While the audit considerations for G&A expenses may vary depending on the operational phase and nature of the business, there are some common factors that apply to most audits:
- Relevant legal regulations, company policies, and internal control procedures related to G&A expenses
- Classification and disclosure of G&A expenses in the income statement and financial statements
- Accounting records, including general ledgers and relevant detailed accounting books (e.g., Account 642 and Account 334)
- Documentation related to management staff salaries, including labor contracts, salary and bonus regulations, monthly timesheets, salary payment records, social insurance, health insurance, unemployment insurance, and union fund contributions
- Allocation schedules for materials, tools, and equipment
- Depreciation schedules for fixed assets
- Provision schedules for doubtful debts, along with supporting documents such as warehouse receipts, delivery notes, and shipment records
- Tax returns and supporting documents for enterprise fees and charges
- Cash-related documents, such as receipts, payment slips, bank notifications, advance request forms, and VAT invoices
- Other relevant documents, including provisioning records and lease agreements for offices, factories, and other facilities.
BDO’s Three-stage approach to auditing General and Administrative expenses
Figure 1 3: Audit process for G&A expenes
1.4.1 Audit planning stage for G&A Expenses
According to Vietnam Standards on Auditing VSA 300, audit planning consists of: a, Developing an overall audit strategy and b, Preparing a detailed audit plan for the engagement A well-structured audit plan benefits the financial statement audit (refer to paragraphs A1 - A3 of this Standard) in the following ways:
- Assisting the auditor in focusing appropriately on significant areas of the audit engagement;
- Helping the auditor identify and address potential issues in a timely manner;
- Supporting the auditor in organizing and managing the audit engagement effectively to ensure an efficient audit process;
- Facilitating the selection of audit team members with the necessary competence and capabilities to address identified risks and ensuring appropriate assignment of work to team members;
- Enabling effective direction, supervision, and review of the audit team's work;
- Supporting the coordination of work performed by component auditors and experts, when necessary
The planning phase is the initial stage of a financial statement audit in general and general and administrative expenses audit in particular During this phase, the auditor establishes a clear direction for the tasks to be performed throughout the engagement Proper audit planning enhances audit efficiency and helps minimize errors and legal risks
Upon receiving a request for audit services from a client, the auditor's initial step is to assess BDO's independence in relation to that client After confirming independence, the auditor begins collecting essential information about the client’s business activities, operational structure, accounting system, internal controls, and any affiliated entities This information serves as the basis for a thorough evaluation of the client profile, helping the auditor decide whether to accept a new engagement or renew an existing one
To collect data pertinent to the audit of general and administrative (G&A) expenses, auditors carry out the following activities:
- Identify the composition and structure of G&A expenses
To better understand the client's internal policies, the auditor holds discussions with the chief accountant and members of the board of directors These discussions aim to:
- Review the methods used to allocate bonuses, allowances, deductions, and salaries in accordance with the organization’s compensation structure
- Evaluate the standards and procedures for distributing tools, supplies, and work hours
- Examine rules concerning the use, maintenance, and depreciation of fixed assets used in operations
- Verify whether all relevant expense categories are properly recorded and align with internal policies regarding per diem allowances, telephone expenses, hospitality, conference costs, and other administrative expenditures
Understanding these internal policies enables auditors to assess the legitimacy and appropriateness of G&A-related transactions and verify their compliance with company regulations If improper allocations are found, auditors may propose adjustments Additionally, expenses that surpass the enterprise's financial capacity could be deemed non-deductible for corporate income tax purposes
1.4.1.2 Assessment of the customer’s accounting processes and internal control systems
Gaining a thorough understanding of the client’s accounting practices and internal control systems related to general and administrative (G&A) expenses is a crucial phase in the audit process The auditor is responsible for confirming the presence of control procedures and assessing their structure, operational effectiveness, and potential risks This assessment serves as a foundation for designing an appropriate audit strategy, determining relevant procedures, and defining their scope to ensure both the accuracy and efficiency of the audit
To acquire the necessary understanding, the auditor engages in discussions with members of the Board of Directors, individuals responsible for preparing financial statements, and other key staff to gather pertinent information Moreover, the auditor may observe daily business activities and examine how internal controls are applied in practice to evaluate their reliability
In cases where the client has been audited in previous years, the auditor can also refer to prior audit documentation Any significant updates or changes compared to previous periods provide useful context, helping the auditor form a more detailed and accurate assessment of the current audit area
To summarize, the auditor should carry out the following tasks:
- Control Environment: The auditor examines how the client’s Board of Directors functions, their supervisory capabilities, and the regulations that define management duties
- Accounting System: The auditor inspects the process of voucher circulation, accounting policies, estimates, accounting methods, and the rules that govern G&A expenses This assessment evaluates the system's ability to properly identify, record, and accurately reflect G&A expenses in the financial statements
- Control Procedures: The auditor evaluates the efficiency and adequacy of controls over G&A expenses It is essential to verify that these controls follow core principles such as fairness, clear responsibility allocation, and appropriate authorization The auditor also reviews the approval procedures and ensures that roles—such as those of accountants, storekeepers, and treasurers—are appropriately separated to maintain effective supervision
Several internal control procedures are implemented to manage corporate G&A expenses that businesses adopt:
- Participation Procedure: This procedure guarantees the appropriate separation of responsibilities across four essential functions: authorization, execution, safekeeping, and record-keeping, minimizing the likelihood of mistakes and fraudulent activities
- Approval Procedure: This control ensures that expenses are only incurred once they have been fully authorized The approval process must adhere to company policies and authorization guidelines, covering details such as the basis for expenses, required approvals, and the hierarchy of authority
- Reconciliation Procedure: Departments reconcile expenses as they occur, which aids in identifying and preventing fraud and errors related to the recognition of expenses
Once the required information has been collected, the auditor proceeds to outline the client's internal control framework To gain a thorough understanding of the control environment, auditors often utilize questionnaires Afterward, they perform an evaluation of the G&A expense category within the organization (Details in Appendix 1: Table 1.2: Questionnaire to assess the internal controls of the G&A expenses item)
1.4.1.3 Risk assessment and materiality determination a Risk assessment
The auditor determines the quantity, scope, and extent of audit work based on the identification of high- and low-risk areas This also helps estimate the expected duration and cost of auditing G&A expenses To evaluate potential risks related to G&A expenses, the auditor needs information about the client’s operating environment, business activities, and key factors affecting this expense category The auditor will review the detailed accounting records (in soft copy) provided by the company in advance Additionally, the auditor considers factors that may influence potential risks associated with G&A expenses Using professional judgment and expertise in the client’s operations, production, and management practices, the auditor assesses risks in alignment with the itemized G&A expenses This process ensures that audit procedures are appropriately tailored to address areas of higher risk and improve the reliability of the audit opinion on G&A expenses
The auditor responsible for auditing General and Administrative (G&A) expenses must assess the internal controls specifically related to this item while also conducting a broader evaluation of the client’s overall internal control system This includes examining financial regulations, shareholder meeting minutes, and conducting interviews with the chief accountant, board members, and other relevant personnel Furthermore, the auditor observes the full process—from the initiation of business transactions to the recording and storage of documents related to G&A expenses—while reviewing supporting documents and vouchers for signs of oversight All information gathered through observations, interviews, and inquiries is compiled into an internal control assessment questionnaire for the G&A expenses section Based on this assessment, the auditor identifies key risk areas, evaluates the level of internal risk, and determines the appropriate audit scope accordingly
After thoroughly evaluating the inherent risks—arising from the nature of the General and Administrative (G&A) expenses and the specific operating characteristics of the client—as well as assessing the effectiveness of internal controls through detailed observation, document review, and interviews with relevant personnel, the auditor proceeds to determine the level of detection risk This calculation is made using a risk assessment matrix, which helps the auditor align the acceptable detection risk with the assessed levels of inherent and control risks By doing so, the auditor can establish an appropriate audit strategy, including the nature, timing, and extent of substantive procedures necessary to obtain sufficient and appropriate audit evidence related to G&A expenses b Determining materiality
After evaluating risks, the auditor proceeds to ascertain the materiality The purpose of determining materiality is to:
- Establish the acceptable threshold for misstatements in reporting
- Define the audit scope and areas of focus
- Assess the impact of both identified and unidentified misstatements on the financial statements
Once an overall materiality level is established, the auditor allocates this amount to individual financial statement items This allocation helps the auditor determine the necessary audit evidence while optimizing efficiency Materiality allocation for G&A expenses ensures that the total misstatements in the financial statements do not exceed the initially determined materiality level Factors influencing this determination include the nature of the item, the auditor's professional judgment, and the associated audit costs
Normally, materiality is generally determined based on the following criteria:
Figure 1 4: Table of materiality ratios based on criteria
General information about BDO Audit Services Company Limited
2.1.1 Process of Formation and Growth
- Company Name: BDO AUDIT SERVICES COMPANY LIMITED
- English Name: BDO AUDIT SERVICES COMPANY LIMITED
- Abbreviation: BDO AUDIT CO., LTD
- Business Registration Certificate No.: 0101333767, issued on
- Latest Amendment License: 16th amendment, issued on December
- Charter Capital: VND 6,000,000,000 (Six billion VND)
- Legal Representative: Pham Tien Hung
- Head Office in Hanoi: 20th Floor, ICON4 Building, 243A De La
Thanh, Lang Thuong Ward, Dong Da District, Hanoi
- Branch in Ho Chi Minh City: 11th Floor, Indochina Park Building, 4
Nguyen Dinh Chieu, Đa Kao Ward, District 1, Ho Chi Minh City
On December 9, 2002, BDO Audit Services Co., Ltd was established with its initial name "Audit and Management Consulting Co., Ltd.", following approval from the Hanoi Department of Planning and Investment
To become what BDO is today, since December 2002, the company has gone through the following stages of formation and development:
Phase 1: From December 2002 to August 2007: Initially licensed in September
2002 under the name "Audit and Management Consulting Co., Ltd.", the company officially commenced operations in March 2003
Phase 2: From August 2007 to May 2008: In August 2007, the company’s
Board of Directors decided to merge with Phương Đông Audit Co., Ltd., forming
Phương Đông ICA Audit Co., Ltd (abbreviated as PCA)
Phase 3: From May 2008 to October 2012: In 2008, the company partnered with PKF International, becoming the first representative of this global audit network in Vietnam After a thorough quality assessment, the company officially became a member of PKF International in January 2009 and was renamed PKF Vietnam Audit Co., Ltd
Phase 4: From October 2012 to Present: In 2012, PKF Vietnam Audit Co., Ltd signed an agreement to become the official representative of BDO International in Vietnam on October 8, 2012 Consequently, the company officially rebranded as BDO Audit Services Co., Ltd., maintaining its headquarters at 20th Floor, ICON4 Building, Hanoi, and its branch in Ho Chi Minh City
BDO Vietnam is a member of the BDO International network and operates in accordance with global standards and international best practices Established in Vietnam in 2001, BDO has two representative offices in Ho Chi Minh City and Hanoi, with a team of over 200 professionals, including certified auditors, tax and financial consultants, as well as well-trained audit managers and assistants
Since its inception, BDO Vietnam has been a trusted partner for domestic and international businesses, as well as non-governmental and non-profit projects funded by major global organizations and financial institutions BDO Vietnam upholds the highest standards of professional ethics and legal compliance and is committed to providing clients with top-quality professional services The company continuously invests in human resource development and modern technology applications to enhance its auditing and consulting services
Figure 2 1: Logo of BDO Audit Services Co., Ltd
2.1.2 Functions, duties, and business activities a, Audit services
- Construction Investment Audit b, Business services
- Others Business Services c, Tax services
- Customs & Duty Advisory d, Finance services
- Financial & Restructuring Advisory e, Forensics services
2.1.3 Organizational Structure and Management Framework of BDO in Vietnam
Figure 2 2: Organizational structure of BDO in Vietnam
Board of Directors: The Board of Directors at the Hanoi office consists of one
General Director, two Deputy General Directors, and two Deputy Directors
General Director: The General Director is the full legal representative of the company, bearing the highest responsibility for the company's quality, and is in charge of directing operations across the entire company
Deputy General Directors / Deputy Directors: They are responsible for managing professional matters and directly supervising the activities of departments and divisions They also provide opinions and solutions to support and advise the General Director in managing the company's operations
At the BDO Hanoi office, there are two main divisions:
Administrative Division, which includes 5 departments: Human Resources,
Professional Division, which includes 4 departments: Audit, Advisory,
2.1.4 BDO's Financial Statement Audit Process
BDO applies the audit program of its member firms, following the audit program of BDO International The company utilizes the APT – Audit Process Tool, a proprietary audit software designed for internal use This software is developed based on the standardized system used across all BDO audit firms worldwide and has been customized to align with Vietnamese accounting regulations
APT serves as a bridge and a common methodology across BDO’s global network, ensuring that audits are conducted efficiently and consistently while maintaining compliance with both international and Vietnamese auditing standards This tool enhances the ability to assess audit risks across various industries and operational functions
BDO’s audit program is structured into six phases, corresponding to the three stages in the standard audit program, as illustrated in the diagram below:
Figure 2 3: Phases of the Financial Statement Audit
2.1.5 Quality Control of Audit Activities
Quality control is always a top priority at BDO to ensure service quality and maintain the firm's reputation This process is conducted regularly and follows a strict procedure involving multiple levels of management
First, at the beginning of the detailed audit at the client’s site, the audit team leader assigns tasks and discusses the audit plan as well as key areas requiring special attention During the audit process, the team leader monitors and reviews the work performed by audit assistants to ensure adherence to the audit timeline and maintain work quality
Team members report their findings to the team leader, draft audit minutes, and simultaneously complete working papers, uploading them to the APT software
After the on-site audit phase, the Audit Supervisor (Quality Controller) will review the working papers on APT based on the audit program and plan established by the auditors
Figure 2 5: Customer information management interface on APT software
Practice of audit of G&A expenses in financial statements audits at MLB Company
After examining previous audit records and details about MLB Company Limited's business activities of MLB Company Limited (hereinafter called “MLB Co., Ltd” or “MLB”), BDO has concluded that there are no substantial changes that would necessitate the cessation of audit services In addition, given the steady leadership of the Board of Directors and their established integrity, along with the latest client information, BDO has determined that no major risks are present that would warrant the termination of services Consequently, the firm has chosen to continue with the audit of MLB Company Limited's financial statements for the year
Below is a questionnaire for the reassessment of an existing client relationship with MLB Company Limited:
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.) 2.2.1.2 Prepare the audit contract
Following BDO's decision to retain the existing client, the company will proceed to prepare the audit engagement contract
On December 15, 2024, MLB Company Limited entered into an agreement with BDO Audit Services Co., Ltd, under Contract No: HĐKT/BDO/2024.311 Key terms of the contract include:
- Performing an audit of the financial statements in accordance with applicable laws;
- An audit fee of 100,000,000 VND, inclusive of VAT;
- Issuance of 6 copies of the audit report in Vietnamese and 6 copies in English
The department head will appoint an audit team for MLB Company Limited, and the team leader will decide on the audit execution after developing the audit plan
2.2.1.3 Learn about the business activities of the enterprise
Next, the auditor proceeds to gather information about the client's line of business Specifically, for existing clients such as MLB Company, the information is already stored in the files from previous audits, and the auditor only needs to update any new information (if any) through discussions with the client
Based on the Company’s Investment Registration Certificate,
MLB Company Limited is a 100% foreign-owned enterprise, established and operating under Investment Registration Certificate No 0110430xxxxx, initially issued by the Hanoi Department of Planning and Investment on June 5, 2008 Subsequent amendments to the Investment Registration Certificate have been approved by the Hanoi Department of Planning and Investment, from the first amendment dated December 8, 2010 to the seventh amendment dated March 2, 2023 The Company’s business lines include:
- Architectural activities and related technical consultancy;
- Installation of other construction systems;
- Wholesale of other machinery, equipment and spare parts;
- Other business support service activities
- Fiscal year: The Company’s fiscal year begins on January 1 and ends on December 31 of the calendar year
- Currency: The accounting currency used is Vietnamese Dong (VND)
- Accounting standards: The Company applies the Vietnamese
Accounting System for enterprises as promulgated under Circular No 200/2014/TT-BTC issued by the Ministry of Finance
- Accounting form and software: The Company uses the Journal
Voucher accounting method and an accounting software system
- Accounting principles for General and Administrative (G&A) expenses: The Company applies the principles based on Circular No 200/2014/TT-
BTC: “This account is used to record general administrative expenses of the company, including salaries and wages of administrative personnel (such as wages, allowances, etc.); social insurance, health insurance, trade union fees, and unemployment insurance for administrative staff; office supplies, tools and instruments, depreciation of fixed assets used for administrative purposes; land rent, business license tax; provision for doubtful debts; outsourced services (such as electricity, water, telephone, fax, property and fire insurance, etc.); and other monetary expenses (such as hospitality, customer conferences, etc.).”
After communicating with the Board of Directors, the chief accountant, and other key staff members, the auditors determined that the company's operations and management practices had remained unchanged from 2023, as no notable differences were found when compared to the prior year
Figure 2 7: Know Your Client Form
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.)
2.2.1.4 Team of auditors conducting the audit
The audit team assigned to MLB Company Limited comprises five members holding the following roles and titles:
Table 2 1: BDO's Audit Team Allocation for the 2024 Audit of MLB Company
No Full Name Position Function
1 Mr P.T.H Partner of Audit In charge of general
2 Mrs N.T.L.H Manager of Audit Overall review
6 Mr Le Dinh Quang Audit Asssistant Member
Table 2 2: Audit Timeline Conducted by BDO at MLB Company Limited
From 20/01/2025 to 24/01/2025 Performing detailed audit at the head office of
MLB Company Limited From 24/01/2025 to 10/03/2025 Compiling documents and consolidating data
Preparing and issue the Audited financial ftatement for the fiscal year ended 31 December
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.)
Mr V.D.D, the senior auditor of the team, is in charge of distributing audit tasks at MLB Company Limited to each team member
The audit of MLB Company Limited's financial statements for the fiscal year ending December 31, 2024, took place over a five-day period, from January 20 to January 24, 2024, at the company’s headquarters
BDO carried out the audit using a detailed, item-by-item methodology The audit team leader, Mr V.D.D, assessed the internal control system, performed an initial analysis, and determined both the overall materiality and performance materiality for the financial statements Based on the company's operational characteristics and materiality limits, Mr D assigned specific audit tasks to each team member
Mr Le Dinh Quang took on the role of assistant auditor, responsible for examining the General and Administrative (G&A) expenses within the audit engagement for MLB Company Limited The team leader, Mr D, was in charge of reviewing the working papers prepared by each member Subsequently, Mrs N.T.L.H, serving as the Audit Manager, together with Mr P.T.H, the Engagement Partner, performed a thorough review of the audited financial statements
The audited financial statements of MLB Company Limited for the fiscal year ended December 31, 2024, were prepared by BDO Audit Services Company Limited These include the balance sheet, income statement, statement of cash flows, and notes to the financial statements
2.2.1.5 Risk assessment and initial materiality determination a, Assess potential risks
Identifying potential risks - regardless of their level - serves as the basis for auditors to determine the scope and extent of audit procedures required It also aids in assessing the time and cost necessary to conduct the audit of the G&A expenses item
To assess the potential risks associated with G&A expenses, the auditor needs to gather details about the client's operational environment and industry sectors Specific factors related to the client's manufacturing and business operations, which directly influence G&A expenses, must also be considered
Additionally, the auditor examines the detailed general ledger (in electronic format) provided by the entity in advance to gain insight into the nature and specifics of the transactions Various factors that could influence the risk level of G&A expenses are also assessed
Drawing on their knowledge of the client's operations and management practices, as well as their professional judgment, the auditor assesses the potential risks related to G&A expenses
Figure 2 8: Assessment of the inherent risks from associated with G&A expenses at MLB Company Limited
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.) b, Assessment of control risks
The auditor responsible for auditing G&A expenses must review and assess the internal controls in place, including those specifically related to G&A expenses as well as the broader internal control system of the client This includes analyzing financial regulations, going through the minutes of the general meeting of shareholders, and holding discussions with the chief accountant, board members, and other key personnel
Concurrently, the auditor monitored how documents related to G&A expenses were recorded and stored, ensuring that these processes were carried out promptly upon the occurrence of transactions and reviewed for signs of internal oversight All insights obtained from observations, interviews, and inquiries will be compiled into the internal control evaluation form specific to the G&A expenses section
Based on this documentation, the auditor then determines the appropriate audit scope by identifying risks and assessing the level of inherent and control risk
Figure 2 9: Evaluation of control risks form of G&A expenses at MLB
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.)
After reviewing the gathered information, the auditor determines that the control risk for the G&A expenses item at MLB Company Limited is low c, Assessment of detection risks
Upon completing the assessment of inherent risks and control risks related to General and Administrative (G&A) expenses, the auditor proceeds to estimate the level of detection risk This estimation is carried out by applying the risk assessment matrix, which serves as a tool to help determine the likelihood that any material misstatements remain undetected by audit procedures
Figure 2 10: Audit Risk Evaluation Matrix
The auditor expects a high risk of detection because the control risk is low and the inherent risk is moderate As a result, the auditor is anticipated to perform analytical procedures, thorough inspections, and tests of control on the G&A expenses item d, Materiality determination
After the auditor has evaluated the risks, the next step to do is determine the overall materiality of the financial statements
Advantages
2.3.1 At the Audit Planning Stage
BDO always conducts client evaluations, whether for new or existing clients, to ensure accuracy in the subsequent steps The audit planning is carried out thoroughly in accordance with auditing standards, enabling auditors to gather necessary information and identify potential risks that may affect the quality of the audit The planning process is undertaken by the audit team leaders, in close coordination with those who directly engage with the client This process helps auditors gain a comprehensive understanding of the client’s financial situation, thereby allowing them to assess potential risks more effectively
Secondly, the task allocation for auditing the G&A Expenses section Work assignments are made based on a comprehensive assessment of each team member’s professional competency, practical experience, and individual strengths For complex or high-risk items, experienced auditors are prioritized to ensure timely identification and handling of any issues On the other hand, simpler or lower-risk items may be assigned to newer members, providing them with opportunities to learn and gain hands-on experience
Such reasonable task allocation not only optimizes the capabilities of each individual but also plays a vital role in improving the overall efficiency of the audit process Additionally, it ensures that emerging issues are detected early, thereby enhancing audit quality and increasing the accuracy of the conclusions drawn
2.3.2 At the Audit Execution Stage
Firstly, flexibility in substantive testing for the G&A Expenses section
Auditors always emphasize caution and professionalism when carrying out audit procedures, ensuring that each step is appropriately tailored to the specific characteristics of each client From the planning stage, auditors assess potential risk factors to develop suitable audit approaches aimed at collecting sufficient and appropriate evidence
During the audit process, if any unusual signs or material misstatements are detected, auditors will immediately apply additional procedures to clarify the nature of the issue This may include expanding the audit scope, performing further reconciliation and verification procedures, or gathering more information from independent sources
This cautious approach not only enables auditors to promptly detect material misstatements but also enhances the reliability of the audit report, thereby contributing to the transparency and accuracy of the client’s financial information
Secondly, the execution of detailed audit procedures for the G&A Expenses item
Throughout the audit, auditors strictly adhere to the detailed testing procedures in line with professional guidelines and current auditing standards Each step is based on a scientific approach to ensure that sufficient, appropriate, and reliable audit evidence is collected
One of the key tools used during this process is the scientific sampling table At BDO, the sampling table not only assists auditors in determining the appropriate number of samples to be tested but also provides timely alerts when the sample size is insufficient to draw reliable conclusions This enables auditors to adjust the scope of their testing accordingly, ensuring that selected samples are highly representative This is a significant advantage at BDO, helping to minimize sampling risk
Particularly, G&A expenses exceeding the materiality threshold are given special attention due to their significant impact on the fairness and reasonableness of the financial statements Performing detailed testing on these items allows for the timely detection of errors or unusual signs, thereby supporting BDO in accurately evaluating the reasonableness of financial figures
The combination of scientific testing methods and a rigorous review process plays an essential role in enhancing audit quality and ensuring the transparency and reliability of the financial information disclosed by the company
2.3.3 At the Audit Completion Stage
Firstly, close supervision by experienced auditors
At BDO, quality is always the top priority in all audit activities To ensure a rigorous and effective audit process, experienced auditors are directly involved in reviewing the entire process They also develop detailed checklists to supplement or adjust necessary procedures in a timely manner This approach not only minimizes errors but also enhances the overall quality and accuracy of the audit
Throughout the engagement, audit team members maintain frequent communication with each other and with the team leader This close coordination enables the team leader to closely monitor the progress of assistants’ work and ensures that tasks are reasonably distributed, avoiding excessive workload toward the end of the audit
Particularly for junior assistants with limited experience, such constant communication plays a critical role in the early detection of potential errors and provides timely support to help them correct issues This not only increases the effectiveness of the audit but also creates opportunities for junior members to gain practical knowledge and improve their professional skills
Secondly, review of working papers and final quality assessment
BDO places great emphasis on audit quality, and therefore, the review process always includes two levels: review by the audit manager and final evaluation by the audit director This dual-layer review helps prevent major errors before the official audit report is issued It is a mandatory step for all audit engagements at BDO, regardless of their size
After the content of the working papers is thoroughly reviewed, the audit team leader conducts a final review of the presentation format during the file completion phase Before uploading documents to the audit software system, audit assistants must re-check the entire working papers to ensure all information meets the team leader’s requirements Each working paper is cross-checked with relevant standards and BDO’s internal policies to ensure compliance and accuracy
Disadvantages
2.4.1 At the audit planning phase
Firstly, regarding the preparation of documents for the audit engagement:
At BDO, auditors typically prepare a list of required documents and request clients to provide them before the commencement of fieldwork For the G&A expenses item, auditors ask clients to prepare supporting documents such as vouchers, invoices, sales and purchase contracts, etc However, the provision of these requested materials is often delayed, which affects the audit timeline and disrupts other planned activities
The main reason behind this issue lies in the heavy workload during audit season The tight schedule leaves auditors with limited time to prepare and send document requests to clients before arriving at their premises
In addition, some clients are not fully cooperative in preparing documents in advance As a result, auditors may not have sufficient documentation when starting the audit at the client’s office This inevitably impacts the timeliness and quality of the audit Since auditors cannot verify a large portion of the information provided, the accuracy of the data collected may be compromised
Secondly, regarding the evaluation of internal control over G&A expenses:
BDO currently uses a standardized questionnaire to assess internal controls over G&A expenses at client companies However, this set of questions is not specifically tailored for different types of businesses and still relies primarily on a general template
Each industry and business model has unique characteristics in the application of internal controls Therefore, using a one-size-fits-all questionnaire may not accurately reflect the specific conditions of the client The lack of detail and customization can lead to inefficiencies during the audit process, resulting in time- consuming procedures that yield limited effectiveness
2.4.2 At the audit implementing phase
At BDO, analytical procedures during the audit of General and Administrative (G&A) expenses primarily focus on horizontal analysis, comparing opening and closing balances and computing variances with accompanying explanations However, the exploration of underlying reasons for such fluctuations, or the assessment of whether these changes are consistent with the actual business context, has not been adequately emphasized As a result, the analytical procedures performed have not fully met the desired level of effectiveness Additionally, vertical analysis techniques—such as the calculation of financial ratios—have not been utilized to their full potential, despite their ability to provide valuable insights during the analysis process
Secondly, regarding substantive testing procedures:
In the substantive testing of G&A expenses, BDO mainly applies sampling based on criteria such as high value, unusual transactions, or auditor’s professional judgment and suspicions
There is currently no standardized requirement regarding the complete set of supporting documents to be reviewed for each sample Instead, document examination relies largely on the auditor’s discretion and experience Consequently, there are instances where, after completing audit procedures at the client’s premises, auditors discover that some supporting documents are missing In such cases, the documentation may be insufficient to assess the validity of increases in expenses during the period This results in situations where auditors conducting the review cannot confirm whether the G&A expenses in question actually occurred
2.4.3 At the audit completing phase
Firstly, the completion, revision, and review of working papers related to
General and Administrative (G&A) expenses are often delayed These tasks are sometimes not carried out in accordance with the original schedule, and in some cases, they are postponed Even a single unfinished section can have a domino effect, delaying the overall review process at higher levels
Secondly, at BDO, before the audit report is issued, there are numerous requirements for internal documentation, most of which are handled manually This includes entering information into the system, printing documents, collecting physical signatures, and then scanning and uploading them back onto the software This process is time-consuming, especially when audit staff are frequently traveling for fieldwork, making it difficult to obtain in-person signatures.
Key limitations identified across the audit phases of G&A Expenses
The duration of detailed audit work conducted at the client’s office is typically short, averaging from 3 to 5 working days At BDO, the number of auditors is still relatively limited compared to the number of clients served As a result, auditors are required to work continuously at a high intensity throughout the peak audit season, which can last for up to three months Under pressure to complete the audit both accurately and quickly, auditors often prioritize areas with higher risk and materiality, such as revenue and cost of goods sold Consequently, the General and Administrative (G&A) expenses—though still significant in size—may receive less attention This can lead to unintentional omissions of potential misstatements related to account 642, thereby impacting the fairness and reliability of the financial statements and lowering the overall quality of the audit
Additionally, limited cooperation from clients—such as failing to provide complete supporting documents for selected G&A expense samples, or submitting irrelevant records not related to the business operations—can further hinder the audit process In some cases, clients may exhibit uncooperative or even dismissive attitudes Given that auditing is a service-based industry, maintaining positive client relationships is essential for both the reputation and sustainability of audit firms like BDO As such, striking a balance between ensuring audit quality and retaining client relationships becomes increasingly challenging
Chapter 2 provided a brief introduction to the company and outlined the audit procedures for General and Administrative (G&A) expenses at BDO Audit Services Co., Ltd in general, and specifically the audit of G&A expenses at MLB Co., Ltd It focused on clarifying the audit steps for the G&A expenses throughout each stage of the audit process—from client acceptance during the planning phase to the issuance of the audit report in the completion phase Based on this, the chapter evaluated the current practices in auditing G&A expenses, highlighting both the strengths and the limitations that need to be addressed in BDO’s audit procedures.
1: Monthly G&A Expenses Fluctuation - Working paper T.03 G&A Expenses|T1
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.)
G&A expenses increased significantly in March, June, September, and December, primarily due to higher management staff costs and outsourced service expenses
- Employee costs increased sharply in these months because the company recorded monitoring fees for the Corporation at the end of each quarter
- In December, the company accrued the 13th-month salary
- Depreciation of fixed assets remained stable, displaying little to no change
- The increase in outsourced service costs during March, June, and September was attributed to the allocation of office rental expenses at Dich Vong Hau, Cau Giay, Ha Noi
Employee cost Stationery cost Depreciation charge
Taxes, fees and charges Outsourced services expenses
- The rise in December expenditures was primarily due to year-end party costs, employee medical check-ups, and the allocation of welfare-related funds
- Taxes, fees, and charges remained stable, as they mainly relate to business license taxes governed by consistent regulatory requirements
Conclusion: There are no unusual changes in G&A expenses
Auditors develop specific testing procedures informed by the outcomes of analytical procedures Once they have carefully reviewed all transactions that surpass the materiality threshold or display irregular account relationships, the auditor will then carry out random sampling on the other transactions
The company has developed specialized software for BDO Vietnam to determine the required sample size Subsequently, the auditor scans the general ledger to identify questionable transactions or select additional samples at random
To ensure timely recording, the auditor also reviews transactions occurring near the end of the accounting period a, Break-down G&A expense
The initial step in conducting tests of details involves categorizing G&A expenses by their respective contra accounts This process aims to separate data from other categories, such as prepaid expenses, staff expenses, depreciation expenses, etc., in order to select samples that do not overlap with those already examined by other auditors As a result, the account balances that need to be tested will be:
Figure 2 15: Break-down G&A expense - Working paper T.03 G&A
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.) b, Select G&A expenses samples
The table of sample selection is presented in Table 2.16 The data in the table indicate that 2 samples are to be examined in detail
Figure 2 16: Sampling Toolkits for checking details of G&A expenses item -
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.)
The auditor will then review the General Journal or the detailed records of Account 642 to identify random or potentially questionable samples Once the data is collected, the auditor will select the corresponding transactions from the detailed book of Account 642 to conduct tests of details
Figure 2 17: Detailed Testing of G&A expenses - Working paper T.03 G&A
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.) c, Cut-off test for the recording of G&A expenses
The auditor will select the last two transactions before the fiscal year-end date and the first two transactions after the fiscal year-end date (2025) Relevant supporting documents, such as invoices, receipts, contracts, or payment records, will be collected for these transactions Additionally, the auditor will check the general ledger for 2025 to ensure that the company has recorded these transactions in the correct period
Figure 2 18: Cut-off test for G&A expenses - Working paper T.03 G&A
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.) d, Presentation / Diclosure
After completing the procedures from sheet T1 to T3, the auditor will perform a final check and complete sheet T4 - information disclosure This can also be considered the final step in the process of performing procedures for the General and Administrative expenses item The auditor will consolidate and confirm the results from the previous procedures while ensuring that all disclosed information is accurate and complies with applicable accounting and auditing standards and regulations
Figure 2 19: Disclosure - Working paper T.03 G&A Expenses|T4
(Source: 2024 Audit File of MLB Company Limited – Archived at BDO.)
Review of Post-Balance Sheet Events: The auditor carefully evaluated all occurrences after the year end date and determined that none had any impact on the financial statements of MLB Company Limited
Going Concern: Following the review, the auditor concluded that MLB
Company Limited is likely to remain operational in the foreseeable future, as there is no significant pressure to settle outstanding debts
Audit Findings Summary: The auditor compiled documents summarizing relevant data for the financial statement notes The audit team leader then reviewed the working papers and audit report, ensuring that all necessary audit procedures were properly conducted and clearly documented Once the review was complete, the audit report was considered finalized, with the audit team leader endorsing the auditor’s conclusions
Before issuing the final opinion, the auditor discussed the audit findings— particularly those related to G&A expenses and the overall financial statements— with the client The client confirmed their agreement with the auditor's conclusions Consequently, the auditor incorporated these into the financial statement notes and expressed an unqualified opinion on the G&A expenses item in the income statement.
2.3.1 At the Audit Planning Stage
BDO always conducts client evaluations, whether for new or existing clients, to ensure accuracy in the subsequent steps The audit planning is carried out thoroughly in accordance with auditing standards, enabling auditors to gather necessary information and identify potential risks that may affect the quality of the audit The planning process is undertaken by the audit team leaders, in close coordination with those who directly engage with the client This process helps auditors gain a comprehensive understanding of the client’s financial situation, thereby allowing them to assess potential risks more effectively
Secondly, the task allocation for auditing the G&A Expenses section Work assignments are made based on a comprehensive assessment of each team member’s professional competency, practical experience, and individual strengths For complex or high-risk items, experienced auditors are prioritized to ensure timely identification and handling of any issues On the other hand, simpler or lower-risk items may be assigned to newer members, providing them with opportunities to learn and gain hands-on experience
Such reasonable task allocation not only optimizes the capabilities of each individual but also plays a vital role in improving the overall efficiency of the audit process Additionally, it ensures that emerging issues are detected early, thereby enhancing audit quality and increasing the accuracy of the conclusions drawn
2.3.2 At the Audit Execution Stage
Firstly, flexibility in substantive testing for the G&A Expenses section
Auditors always emphasize caution and professionalism when carrying out audit procedures, ensuring that each step is appropriately tailored to the specific characteristics of each client From the planning stage, auditors assess potential risk factors to develop suitable audit approaches aimed at collecting sufficient and appropriate evidence
During the audit process, if any unusual signs or material misstatements are detected, auditors will immediately apply additional procedures to clarify the nature of the issue This may include expanding the audit scope, performing further reconciliation and verification procedures, or gathering more information from independent sources
This cautious approach not only enables auditors to promptly detect material misstatements but also enhances the reliability of the audit report, thereby contributing to the transparency and accuracy of the client’s financial information
Secondly, the execution of detailed audit procedures for the G&A Expenses item