Completing the audit process on revenue from sales and provide services in the audit of financial statements conducted by PNT International Auditing Company Limited

In the process of international economic integration, auditing has become indispensable needs for business activities in order to enhance the effectiveness and efficiency of enterprises, economic organizations. Following the trend of strong development of the independent auditing firm . PNT international auditing company limited was established in order to contribute to meet the increasing demand for domestic audit services. With a team of professional, experienced and skillful professionals in both professional and cultural fields, with a specialization in auditing, accounting, finance, taxation, valuation, law, investment and banking, ... the quality of service of the company increasingly high. Therefore, the internship at PNT International Auditing Limited Company is a good opportunity for auditing students like me so that they can learn valuable practical experience in auditing, about the professional work environment of the company. During the internship at the company, he found that in the indicators on the financial reports, sales and service provision is one of the indicators of important position. This is due to the close relationship between sales and service provision with other indicators such as cost of goods sold, profit before tax, after-tax profit, cash, receivables, taxes and other payments to the state ... These are usually the parameters of fluctuations and the possibility of large violations. Therefore, auditing sales and service provision is one of the most important aspects of any financial reporting audit. The results of the audit of the item of sales and service renderings have a great influence on the overall audit result of the financial statements audit. However, in practice the process of auditing the sales and service revenue items still exist some limitations such as not fully apply new accounting standards, auditors may encounter difficulties. The difficulty in collecting initial information about the audit or application of each job content in the audit program is not yet tight. This may diminish the quality of audits of sales and service items in general auditing companies and PNT International Auditing Company Limited. Recognizing this importance and based on the internship at the company, i chose the thesis topic: "Completing the audit process on revenue from sales and provide services in the audit of financial statements conducted by PNT International Auditing Company Limited .”

This bachelor thesis contained huge amount of work, research and dedication Still,implementation would not have been possible if i did not have a support of manyindividuals and organizations Therefore, i would like to extend our sinceregratitude to all of them Foremost, I would like to express my sincere gratitude to

my instructor Dr To Van Nhat for the continuous support of my research, for hispatience, motivation, enthusiasm, and immense knowledge Her guidance hashelped me in all the time of research and writing of this thesis Without her superiorknowledge and experience, the Bachelor thesis would not like in this quality ofoutcomes, and thus his support has been essential My sincere thanks also goes to

my manager – Mrs Huong, my seniors – Mr Chung, Mr Tung and Mr Hai andstaffs working in Financial audited Department of PNT international auditingcompany limited for offering me the summer internship opportunities in theirgroups and leading me working on diverse exciting projects Nevertheless, I express

my gratitude toward our families and friends for their kind co-operation andencouragement which help me in completion of this Bachelor thesis

TABLE OF CONTENT

ACKNOWLEDGEMENTS i

TABLE OF CONTENT ii

STATUTORY DECLARATION iv

LIST OF TABLES, LIST OF DIAGRAMS vi

INTRODUCTION Error! Bookmark not defined CHAPTER 1: THEORETICAL FRAMEWORK ON AUDIT OF REVENUE FROM SALES AND PROVIDE SERVICES IN FINANCIAL AUDIT CONDUCTED BY PNT INTERNATIONAL AUDITING COMPANY LIMITED 4

1.1 Overview of revenue from sales and provide services 4

1.1.1 Concept and classification of sales and services provision 4

1.1.2 Conditions for recording sales and service provision 5

1.1.3 Characteristics of sales and services provision affecting the audit work 8

1.1.4 Key internal controls of sales and services provision 9

1.2 Overview of sales and services provision in the audit of financial statements 11 1.2.1 Audit objectives in auditing sales and services provision 11

1.2.2 Basis for auditing the item of sales and service provision in the audit of financial statements 13

1.2.3 Potential errors and frauds 13

1.3 Sequence in auditing sales and services provision in financial audits 14

1.3.1.Audit planning 15

1.3.2 Audit implementation 17

1.3.3.Completing the audit 23

CHAPTER 2: PRACTICE OF AUDIT OF REVENUE FROM SALES AND PROVIDE SERVICES IN FINANCIAL AUDIT CONDUCTED BY PNT INTERNATIONAL AUDITING COMPANY LIMITED 25

2.1 Overview about auditing firm - pnt international auditing company limited 25

2.1.1 Fundamental informations about PNT company 25

2.1.2 Organizational characteristics of the management apparatus of the company 26 2.1.3 Characteristics of the business 27

2.1.4 Auditing organization at PNT International Auditing Company Limited 28 2.2 Audit process status sales and sevicers prosivion items in financial statements by pnt international auditing company limited 30

2.2.1 Status of preparation before the audit 30

2.2.2 Status Audit planning 31

2.2.3 The audit implementation 39

2.2.4 The audit ended 53

2.3 Review and evaluation on auditing procedures for the sales revenue and services provision of financial statement conducted by pnt international auditing limited company 55

2.3.1 Advantages 55

2.3.2 Restrictions 57

2.3.3 Cause of the situation 58

CHAPTER 3: COMPLETE AUDITING ITEMS OF THE SALES AND SERVICE PROVISIONS IN FINANCIAL STATEMENT CONDUCTED BY PNT INTERNATIONAL AUDITING LIMITED COMPANY 60

3.1 The needs to improve the audit process audit in sales and services provision items in financial statements conducted by pnt international auditing company limited 60

3.1.1 Development of PNT international auditing company limited 60

3.1.2 The needs to improve the audit process audit in sales and services provision items in financial statements conducted by PNT international auditing company limited 61

3.2 Principles and requirements to complete the audi process of sales and services provision in auditing financial statements by pnt international auditing co., ltd 61

3.2.1 The principle of perfection 61

3.2.2 Completion requirements 62

3.3 The solution to improve the audit process in sales and services provision items in financial statements conducted by pnt international auditing co.ltd 63

3.3.1 Improve audit planning phase 63

3.3.2 Improve audit implementation phase 63

3.3.3 Improving audit end stage 64

3.4 Conditions make the solution 64

3.4.1 On the state and professional associations 64

3.4.2 The audit company 65

3.4.3 The audit client 65

3.4.4 The auditor 65

THE CONCLUSION 66

LIST OF REFERENCES 67

APPENDIX 68

STATUTORY DECLARATION

I herewith formally declare that I myself have written the submitted BachelorThesis independently I did not use any outside support except for the quotedliterature and other sources mentioned at the end of this paper

I clearly marked and separately listed all the literature and all other sources which

I employed producing this academic work, either literally or in content

Hanoi, 28/4/ 2017Signature

LIST OF TABLES, LIST OF DIAGRAMS

TABLES

Table 1.1 The objective of internal control and internal control content 10

Table 1.2 Audit objectives in auditing sales and services provision 12

Table 1.3 General internal control objectives, the internal control process, the controlling survey with sales revenue items and provide the service 19

Table 2.1 Some indicators of business activity of the limited liability company the international audit PNT 27

Table 2.2 A310 work papers of the auditor 32

Table 2.4 Identify critical values for ABC Corporation 36

Table 2.5 Sales and services provision audit program 37

Table 2.6 G110 working papers of the audi 41

Table 2.7 G131 working papers of the auditor 43

Table 2.8 G132 working papers of the auditor 44

Table 2.9 G133 working papers of the auditor 45

Table 2.10 G134 working papers of the auditor 46

Table 2.11 G135 The working papers of the auditor 48

Table 2.12 G137 working papers of the auditor 49

Table 2.13 G136 working papers of the auditor 51

Table 2.14 G120 working papers of the auditor 54

Table 2.15 Minutes of audit 55

DIAGRAMS Diagrams 2.1 : The company's management apparatus 26

Diagram 2.2 Auditing process of PNT International Auditing Company Limited 29

1 The urgency of the research topic

In the process of international economic integration, auditing has becomeindispensable needs for business activities in order to enhance the effectiveness andefficiency of enterprises, economic organizations Following the trend of strongdevelopment of the independent auditing firm PNT international auditing companylimited was established in order to contribute to meet the increasing demand fordomestic audit services With a team of professional, experienced and skillfulprofessionals in both professional and cultural fields, with a specialization inauditing, accounting, finance, taxation, valuation, law, investment and banking, the quality of service of the company increasingly high

Therefore, the internship at PNT International Auditing Limited Company is a goodopportunity for auditing students like me so that they can learn valuable practicalexperience in auditing, about the professional work environment of the company

During the internship at the company, he found that in the indicators on thefinancial reports, sales and service provision is one of the indicators of importantposition This is due to the close relationship between sales and service provisionwith other indicators such as cost of goods sold, profit before tax, after-tax profit,cash, receivables, taxes and other payments to the state These are usually theparameters of fluctuations and the possibility of large violations Therefore, auditingsales and service provision is one of the most important aspects of any financialreporting audit The results of the audit of the item of sales and service renderingshave a great influence on the overall audit result of the financial statements audit.However, in practice the process of auditing the sales and service revenue items stillexist some limitations such as not fully apply new accounting standards, auditorsmay encounter difficulties The difficulty in collecting initial information about theaudit or application of each job content in the audit program is not yet tight Thismay diminish the quality of audits of sales and service items in general auditingcompanies and PNT International Auditing Company Limited

Recognizing this importance and based on the internship at the company, i chose

the thesis topic: " Completing the audit process on revenue from sales and provide services in the audit of financial statements conducted by PNT International Auditing Company Limited ”

2 Research purpose of the topic

Topics are researched to achieve the following objectives

Firstly, systematize and clarify the basic theories of the process of auditing the sales

and service items of the financial statements audited by an independent auditingorganization;

Secondly, analysis of the status of the process of auditing sales and service items inthe audit of financial statements conducted by the PNT International AuditingCompany Limited Thereby, the assessment of the current situation, points outadvantages, outstanding issues and causes of limitations in the process of auditingthe sales and service items in the audit of financial statements by PNT InternationalAuditing Company Limited;

Thirdly, proposes some suggestions to improve the process of auditing the item ofsales and service provision in the audit of financial statements conducted by PNTInternational Auditing Company Limited

3 Subject and scope of research of the topic

Research subjects of the subject is the process of auditing the sales and service items in theaudit of financial statements conducted by independent auditing organizations

The research scope of the subject is the process of auditing sales and servicerevenue as an integral part of the overall audit of the financial statements by PNTInternational Auditing Company Limited The figures used for the analysis of thesituation are taken from the financial statements ended on 31 December 2016 at theaudit firm of PNT International Auditing Company Limited

4 Research method of the topic

Based on the general methodology of dialectical materialism and historicalmaterialism, the subject is studied away from practical reasoning, taking theoreticalexamination, researching issues in Relationship with each other In addition, thetopic also uses the following specific methods:

Methods of analysis, interpretation, presentation

Method of synthesis, inductive

Comparative method

Practical survey method

5 Structure content of the topic

In addition to the introduction, conclusion, reference list, the topic structure consists

of 3 chapters

Chapter 1: Theoretical framework on audit of revenue from sales and provide services in financial audit conducted by PNT International Auditing Company Limited

Chapter 2: Practice of audit of revenue from sales and provide services in financial audit conducted by PNT International Auditing Company Limited

Chapter 3: Assessments and recommendation to improve audit of revenue from sales and provide services in financial audit conducted by PNT International Auditing Company Limited.

Due to limitations in knowledge and time, there are inevitably mistakes in thisarticle I would like to receive comments and suggestions from my teachers and mybrothers and sisters in the PNT Company to complete the thesis

Through this I would like to send my sincere thanks to the instructor Dr To VanNhat – my supervisor ,help me to complete this graduation thesis I also would like

to send my deep thanks to the management of PNT International Auditing CompanyLimited, departments who have enabled me to practice and take part in the work atyour company

Thank you sincerely !

Student

Le Thi Ngoc Anh

CHAPTER 1 THEORETICAL FRAMEWORK ON AUDIT OF REVENUE FROM SALES AND PROVIDE SERVICES

IN FINANCIAL AUDIT CONDUCTED BY PNT INTERNATIONAL AUDITING COMPANY LIMITED

1.1 Overview of revenue from sales and provide services

Financial statement is a system of reports prepared by the enterprise according tothe current accounting standards and regimes If the balance sheet reflects the value

of the asset and the source of its assets, the income statement results reflects thebusiness situation of the enterprise in a given period of time In particular, therevenue from sales and provide services an extremely important indicator, affectingmany other indicators in the business result and balance sheet of the enterprise Inaddition, through the analysis of turnover dynamics, the auditor can see thevolatility of other relevant financial indicators, which can provide a brief overview

of the indicators

Auditing financial statements is the process of auditing financial information in thefinancial statements to ensure that the information is truthfully reported in allmaterial respects However, because the financial information of the business isvery wide, the auditor can not cover all this information As a result, the auditorshould focus on items that are material and highly probable, so as to providereasonable assurance as to the financial status of the auditor Revenue from salesand provide services is one of important items, having a significant effect on manyother items in the financial statements, so the audit of this item is one work is highlyvalued in the audit of financial statements

1.1.1 Concept and classification of sales and services provision

The financial and accounting system in an enterprise consists of a number ofmutually interrelated relationships, which complement one another to create thebasis for the other activity to develop, form a closed loop Sales and revenuerecognition can be considered as the final stage in the production and business ofthe business This activity will bring income to businesses, which is a condition forenterprises to decide whether to invest in re-expanding production or not Thisprocess begins with an order and ends with the conversion of the goods product into

a receivable and finally into money

According to Karl Marx's conception, "Revenue is the result of the consumptionprocess, which is the process of realizing the value and use value of goods andgoods Through consumption, the product moves from material form to monetaryform and ends a cycle of capital mobility " According to Vietnamese Accounting

Standard 14 - "Turnover and other incomes" " Turnover means the total value of economic benefits gained by an enterprise in an accounting period, which arise from the enterprise’s normal production and business operations, contributing to increasing the owner’s capital." Revenue includes: sales and services provision,

financial revenues and other income Inside:

Revenue from the sale of goods and rendering of services is the total amount of

money that is earned or will be earned from activities or transactions: Goods sale:

Selling products manufactured by the enterprises and bought-in goods; Provision

of services: Performing the work agreed upon in the contracts in one or many accounting periods

There are also: Trade discount means a reduction of the listed price granted by the

selling enterprises to the buyers of large volumes of goods; Reduction of the price

of goods sold means a price reduction granted to the buyers due to the goods’ inferior quality, wrong specifications or old-fashioned ; Value of returns of goods sold means the value of the volume of goods sold already determined as consumed, but then returned by the buyers who declined making payment therefor.

Revenue is presented in the statement of income in accordance with the following:Turnover of sales and service provision (Code 01); Turnover of financial activities(Code 21); Other income (Code 31)

1.1.2 Conditions for recording sales and service provision

Revenue is an indicator reflecting the results of enterprises in general and of theprocess of consuming goods and services in particular, because of the importance ofthis indicator in the business result report as well as the influence It is up to theindicators that exist on the balance sheet, the recognition of turnover must complywith some of the following provisions According to Vietnamese AccountingStandard No 14 - "Turnover and other incomes":

“ Sale turnover shall be recognized if it simultaneously meets the following five:

a/ The enterprise has transferred the majority of risks and benefits associated withthe right to own the products or goods to the buyer;

b/ The enterprise no longer holds the right to manage the goods as the goods owner,

or the right to control the goods;

c/ Turnover has been determined with relative certainty;

d/ The enterprise has gained or will gain economic benefits from the good saletransaction;

e/ It is possible to determine the costs related to the goods sale transaction ”

The enterprise must determine the timing of the transfer of most of the risks andbenefits associated with the ownership of the goods to the buyer on a case-by-casebasis In most cases, the timing of the transfer of the majority of the risks coincideswith the time of transfer of the benefits associated with the legal ownership orcontrol of the goods to the buyer Where an enterprise is still exposed to most of therisks associated with the ownership of the goods, the transaction is not considered to

be a sale and the revenue is not recognized Enterprises also bear the risk associatedwith the ownership of the goods in various forms such as: Enterprises are alsoresponsible to ensure the property is operating normally that is not covered by theterms Ordinary warranty; When the payment of sales is uncertain due to the buyer

of the goods; When the goods are delivered for installation and installation is animportant part of the contract that the business has not completed; When the buyerhas the right to cancel the purchase for any reason stated in the sales contract andthe business is not sure about the possibility of the goods being returned If anenterprise is exposed to only a part of the risks associated with the ownership of thegoods, sales are determined and revenue is recognized

Sales revenue is recognized only when it is probable that the enterprise willreceive economic benefits from the transaction Where the economic benefitsfrom a sale transaction depend on the uncertainty factor, only the revenue isrecognized when the uncertainty factor has been settled If the turnover has beenrecognized in cases where the money is not yet collected, when determiningwhether the receivable debt amount is not collected, it must be accounted intothe production and business expenses in the period, which shall not berecognized as revenue decrease When determining the receivable amount to beuncertain, the provision for doubtful debts must be set up without any reduction

in turnover Bad debts, when actually determined as unsolicited, shall be covered

by the reserve for bad debts

Revenue and expenses related to the same transaction must be recognized at thesame time on a consistent basis Expenses, including costs incurred after the date ofdelivery (such as warranty and other costs), are usually measured reliably whenrevenue recognition conditions are met Customer prepaid funds are not recognized

as revenue that is recognized as a liability at the time of advance receipt of the

customer The amount payable to the customer's prepaid amount is recognized asrevenue only when it simultaneously satisfies the five conditions for recognizing thesale of the goods mentioned above.

Turnover from service provision transactions shall be recognized when the results

of these transactions are determined in a reliable way Where a service provisiontransaction relates to many periods, turnover shall be recognized in each periodaccording to the results of the work volume finished on the date of making of suchperiod’s accounting balance sheet The result of a service provision transaction shall

be determined only when it satisfies all the four (4) conditions below:

a/ Turnover is determined with relative certainty;

b/ It is possible to obtain economic benefits from the service provision transaction;c/ The work volume finished on the date of making the accounting balance sheetcan be determined;

d/ The costs incurred from the service provision transaction and the costs of itscompletion can be determined

In the case of transactions in the provision of services performed in manyaccounting periods, the determination of service turnover in each period is usuallycarried out in accordance with the method of completion rate Under this method,revenue recognized in the accounting period is determined by the proportion ofcompleted work

Revenue from the rendering of services is recognized only when it is probable thatthe enterprise will receive economic benefits from the transaction When therecorded revenue can not be recovered, it must be accounted into the expenseswithout reduction of turnover When it is uncertain to recover an amount that waspreviously recorded in revenue (bad debt), the provision for doubtful debts must bemade without decreasing revenue Bad debts, when actually determined asunsolicited, shall be offset by the reserve for bad debts

Where the services are carried out in a variety of activities that are not segregatedand are carried out in a number of accounting periods, periodic revenue isrecognized on an average basis When there is a basic activity compared to otheractivities, the recognition of revenue is made according to that basic activity Whenthe outcome of a service transaction can not be ascertained, revenue is recognizedcorrespondingly to the recognized and recoverable costs In the early stages of aservice delivery transaction, when certainty is not determined, revenue isrecognized at recognized and recoverable costs If the costs associated with theservice are certainly not recoverable, no revenue is recognized and the costs

incurred are recognized as expenses to determine the results of the period Wherethere is reliable evidence that the costs incurred will be recoverable, the revenue isrecognized when the four conditions for recognizing service revenue are met.

The cycle of revenue recognition can be summarized as follows: When thebuyer submits the purchase order, the purchase order comes in, the business willconsider the possibility of accepting the sale through the coupon and making a saleinvoice After deciding on the sale of goods, the enterprise shall conduct the saleconsideration subject to part or whole of the goods lot This decision can beconcurrently expressed in the economic contract as a condition agreed upon in thecontractual sale and purchase and sale and acceptance is an important task At thesame time, the business team is still attracting customers and the company willdeliver the goods and write the bill of lading when the goods are delivered, which isthe condition of the sales note, in some cases the invoice is issued Carries with bill

of lading Based on the sales invoice, the accountant recorded in the Sales Diary andtracked the receivables, which was then recorded In the case of sales deductions,depending on the cause of the accountant must record in the sales logs returned,discounted goods sold, or discounted to customers, these are recorded by theaccountant Consumption is accounted for in corresponding deduction accounts

1.1.3 Characteristics of sales and services provision affecting the audit work

First of all, revenue from sales and service provision are indicators reflecting themain and regular business results of enterprises, which should be the key criteria inthe financial statements The sales and service provision item in financial statementsare always interested in user Business can easily write increase this item tobeautify the financial report to satisfied investors On the contrary, enterprises mayalso erroneously reduce this index to reduce the value added tax amounts payable tothe state Therefore, when auditing an item, important audit objectives such asgeneration, completeness or timeliness must be noted

Secondly, revenue from sales and service provision is an indicator closely related toother indicators in the financial statement such as cash, customer receivables,inventories, taxes and other items Hence, when auditing the sales and serviceprovision items must be in relation to other items and use the rich sources forreference The results of the audit of the sales and the service provision may be used

to audit other accounts or periods on the financial statements

Third, the accounting of sales revenue and service provision depends on manycomplex accounting principles The first is the right principle: when recognizing asale, a corresponding cost associated with generating that revenue is recognized

Costs related to revenue include the cost of the period generating the revenue, thecost of the preceding periods and the costs of the subsequent periods in relation tothat revenue The second is the key principle: sales and service provision is the firstindicator on business results The inaccuracy of this information will significantlymisrepresent the business results report, affecting the economic decisions of theusers of the financial statements Sales and service provision is critical to determinethe nature and content of sales and service provision - money collection Third is theprinciple of consistency: the accounting principles and methods for sales andservice provision must be consistent throughout the accounting year (eg: accountingpolicies for sales revenue and provision of services collected in foreign currency ).Due to subjective judgment, depending on the business, sales and service provisionmay be adjusted to meet the purposes of the parties concerned Therefore, it is veryeasy to generate frauds, critical errors should audit the item sales revenue andservice providers are very focused on auditing financial statements.

The characteristics of the sales and service provision item are very important forauditors in the audit of financial statements Understanding this item helps theauditor to understand the mistakes and risks that may occur From there, identify theaudit objectives, the methods used to audit and identify the types of audit risks

1.1.4 Key internal controls of sales and services provision

Internal control for sales and service providers is by the process of enterprise managers

It includes control policies, the step control and the control procedures are established

in order to ensure that the job step in the record sales and provide services is executedproperly and efficiently The enterprises set up internal control content for sales itemsand provide the service through the following work steps: order processing andcommercial Contracting; transport of goods, purchase of services; export warehouse,delivery; handle logging sales professional; Professional logging processing reducedsales revenue; log processing service charge;

Table 1.1 Below will describe about internal control objectives and internal controlcontent for sales items and provide the service

Table 1.1 The objective of internal control and internal control content

of sales and services provision Internal control objectives Internal control content

Ensure that the account sales

and logging service provides

is the logical base

Regulations and check the implementation of theregulation on implementation of the rules on:

-numbered vouchers, commercial contract; thecontinuity of the sales invoice

-content and sales approval responsibility-have the certificate from the proof for sales services(warehouse, shipping, etc.)

Make sure you have account

sales and provide the proper

authorization service

Sales and service providers sell bear must be adoptedconsistent with the company's sales policy

Ensure sales and service

providers are reasonable,

proper evaluation

Issued regulations and instructions about checking,comparison figures on the Bill and figures on thewindow production, delivery; check the exchange rates

of foreign currencies and sell inventory export unit price(if the currency in foreign currency)

Ensure sales and service

providers are classified and

proper accounting

The classification and logging are guaranteed according

to the groups, according to the method of sale

Ensure the correct, full of

sales revenue items and

provide the service

Business arising must be full logging, do not admit, lack, coincide.Check suitability on may arise on logging withprofessional career service

Ensure the proper incremental The full synthesis of generation data correctly

(Source: Program audited financial statements, Financial Academy-2011)

In conclusion, in order to achieve the above control objectives, the entity must carryout specific control work associated with each stage of the item of sales and serviceprovision Specific internal controls on the item of sales and service can be generalizedthrough specific actions The unit develops and issues regulations on generalmanagement and internal control in particular for each specific stage of the work,which can be divided into two categories Firstly, regulations on the functions,responsibilities, powers and obligations of persons or departments involved in handlingwork Secondly, regulations on internal control procedures are followed in real ordercurrently handled the job Organizing organizations to implement the above regulations

on management and control: organize the assignment, arrange personnel, disseminatethoroughly the functions and tasks, check and urge the implementation of regulations,

1.2 Overview of sales and services provision in the audit of financial statements

The indicators on sales and service income, financial income from financial activitiesreflected in the income statement are often closely related to cash receipts, bankdeposits, receivables, etc reflected on the balance sheet Therefore, a large part of thework must be carried out when auditing the audited financial statements when auditingthe accounting standards reflected in the balance sheet Because of this relationship, thequality of revenue audits can affect the quality of auditing of items and other cycles andvice versa Therefore, when performing the audit, it is necessary to combine auditing ofrevenue with audit of related items in order to achieve the best results In addition,auditors may rely on auditing results that save time and costs when auditing items andother cycles and vice versa.

1.2.1 Audit objectives in auditing sales and services provision

Auditing financial statements is a human conscious activity, as with other types ofaudits, the objective of financial auditing is to verify and express opinion on thesubject audited, according the Vietnamese Auditing Standard No 200: "Thepurpose of auditing financial statements is to help auditors and auditors provide theopinion that the financial statements are prepared on the basis of the standard andthe system of accounting The current (or accepted) mathematical compilationcomplies with relevant laws and should reflect truthfully and reasonably in allmaterial respects " Match the overall objective of the audit of financial statements

is confirmed on the level of honest, reliable, sensible of the norms on financialstatements are audited, the audit's specific objectives the revenue item is to collectsufficient evidence from which appropriate giving testimony about the level ofhonesty affordable, reliable, norm's "sales and service providers", "the revenuedeductions", as well as "revenue on sales and service providers" on the reportedresults of operations.At the same time, the objective of the audit the item sales andservice providers also provide the relevant documentary information as a basis ofreference when the audit cycle, related items such as: receivable customerreceivable, short term long term clients, to the internal revenue value added tax

To achieve the above objective, the auditor must achieve the following specificaudit objectives:

Table 1.2 Audit objectives in auditing sales and services provision

General audit objectives Audit objectives in auditing sales and service

provision

actually incurred

be calculated, proper, reasonable review

Full classification and record Sales revenue items and provide the service has

recorded which ledger was happy to full payment,

do not coincide or mistakes

Right classification and record The sales profession and service providers must be

classified and recorded the right accounting principles,properly reciprocal relations, accurate account data has acorresponding record on vouchers

Classification and accounting

period

Professional sales and service providers must beguaranteed, timely accounting arising in the periodwould then be written accounting of the period

sales and service providers have logging in theStates must be fully synthesized, exactly on eachwindow and window details

The presentation of information about sales andprovide services on financial reports must conform tothe provisions of the standard and the currentaccounting regime, to ensure consistency with themetrics have been carried on the relevant ledger

(Source: program audited financial statements, FINANCIAL ACADEMY-2011)

As such, setting goals before conducting audits will help the audit work in the rightdirection while saving time during the audit process The auditor must pay attention tothe specific purpose of the audit to achieve the overall objective of the audit Focus onwhat goal depends on the nature and level of risk of the item sales revenue and serviceprovision in the financial statements In summary, the audit of sales and serviceprovision must meet the following requirements Firstly, the auditor shall collectevidence proving that the accounting of sales of goods and provision of services andthe internal control system of the enterprise has ensured the accounting of sales ofgoods and provision of services which is honest, reasonable and in accordance withgovernment regulations Concurrently, the auditors shall collect sufficient evidencesproving that all arising operations on the sale of goods and provision of services havebeen accounted fully reflected in the accounting books Finally, the auditor collects

sufficient evidence of any arising sales and service income that has been accuratelyaccounted and accounted for accurately and accurately.

1.2.2 Basis for auditing the item of sales and service provision in the audit of financial statements

Audit grounds are an important basis for auditing Documentation (or bases) forauditing sales and service items is very diverse, rich in origin, form and content .Revenue from sales and service provision is an item in the sales-to-pay cycle, so it

is possible to summarize the following key resources:

Firstly, the policies, regulations or regulations governing internal control of thesales activity that the unit has applied to the sales management and the recognition

of sales and service provision Internal control policies and regulations include:regulations promulgated by the competent authority of the state and issued by theunit itself Second, the major financial statements are related, including: businessresults (reporting financial information such as sales and service income, revenuedeductions Sales and service provision, net revenue from sales and serviceprovision); Statement of financial statement (report details of sales and services,discounts on sales and services) Equally important, auditors rely on accountingbooks related to sales, including: sales records; Cargo logbook; Diary to protectgeneral general ledger and detailed accounting books related to sales of goodsand services; Trade discounts; returned goods; discount sales The table of salesturnover by goods item or by service (monthly or quarterly) and by section (if any)

is also one of the bases to be audited when auditing the item Sales revenue andservice provision In addition, the accounting vouchers record the sales and the basisfor accounting entries such as sales invoices; Shipping invoice and service delivery;delivery bill; Stock returns to the store; Vouchers on sale discount; The sale isreturned The next source is the other documents related to sales and serviceprovision are also basic grounds such as sales plan; the order; commercial contracts;Sales policy; liquidation records; Contract finalization; Finally, the auditor bases thedocumentary evidence used to account the sales of goods and services and thedeductions from sales of goods and services, including: VAT invoice; Common salesinvoices; Payment table of goods consignment, consignment; Card stalls; Paymentdocuments (receipt, bank transfer, check, collection order )

1.2.3 Potential errors and frauds

Revenue is a fairly sensitive item in all of the business Therefore, the consideration

of wrongdoings, risk to this item is always the attention of auditors Commonmistakes with item sales and service are usually:

Firstly, revenue reflected in books and accounting reports is higher than actual

turnover: This misstatement shall be regarded as accounting which accounts for theturnover of revenues which are not enough elements defined as turnover Theregulations, or revenue figures reflected on the books, are higher than sales onaccounting documents: invoices, product quotes, etc The faults in this case could bedue to raw materials The following reason: incorrectly calculated and recorded dataincreased revenue compared to data reflected in the accounting voucher; Writerevenue; Revenue accounting; Recognizing turnover when the enterprise has not yetdelivered or has not provided the service but the buyer has advanced the money forthe enterprise; Record sales of goods for sale; Turns sales from wholesale to retail;Record revenue 3387 (unrealized revenue) on sales and service provision

Second, revenue reflected on books, accounting statements is lower than actualrevenue: This is a misleading accounting is not accounted into the turnover of allrevenues that have been qualified to determine The revenue as prescribed, or therevenue reflected on the books, accounting statements is lower than the turnover onthe accounting documents: invoices, quotations products This can be due toCauses such as the enterprise has done procedures for selling goods, providingservices and customers have paid or accepted the payment but the enterprise has notaccounted for sales revenue; The enterprise makes a wrong accounting of theaccount and does not account it into the account of sales and services; Incorrectlycalculated and recorded data reduces sales compared with data reflected in theaccounting voucher; Accountants transfer turnover from retail to wholesale, notturnover in case of barter, pay for employees or reward, gift

Third, the revenue of the business always comes with the output value-added tax.Therefore, there are many other frauds and errors that have been made for the purpose

of tax evasion For example, businesses can deduct high tariff items into low tariffitems This is a typical example of fraudulent accounting of value added tax

Accounting and recording wrong revenue has many causes But the main reason ismainly due to incompetent and experienced accountants who are not familiar withregulations on sales and service provision It may also be because of an objectivecause that the accounting staff deliberately accounting revenue in contravention ofregulations In order to detect such errors, the auditor requests to proceed with dueprocess and audit procedures carefully, scrutinizing the relevant documents anddocuments, especially to save them Notice the abnormal signs may be

1.3 Sequence in auditing sales and services provision in financial audits

The process of auditing the item of sales and services provision includes all steps ofwork performed by the auditor in stages to collect auditing evidences to assess thelevel of truthfulness, trust reliable, reasonable item of sales and services provision

The content of the process of auditing the item of sales and service provisionincludes the following three phases:

The audit plan consists of the master plan and the program of auditing sales andservice provision

a The overall audit plan

The objective of the overall audit plan is to be able to perform audit work effectivelyand correctly over time Key issues auditors need to review and present in the overallaudit plan when auditing the sales and service items include three items

Firstly, understanding the general performance and sales activities of the audited entities The first step to understanding the sales and service activities of

the audited entity is to understand the customer and the operating environment Theauditor collects information about the operating environment and factors affectingthe business such as the general business environment, industry issues, businesspractices and industry trends, legal environment .That business is operating.Auditors should also gain insights about the business itself in terms of: key businessactivities and performance; Ownership of stakeholders and organizational structure

of the business; Major changes in the size of the business; Knowledge of appliedaccounting system; Business results and taxes Other issues such as key personnel

of the business, accounting personnel, other administrative information such asbranch, parent-child, account or lawyer information

Next, the auditor needs to understand the unit's sales and service activities in allaspects Business information is important information, which includes informationabout your organization's key products and services; The structure of the type ofturnover in total sales revenue and service delivery; The method of sale of thebusiness applied mainly; Level of competition; Sale price or service policy;Distribution channels, regulatory issues regulating sectoral operations; Invoice

policy, discount, discount and promotion; Terms of payment, sales commission;The risks associated with the collection process are equally important, the auditorshould seek information about the accounting policy applicable to sales of goodsand services, Sales and service provision, the basis for recognition of sales andservice receipts and receivables; Accounting estimates and judgments used such ascompletion rates, estimation of bad receivables; Shipping or agent sales policy

Second, the initial understanding of internal control over sales and service provision and the anticipated control risk assessment The primary purpose of

the internal control of sales and service provision is to ensure that the auditorintends to establish the expected level of confidence in the internal control systemover the sales item Goods and services The initial content of internal control oversales and service provision is focused on reviewing the internal control regimes fordesigned sales and service deliveries Be full, tight and proper A number ofauditing procedures used by auditors are as follows: auditors study the design ofregulations and regulations governing the sales process as well as sales and serviceprovision of the unit Subsequently, the auditor studied the documents, papers orinterviews with relevant stakeholders to grasp the system of key control proceduresdesigned and assessed for the existence, adequacy and appropriateness of Thoseprocedures From the initial findings of internal controls on sales and serviceprovision, the auditor must evaluate the expected control risk The results of thecontrol risk assessment are expected to help the auditor to identify potential pitfallsfor sales and service revenue, determine which audit methods to perform Now aswell as other related work content

Third, the assessment of the audit risk and the significance of the item of sales and service provision The assessment of the audit risk depends on the results of

potential risk assessment, Control and detection risks are expected

About potential risks assessment: The auditor must rely on his professional

judgment to assess potential risks on the basis of: integrity, experience, knowledge

of the board as well as the Changes in management board composition occur in theaccounting year Besides, the qualifications and professional experience of chiefaccountants, accounting staff, and those directly involved in the accounting ofrevenues Sales and service provision and their change are also important factors.Auditors also need to assess the extraordinary pressure on board of directors, chiefaccountants, accountants and changes in the field of activity, business lines,production scale, technology, Production process, human resources The target forthe final evaluation is the degree of complexity, the large number of operations

involved in sales and service provision.

About the control risk assessment: Based on a preliminary understanding of the

internal control system and accounting system of the unit, the initial assessment ofthe control risk for each database of the industry Affair and balance account salesrevenue and service provider

Determine the expected detection risk:

Dr expected = AR / (IR * CR)

Where: AR is audit risk (audit risk)

IR is inherent risk

CR is control risk

DR is the detection risk

About regarding the determination of materiality: the auditors carry out initial

estimates of the materiality of the entire financial statements and then allocates aninitial estimate of the materiality of the items related to the business Collection ofgoods and services Through auditing procedures, the auditor assesses the actuallevel of errors in sales and service provision, comparing the acceptable errors ofsales and service provision The case was previously determined to make an accept

or an exception

b Set up an audit program for sales and service provision

The sales revenue audit program and the service provider provide guidance on theaudit objectives of each activity, the content, the schedule and the scope of thespecific audit procedures and the estimated time needed for the audit Auditing salesrevenue and service delivery Auditing program sales revenue and service deliveryincluding the contents: Documents require customers to prepare; Audit objectives;Audit procedures; Conclusions and recommendations The company can designaudit programs on software or on paper, depending on the audit that the auditprogram can change or add to the appropriate

1.3.2 Audit implementation

The audit practice stage is implemented using the following two audit methods:Compliance audit method (test control) and basic audit method (basic test)

1.3.2.1 Implementation of control tests

Purpose of implementation of control tests is reassess the effectiveness of theinternal control system during the audit planning phase that the auditor believes in.The re-evaluation of the effectiveness of the internal control system is only carriedout when the expected control risk is assessed to be insufficient About content ofimplementation of control tests : The auditor assesses the operation of the internal

control regulations for items of sales and services Auditors clarify how theregulation exists, whether it is regular, ongoing, efficient There are three specificcontent following below

The first is nderstand and evaluate control policies and regulations on internal control Auditors conduct the collection, study and evaluation of internal control

policies and regulations on sales activities, such as: regulations on rights andresponsibilities of persons or parts in The signing of sales contracts, the approval oforders, the approval of the sale of goods, the provisions on the order and procedures

in negotiating and signing contracts Commercial co-operation, in the delivery ofgoods The assessment of these materials is done in terms of: completeness andconsistency of control procedures for consumption; The suitability of the internalcontrol regulations with the characteristics of the unit's sales operations

The second is survey on the operation of internal control regulations The

purpose of these surveys is to assess the operational effectiveness of internal controlregimes, namely the assessment of the existence, regularity, continuity in theoperation of control regimes, step, control procedures.The auditor may use a variety

of techniques to gather evidence for such control references: interviews with relatedstaff, auditors may also directly observe the work of the personnel Inspecting filesand documents, controlling goods from warehouses, re-conducting the internalcontrol procedures; Check the sign of internal controls saved on the documentrecords

The last one is survey on the implementation of the principle of the control activities organization Based on the evidence that has been collected from internal

control activities of the unit for the sales profession, auditors make decisions aboutthe level of risk control as a basis to decide on the scope, the content of the detailedtest procedure

Table 1.3 General internal control objectives, the internal control process, the controlling survey with sales revenue items and provide the service

Internal control

objectives The internal control process Survey of control process

Sales and logging

services offer is real

The contract of purchase and sale arenumbered and are closely monitored

Sales invoices are numbered andsaved in full

Have the certificate from the prooffor sales services (transportation,warehouse )

Check the continuity of the businesscontract

Check the continuity and validity ofthe previous numbered bills

Select a business number, check theadequacy of the vouchers, validshipping, export warehouse

Ensure the sales were

proper approval

Approval of the sale to the right withthe competition policy and corporatemarketing

The sales approval, the contract ofsale is the right jurisdiction werespecified

Select an order check the sales onapproval documents on the contentapproval and approval authority.Check out some of the contract signingauthority, about the content of thecontract

Internal control

objectives The internal control process Survey of control process

Ensure the proper

Effective test, regular continuity ofcontrol procedures Look for signs ofinternal checks on the selling price.Proceed to select a sample, thecalculations again

Ensures that sorting

and proper accounting

sales revenue

Use proper accounting scheme,properly reciprocal relationsMember, true nature according toeach business sales method and thesales revenue of each category

Check the content of the Bill andbefore logging

Review of the correctness of theaccounting scheme

Check violation of internal controlrules on the documents in question.Consider the classification of revenuesaccording to group rows with different taxrates

Investigate the system of sales documents.Ensure the correct, full

accounting period the

sales profession

Reference number of the invoicewith the number of recorded journalentry window

Check the computer covered on yourbusiness arising on industriallogging with the vu

Check the reference number of theinvoice with the number of recordedjournal entry window

Check carefully the sales profession havelarge sales revenue accounting periodbeginning

Ensure the proper

presentation,

incremental sales

Check the calculation results

Comparison of synthetic data fromthe detailed book with GeneralWindows, with the balance sheet of,the financial statements

Proceed against ledger, shared detailswith the balance sheet of financialstatements, with the shared services,shared posts signed sales

(Source: Program audited financial statements, Financial Academy-2011)

Survey results help control auditor reviews back to the level of risk control Fromthere to adjust the scope of the basic implementation testing

1.3.2.2 Perform basic tests

The first of perform basic tests is perform analytical procedures The purpose of

the implementation of the analytical procedure is zoned to the focus of audit;determine the orientation check towards the declared increase or toward reducingfinancial information report; determine the charge base data can be wrong, since it

determines the target specific audit for each led base materials The analytical

procedure is usually performed when auditing items sales and service providers:Compare sales and service provider of the year from the year before according tothe total number or under each type of sales and service providers; compare theaccount trade discount, discount wholesale, wholesale bounced back this yearcompared to the year before to see the situation from that of business enterprise'sextraordinary transformation would not The next , Considering the rate of sales andprovide services on total assets, sales revenue and provide service on the equity, therate of gross profit, the rate of business performance from there see the jewelry

manufacturer and business performance of the business Beside, auditors Compare

and analyze sales and provide services each month, each quarter to see the volatility

of sales and service providers through each item each month, each quarter Need tolook carefully at the March, those you have sales and service providers increase ordecrease mutations to focus detailed examination The last one is build the model toestimate sales and provide services based on independent sources, such as: thevolume sold, the selling price, the price of wholesale capital last year and this year,sales revenue and provide services from customers primarily, industry operationsstatistics The analysis of data used to build the model and ensure accountingestimate sales and service providers are reasonable, accurate logging Auditors need

to determine the difference between the number of logging and estimated, if thedifference is greater than the number of variances are acceptable then the Auditorsneed to collect more evidence to explain the disparity

Secondly is Perform detailed test procedures for sales and service providers

Detailed test procedures are done after the implementation of the control and testprocedures for the analysis Check the details in order to achieve the aim of real,adequacy, correctness, right, reviews, accounting classification There are fivemanagement assertions following below

1.Management assertions "Occurrence": to ensure the sales profession be logging

is actually incurred, the implementation of audit procedures Before all, the auditorcheck the corresponding sales invoice to account revenues sales have recordedgeneral Ledger and accounting details The auditor check the approved industrialprofile service: check the sales order, commercial contract or plan has been logging

logging services respectively.

Next, checking the document warehouse and transportation vouchers equivalent (ifany) of the sales profession In addition, the auditor can perform additional auditprocedures to prove the sales profession and check out the notes, the correspondingshipment tracking on the corresponding service book as: sales diary, diary,protection of shipping, inventory card They collected endorsements fromcustomers on the sales profession and check the site map through the accountingjournal entry things simultaneously logging on reciprocal accounts (account 131,3331 ) The test facility for materials "arise" is often done on the basis of sampleselection, particularly noted for the unusual profession, major customers, the bigsales Checking the "arise" has always been the auditor concerned when internalcontrol activity of the unit less effect, especially when the unit is experiencingdifficulties in business

2 Management assertions "accuracy": The sales profession must determine, calculate

sales revenue on the basis that the amount was considered to be consumed, the saleprice was agreed Sales case by outside, the calculation must also base on exchangerates at the time of the sale to redeem on the local currency to logging The auditprocedure primarily popular and often used: Inspect the information as the base towhich the unit has applied to computer sales look reasonable and right; Check thenumber of sold out items on the Bill of sale: compare with the correspondingfigures on the trade of approved contracts and figures on on the documentwarehouse, shipping vouchers ; The test of the Bill of sale price indicated on thesales invoice: compare with the price indicated on the contract, or the unit price onthe listing price of the unit Where necessary the Auditor can consult the unit price

in the market of similar goods at the same time, if it is unreasonable can discuss orask managers to explain; Case sales in foreign currency, it should check theexchange rates recorded on the Bill of sale; Check the results of the evaluation unit:Auditors examine the results of a calculation on the sales invoice

3 Management assertions "completeness": to ensure the account is sales revenue

generated was sufficient accounting records The audit procedures are usuallyapplied is: Compare the number of journal entry recorded sales revenue with thenumber of the sales invoice to check the adequacy of revenue accounting; Check thecontinuity of the order number (serial) of the Bill of sale was logging sales Thelack of the journal entry log numbers sales revenue Bill will violate the "adequacy"

in sales revenue accounting

4 Management assertions "classification " : Sales and service providers item must

be recognized and reflected in the correct sequence, Sitemap account and current

accounting methods or be admitted The audit procedure is usually applied: Check

the content recorded on the documents on the clarity, adequacy, accuracy to ensurenot to be confused with the sales professional career service not sales; Consider theaccounting profession into sales as sales revenue and reciprocal account book (111,

131 account, 3331 .) see diagram not accounting properly; Progress collatebetween the journal entry recorded sales revenues with the corresponding salesinvoice each of the factors: the number of days and the money to check the exactaccounting; Consider the classification unit's sales revenue has ensured: distinguishthe unit's sales revenue with sales by other units sent to sell; differentiate salesprocessing with sales revenue due to production units; differentiate sales of itemssubject to the value added tax rates vary

5 Management assertions "cut-off ": full sales business conditions recorded sales

revenue of the States would then record in that period The audit procedure is

usually done: Proceed to consider the reasonableness of the annual cut (cut off) andaccounting, general sales of the unit Next is comparison of contrast between thedate noted on the accounting profession and on the respective services arise (daterecorded on the Bill of sale) in order to evaluate the true count in sales revenueaccounting In a survey about "true count" to note the sales profession wasaccounting on the last accounting period and the beginning of the next accountingperiod, easy going wrong due to accidentally or deliberately The accountingprofession sales sooner or later can lead to false and report aggregate sales revenuesand therefore involve violations with respect to the sales profits Detailedexamination of the sales professional is always tied to the record business to collectcustomers, noting the output value added tax; so, the auditor will simultaneouslyreviews are about business accounting receivable customers and recorded businessvalue added tax payable Detailed test work on the working papers do auditing andcertification offers the basis for the audit results in a later step

Lastly is check the business details of falling sales and service providers The

professional sales revenue decrease can mainly happen is: trade discount, discountwholesale, wholesale bounce back There are also direct taxes for sales activitiessuch as: special consumption tax, export tax The implementation of a tradediscount, a discount wholesale and wholesale bounces must adhere to the strictagreement and in the correct sequence The deals are usually stated in the contract

or in the commercial unit's sales policy was announced This is the base isparticularly important to check the reasonableness and correctness of your reduced

business related sales revenue The auditor check the details of the discount salesand service providers: when there arises from this profession, auditors conductchecking each profession arises, consider the rules about accepting the deductionsspecified in the commercial contract or the decision of the Board of Directors , theDepartment has the authority to approve the reduction of the price or the salesbounce back The most important thing when auditing the discount sales and serviceproviders is to check each case full of vouchers and related documents to prove that

profession arises or not In addition, when audit sales and service providers have

arisen the account sales and service providers noted before the auditor shouldexamine the allocation of account sales and service providers noted before: foraccount sales and service providers noted before , the auditor should consider thecommercial contracts were signed as the basis to consider the time of payment ofthe sales plan and offer reasonable services or not, considering the sales anddistribution service providers were eligible to record sales and provide services inthe period On that basis, auditors check the allocated data on sales and offers thisservice has reasonable guarantees correctness or not

1.3.3.Completing the audit

After carrying out the basic surveys and professional surveys related to accountingdata, the auditors shall sum up audit results This work is based on the results of thesurveys performed by the insider that are stored on the working papers and otheraudit evidence that the inquirer has collected The final stage of the audit processthe financial statements are the work of making an audit report on the financialstatements However, before making an audit report on the financial statements, theauditor should take into account a number the following:

The first is events occurring after the date of closing accounting books may affectthe audit report Financial auditing is the process of verifying and expressingopinions about the financial condition of a business, in order to provide those whoare interested in reliable information, to help them make informed decisions Themaximum risk that may be encountered by the wrong decision is thereforemaximized, so when auditing the financial statements, the auditor will payparticular attention to the events occurring after the date of closing the accountingbooks but is expected have a direct impact on the financial situation of customersthis year Consideration of these events is also a factor to help protect the prestige ofthe auditing company

The second is make audit reports and management letter An audit report is a reportprepared and published by an auditor to state its official opinion on audited financial

statements (standard 700) Auditors may choose one of the following four types ofcomments for inclusion in the audit report Full acceptance is used in cases wherethe audited financial statement contains errors but the unit has been adjusted inaccordance with the opinion of the auditor, the revised report is accepted by theauditor, this opinion can also be used in a commentary paragraph to clarify some ofthe factors affecting the financial statements but without prejudice to the auditor'sopinion Partial acceptance is made when the auditor believes that the financialstatements are only true and fair if not affected by the exclusion or exclusion thatthe auditor makes in the report Team, mathematics, except where the auditor islimited in the scope of the audit or disagreement with the manager about theaccounting method, where there are factors depending upon uncertainties It canhappen depending on what happens in the future Unacceptable comments occurwhen there is serious disagreement between the manager and the auditor on theselection and application of accounting standards and systems or the non-conformity of the information disclosed in the financial statements Major orinterpreted financial statements, comments of this type are also given when there is

a limitation on the extent of the audit involving the majority of the items.Disagreements as a consequence of limiting the information is critical or lacking inlarge amounts of information relating to items so far that the inside citizens can notobtain sufficient evidence to provide opinion This kind of feedback is objective anddepends on relevance

In the case of customers in need, auditors and auditors will set up managementletters to make comments on the financial situation as well as the accounting of thecompany, from the suggestions The customer will complete the system ofaccounting

CHAPTER 2 PRACTICE OF AUDIT OF REVENUE FROM SALES AND PROVIDE SERVICES IN FINANCIAL AUDIT

CONDUCTED BY PNT INTERNATIONAL

AUDITING COMPANY LIMITED

2.1 Overview about auditing firm - pnt international auditing company limited

2.1.1 Fundamental informations about PNT company

According to the Government's Decree 105/2004 / ND-CP on independentauditing, in order to create an independent and objective environment forindependent auditing in Vietnam, enterprises can exist in various forms With suchadvantages, auditors, construction engineers and assistants who have worked formany years at major audit firms of the Ministry of Finance such as AASC, A & C -established PNT International Auditing Co., Ltd Wishing to work moreprofessionally, quality contributes to Vietnam's independent audit work progressinginternationally Accordingly, PNT International Auditing Limited company wasestablished on January 08, 2007 according to Business Registration Certificate No

0102029558 issued by the Department of Planning and Investment of Hanoi

PNT International Auditing Company Limited is a professional companyoperating in the field of Auditing, Accounting, Tax Consultancy, FinancialConsulting and Valuation The company has the short name is PNT audit Type ofPNT audit is limited liability Company with two or more members The PNT auditcompany has 55 employees working officially and continuously at the company.Besides, there are many employees are hired to work under different contracts andworks The core value of PNT audit is the human factor, with experienced auditorsand experts with highly trained staff in a variety of fields This is a series ofspecialized services in finance, accounting, auditing, valuation and tax consulting formany organizations and company throughout the country Auditing services Financialreports, audits Reports on finalization of investment capital, completed works, assetvaluation and valuation have been rated by many customers as high quality

In addition to the above services, PNT auditors pay special attention to trainingservices, management consultancy services, financial consulting, accounting andtaxation services to help clients improve their financial management Improve theaccounting system, internal control system and improve competitiveness in themarket in the trend of international integration

2.1.2 Organizational characteristics of the management apparatus of the company

Diagrams 2.1 : The company's management apparatus The board of directors of PNT international auditing liability company consists

of seven members, the highest management level, all terms, development strategies,business plan or the new policy of the company must be passed to the members'council for consideration and approval before being put into practice Chairman ofthe board of members elected from the board of members, is the representative ofthe board members to approve and approve the work, the plan The director of thecompany is the person who directly manages the day-to-day business of thecompany and is responsible to the members' council for the exercise of his / herrights and duties The board of supervisors control the quality of internal activitiesthrough the following tasks: issuance of regulations on quality management boardresponsibilities in auditing firms; establish relevant ethical regulations; carry out theassessment of the acceptance and maintenance of customer relationships, specificservice contracts; develop human resource policy; develop regulations duringcontract implementation; supervision

Beside, the employee of the company is divided into departments according to

the functions and duties of each person The administration - accounting department

is responsible for drafting auditing contract, labor contract, auditing file and at thesame time keeping accounting records and accounting for economic activities

Control BoardDirector

Basic buildingdepartment

Accounting - tax service department

Accounting - tax service department

Auditing Financial report departmentAuditing Financial report department

arising in the unit The basic construction department is responsible for inspecting

the implementation progress of the construction work of the customer partner and atthe same time inspecting the actual construction quality against the estimate toensure optimum 3 factors time, cost, quality About the accounting - tax division,the main job is to receive accounting and tax reporting services for variouscompanies, as well as advisory services to help clients with data on the mediumfinancial report Right and the most beautiful The auditing financial reports

department, In addition to confirming the correctness and correctness of information

in the financial statements in a transparent and reliable way for the users, theauditors also express their opinions and advise customers the most appropriate andeffective solution for the development of the company

2.1.3 Characteristics of the business

PNT International Auditing Limited Company is an independent, self-financing entitythat pays for itself through its revenue streams and fulfills its obligations to the statebudget The results of business operations of PNT International Auditing LimitedLiability Company are reflected in some of the criteria in the following table:

Table 2.1 Some indicators of business activity of the limited liability company

the international audit PNT

As see on the table , the company's revenue has increased over theyears, 2014 compared with 2013 increased 132 million, in 2015 comparedwith 2014 increased 627 million Similarly, profit and profit after tax of thecompany has also increased continuously, showing that the company isoperating more and more efficiently The company's staff numbers are also

increasing, showing that the company is expanding its operations,increasing its customer base as well as its audit engagements The number

of AUDITORS is increasing to increase the quality of the audit Averagesalary of the company is relatively positive in the economy are facing manydifficulties today

Thus, in recent years, with the development of the field of audit, PNTInternational Auditing Limited Company is developing more and more,improving the quality as well as prestige to meet the Increasing customerdemand, bringing the greatest benefits to customers In addition, thecompany also pay attention to employees, improve the treatment regimesthrough the years The company is really strong development steps,gradually affirmed the place in the field of auditing

2.1.4 Auditing organization at PNT International Auditing Company Limited

To ensure the effectiveness, economy and validity of each audit as well as

to gather sufficient and valid audit evidence as the basis for the auditor'sconclusions about the truthfulness and relevance The data of the Financialstatement, the audit is usually conducted in a four-stage process PNTInternational Auditing Company Limited performs the audit work asfollows:

Diagram 2.2 Auditing process of PNT International Auditing

Company Limited

The process of auditing the sales and service provision section also follows the steps

of the audit process of the financial statements of PNT international auditing limitedcompany However, depending on the characteristics of each customer: a newcustomer or a traditional customer, depending on whether the accounting system iswell organized and scientific, the internal control system , the steps that must betaken at each stage of the audit procedure for revenue items are different Due totime constraints, I would like to learn about auditing the Sales and provide services

in financial statements of the PNT audit

Conduct audits

Implementation and evaluation:

- Test control

- Perform analytical procedures

- Detailed examination procedures

End of audit

- Complete the audit profile and make a draft report

- Release report and management letter

Planning audit

- Potential risk assessment

- Determine the importance of the plan

- Identify important audit areas

- Conduct an initial analysis check

- Evaluate control environment

- Determine the nature of the scope of the audit procedures

- Set up an audit team and schedule an audit

Pre-audit stage

- Send an audit letter

- Learn about business and accounting systems

- Determine the audited entity

2.2 Audit process status sales and sevicers prosivion items in financial statements by pnt international auditing company limited

The audit process sales and servicers provision comply also items the steps inthe process of auditing the financial reports of PNT company but has a few othertraits for each type of customer To analyze the status of the audit process audit

in sales and servicers provision items of financial statements by PNT companyconducted , please take the example illustrated in the ABC company clients Mr.NTT was assigned in charge of auditing the financial report at the annual levelABC company 2016 period will make audit entries sales and servicers provision Mrs PTH was reviewer number one , Mr LVM was reviewer number two

2.2.1 Status of preparation before the audit

PNT audit company always actively seek clients through many differentapproaches: sending mail offers and profiles, contact by phone or email, meetdirectly with customers to go to the contract audit Every year, companies sendletters to the companies and enterprises Through the letters, the companyintroduced to the customers the kind of service that the company offers, aboutthe capacity of the company If the client needs to use the services of thecompany then sends invitations for company audit After receiving the invitation,

if the auditor is traditional customers, the company will proceed to meet theBoard of Directors of client companies, Exchange, collect new informationupdates, ability to continue to provide services and conduct the contract audit If

a new customer, before signing the contract, the company must collect thecustomer's preliminary information, such as information about the businessenvironment, information on business, the form of ownership of capital, thebusiness situation of the enterprises, the problems of key personnel andorganizational management identity audit reasons The information collectedwill be stored in the audit record as a basis for the evaluation of risk to accept theaudit contract, from which to make decisions to accept or not the audit contract

At the same time the selection team auditors ensure professional qualification andindependence with the entire audit process

ABC Corporation is the company's traditional customers of PNT company , afterpreliminary talks with leaders of the customer about the terms of the contract,considering the level of risk may be encountered, the ability to continue toprovide the service and the fees of Auditors, PNT company contracted to auditthe financial report with ABC Corporation

Appendix 2.1 Illustrates the questions related to continue providing audit services conducted by PNT company

Appendix 2.2 Audit contract.

After the contract is signed, the company conducted the audit comprises the auditorsteam has performed an audit of the financial report of the previous year of ABCCorporation go perform audits at ABC company

Before the start of implementation of the audit, the audit team leader will plan anaudit from which assigned jobs to each Member of the group to ensure the efficientgeneration, work best

2.2.2 Status Audit planning

2.2.2.1 Collects basic information about you and the information related to sales and sevicers prosivion items

ABC Corporation's customers from the previous year of PNT should companiesafter signing the contract, the MR.NTT proceed to collect basic information aboutABC from general audit record file, the audit records in 2015, to update the changes

in the year 2016 by ABC about the business situation , changes in the businessenvironment, capital changes, organization of executive management, the changes

in the accounting system, the Internal control system of the ABC Before youperform the audit at clients, MR.NTT send a fax requesting the documents provided

to ABC to prepare for the audit work, such as financial statements, the balancesheet, the number of the General Ledger, accounting details 2016 to help auditorscan't catch ABC's situation is preliminary That auditors have enough basis forinitial risk assessment for company ABC and sales and sevicers prosivion items onthe overall measure

The results of this work are presented in the working papers below

Table 2.2 A310 work papers of the auditor

PNT INTERNATIONAL AUDITING

LIMITED COMPANY

Customer name: ABC Corporation

The end of the accounting period: 31/12/2016

Content: Learn customer and operating environment

-Construction, installation and repair of industrial, civil and public works,

transportation, irrigation, post office, public works, infrastructure works, source

stations and grid;

-Manufacture and sales of equipment, structural steel, metal building materials;

-Investment consulting, survey, design and construction;

-Consulting and transfer of technology for production of concrete products industry;

+ The principle and the method of recognition of revenue

The company's revenues include revenues from construction activities, cement sales

and revenue from interest, dividend income, deposit

Cement sales are determined by the value of the funds has been obtained or will be

obtained in principle accrue merits, noting when the transfer of the goods to the customer,

issue invoices and accept payments by customers, match 5 conditions recorded revenue

regulation in Vietnam accounting standards no 14-"revenue and other income"

Turnover of construction activities are recorded according to the value of the volume

test done, be confirmed by the minutes of trials, settlement, has released the invoice

value, in accordance with the provisions of Vietnam accounting standards no

15-"construction contract"

Revenue from interest on deposits is recorded on the basis of time and actual interest rates

ever, match 2 conditions of recognition of revenue arising from the deposit interest rate

regulation in Vietnam accounting standards no 14-"revenue and other income"

The account of the customer received before are not recorded as revenues in the period

In 2016, the economy is gradually stabilizing and growing back Demand on the real

estate market and construction work are increasing Shows the increase of the

company's sales and services provision is reasonable

Conclusion: potential risk is assessed at the medium level Auditors should focus

on lead base material group "true count", "audit and evaluation",

2.2.2.2 Reviews the internal control system

After you learn, collect and study the basic information about clients, auditors T

conduct analysis, reviews of the internal control system and the evaluation of the

risks and key General understanding of processes of information processing sales

and services provision

Based on the audit records in 2015, the ABC company found no significant change

in the accounting system, internal control system auditors agree with these changes

Mr NTT conducted interviews chief accountant Mr K, logging sales and services

provision to learn about the process of acknowledging sales and services provision

Next, the MR NTT select a profession related to sales and services provision

number to check the operation of the internal control system

To illustrate the auditor to use the questionnaire below:

Table 2.3 Internal control questionnaire applied to ABC Company

SALES AND SERVICES PROVISION and

receivables

Customer and sales data:

The references relating to the acceptance of new

customers has been tested and the credit limit for

customers including time and amounts have been

approved yet?

specifically is the customer relationship should the company have mastered as well as have a certain credibility for his clients.There are procedures for opening, closing the

window the client's details and update permanent

data?

Yes

All the detailed customer receivable book included in

the lists of trade receivable?

Yes

Selling price of the product have been made

correctly, the table lists the sale price the product is

updated and reported to the relevant departments?

Yes

Sales:

The delivery Slips are used to billing and has been

inspected to ensure all deliveries were to be issued an

invoice?

test workload completed, settlement and invoice finance

PNT INTERNATIONAL AUDITING

LIMITED COMPANY

Customer name: ABC Corporation

The end of the accounting period: 31/12/2016

The goods are delivered there based on the orders? Do not apply Commodity trading

companies, which operate

in the field of constructionThe bill has to be examined with the delivery slip

about the mathematical precision, sale price, discount

and discount, credit period, value added tax and other

taxes on the invoice?

Yes

The invoices are properly recorded in the log book details

sales and services provision and totals have been updated

to correspond to sales and services provision ledger,

customer receivable and window details?

Yes

Sales revenue in cash have been recorded at the time

of sale?

Yes

3.10Scrap sale proceeds, the products damaged

have been recorded?

product spoilage and scraps

3.10Total sales and services provision get reconciled

with bank deposits, value added tax and other

accounts payable as defined by the law?

Yes

3.11Sales cut-off procedures have been done right? Yes

3.12Compensation insurance have been excluded

from the revenue?

No

3.13Redundancy costs of warranty and after sales

services are consistent with accepted accounting

policy and experience the year before?

Not

3.14Monthly sales reports are sent to the client to

confirm that there is no involvement of the staff

kept the books and sales staff?

Do not apply

3.15Money collected from customers are recorded properly

in the receipts have been numbered before and are:

Yes

3.16In the case of a sale for cash has not obtained

the money, there are details on the outstanding

invoice amount in sales revenue account in cash?

Yes

Conclusion: based on the questionnaire and interview process, the auditor reviews

the risk control in average.

After performing a find out basic information about the business activities of thebusiness as well as learn about the internal control system of the unit, the auditorsconducted reviews and risk

To achieve the desired audit risk, Mr NTT perform risk assessment parts Frompotential risk is average (working papers reference the a310), risk control is