BANKING ACADEMY OF VIETNAM FACULTY OF ACCOUNTING AND AUDITING ---------- GRADUATION THESIS TOPIC: IMPROVING AUDIT PROCEDURES OF TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS AT ERNST & YOUNG VIETNAM COMPANY LIMITED Student name : Tran Thanh Hoa Student code : 23A4020141 Class : K23CLC-KTA Major : Accounting and Auditing Supervisor : Asso. Le Thi Thu Ha Practice unit : Ernst & Young Vietnam Co., Ltd Hanoi, 2024 STATUTORY DECLARATION I hereby declare the Graduation thesis “Improving Audit procedures of Tangible fixed assets in financial statement audits at Ernst & Young Vietnam Company Limited” is the result of my research based on my internship at Ernst & Young Vietnam Company Limited. The research contents and results are true and have not been published before. The data in the table for analysis, comments and evaluation are collected myself from many different sources which are clearly stated in the reference section.
In addition, the thesis also uses a number of comments, assessments as well as data of other authors, other agencies and organizations, all with citations and source annotations. Hanoi, May 2024 Author Tran Thanh Hoa i ACKNOWLEDGEMENTS First and foremost, with deep and sincere gratitude, allow me to express my appreciation to all individuals and organizations who have provided the necessary conditions to support and assist me throughout the process of studying and researching the topic of "Improving audit procedure of tangible fixed assets in financial statement audits at Ernst & Young Vietnam Company Limited” I would like to extend my thanks to the esteemed faculty members of the Banking Academy, especially the professors of the Accounting and Auditing Department, who have educated and imparted valuable knowledge to me during my time at the academy. I would like to express my gratitude to Assoc. Le Thi Thu Ha, who has dedicated a significant amount of time and effort to guide me wholeheartedly in completing this graduation thesis.
Furthermore, I would like to express my gratitude to the support of many staff members, seniors, and managers at Ernst & Young Vietnam Co., Ltd, who have contributed to my acquisition of sufficient knowledge to finalize this thesis. Despite putting forth my utmost effort, due to limited time and limited experience, the thesis inevitably contains some shortcomings. I sincerely hope to receive the contributions of the professors, teachers, and classmates to further improve the thesis. Sincerely and Best regards! Hanoi, May 2024 Author Tran Thanh Hoa ii TABLE OF CONTENTS STATUTORY DECLARATION.
ii LIST OF ABBREVIATIONS.vi LIST OF TABLES. vii LIST OF FIGURES. The necessity of the topic. Research object and scope.
Structure of the thesis. 5 CHAPTER 1: THEORETICAL BACKGROUNDS ON THE AUDIT PROCEDURES OF TANGIBLE FIXED ASSETS IN FINANCIAL STATEMENT AUDITS. Characteristics of tangible fixed assets that affect financial statement audits. Characteristics of tangible fixed assets.
Accounting for tangible fixed assets. Common risks related to tangible fixed assets. Internal controls for tangible fixed assets. Audit procedures of fixed asset in a financial statement audit.
Objectives, basis and used documents for tangible fixed assets audits. The audit process for tangible fixed assets. 23 iii CHAPTER 2: THE PRACTICE OF AUDIT PROCEDURES OF TANGIBLE FIXED ASSET IN FINANCIAL STATEMENT AUDITS AT ERNST & YOUNG VIETNAM COMPANY LIMITED. Overview of Ernst & Young Company Limited.
The history and development. The main business lines, clients and recent business results. The organizational structure. The practice of audit procedures of tangible fixed assets in financial Statement audits at Ernst & Young Company Limited.
Audit review and finalization. Auditing tangible fixed assets in financial statement audits performed by EY. Audit finalization and reporting. Assessment of tangible fixed asset audit procedures conducted by EY.
Causes of the weaknesses. 86 CHAPTER 3: RECOMMENDATIONS AND SOLUTIONS TO IMPROVE AUDIT PROCEDURES OF TANGIBLE FIXED ASSETS AT EY VIETNAM. The oriented development of Ernst & Young Vietnam Company Limited. The need for improving the tangible fixed assets audit procedures.
Principles and requirements for improving auditing tangible fixed assets in financial statement audits performed by Ernst & Young Vietnam Company Limited. Solution to improve auditing tangible fixed assets in financial statement audits performed by Ernst & Young Vietnam Company Limited. Audit planning stage. Audit fieldwork stage.
Audit finalization and reporting stage. Recommendations to improve the tangible fixed assets auditing process at Ernst & Young Vietnam. For the Ministry of Finance and other agencies. For Vietnam Association of Certificate Public Accountants.
For Ernst & Young Company Limited. For the auditors. For the clients. 106 v LIST OF ABBREVIATIONS Acronyms Original Co., Ltd Company Limited CRA Combined control risk EY Ernst & Young FSCP Financial statement close process ITGCs IT general controls LS Lead sheet SCOTs Significant class of transactions WCGWs What could go wrong vi LIST OF TABLES Table 1.
1 - Percentage allocation of materiality. 1 - Percentage allocation of materiality……………………………………………. 2 - Attendant of audit team of ABC Company. 3 - Estimated useful life of tangible fixed assets.
4 - The changes in the balance of fixed asset accounts. 6 - EY benchmark and range of benchmark. 7 - Audit procedure checklist. 9 - Reconcile LS with GL.
10 - Reconcile LS with Listing of each account. 11 - Overall analytical procedure.72 vii LIST OF FIGURES Figure 1. 1 - Accounting for increases of tangible fixed assets due to new purchases. 2 - Accounting for increases of tangible fixed assets completed by capital constructions.
3 - Accounting for increases of tangible fixed assets completed by capital constructions. 1 - Organizational structure of Ernst & Young Vietnam Co. 2 - Audit team structure of Ernst & Young Vietnam Co. 3 - Auditing process at Ernst & Young Vietnam Co.
4 - Combined Risk Assessment. 5 - Setting PM, TE and SAD. 6 - Threshold for assets and revenue. 7 - IPE – Fixed assets register.
8 - IPE – CIP breakdowns. 9 - Compilation procedures of ABC Company. 10 - Test of details account 241, 211. 11 - Review useful life of fixed assets.
13 - Presentation of fixed assets of ABC Company. 14 - Notes to the financial statements of tangible fixed assets of .81 viii Graduation thesis Banking Academy of Vietnam INTRODUCTION 1. The necessity of the topic The recent trend of economic integration within the countries has generated a demand for enhanced transparency in financial information. Therefore, auditing companies and auditors have played an increasingly important role in the development of the economy, contributing significantly to the success of the country's innovation career in recent years.
Currently, there is the emergence of numerous multinational corporations and the growing strength of domestic and foreign companies in terms of capital and asset scale. One of the most important pieces of information that investors are concerned about is the tangible fixed assets of enterprises. Tangible fixed assets and depreciation of tangible fixed assets play a crucial role in the business production process of a company. Moreover, the tangible fixed asset item on the balance sheet usually accounts for a significant proportion, so errors related to this item often have a significant impact on the financial reports of the company.
Audit of tangible fixed assets accounts holds significant significance within an audit engagement. Enhancing the caliber of audit procedures related to tangible fixed assets aids auditors in elevating the overall quality of an audit, enabling the identification of potential accounting irregularities while also enhancing the management of tangible fixed assets. However, there are still many areas for improvement in the tangible fixed assets item and its audit. The shortcomings can arise from various aspects, but the main issue lies in the incomplete environment for implementing the audit process, which needs to be improved and consolidated to enhance the quality of tangible fixed asset audits.
Recognizing the importance of the tangible fixed asset item for each business, along with a 3-month internship at Ernst & Young Vietnam Co., Ltd, I have decided to focus my graduate thesis on the topic of “Improving audit procedures of tangible fixed assets in financial statement audits at Ernst & Young Vietnam Company Limited.” Tran Thanh Hoa 1 K23CLC-KTA Graduation thesis Banking Academy of Vietnam 2. Literature review Audit of financial statements in general, and specifically the audit of tangible fixed assets account, plays an increasingly important role in today's economy. Various studies have been conducted on this topic from different perspectives, and most of them have highlighted the necessity of improving the audit procedures of tangible fixed assets in financial statement audits. This is because tangible fixed assets account has a significant relationship with the auditor's opinion.
Some notable studies include: “The Financial Audit Complexity of The Fixed Assets” by Sorin Domnişoru and Sorin Vînătoru, which offers a detailed examination of auditing fixed assets. The research sheds light on the challenges and intricacies associated with this field. The authors initiate the exploration by discussing crucial concepts derived from specialized literature, emphasizing their significance. The study primarily concentrates on tangible fixed assets and provides an outline of the methodological approach.
This approach encompasses various considerations such as the financial reporting framework, entity profile, and the role of fixed assets within the organization's system. In Vietnam, a noteworthy research paper is "Analysis of Fixed Assets Utilization" by Ms. Dinh Thi Thu Hien (2022), which focuses on effectively utilizing fixed assets. This study analyzes the equipment and utilization of fixed assets, highlighting their significance in the business production process.
The research suggests that a lack of fixed assets, despite an excess supply of raw materials and abundant labor, can lead to slow or interrupted production processes, impacting the outcomes. Analyzing fixed asset utilization helps address these issues, allowing businesses to assess and implement scientific and rational measures to maximize mobilization, increase production output, improve labor productivity, and reduce costs. Furthermore, there have been numerous graduation theses that concentrate on auditing specific accounts within financial statement audits. The Banking Academy of Vietnam has contributed several theses in this area, such as "Improving auditing tangible fixed assets in financial statement audits performed by Ernst & Young Vietnam Company Limited" by Thanh, H.T (2022), "Improving audit procedures of fixed assets in an audit of financial statements at Deloitte Vietnam Company Limited" by Tran Thanh Hoa 2 K23CLC-KTA Graduation thesis Banking Academy of Vietnam Thao, T.N (2020), and "Improving the audit of accounts payable in the financial statement audit conducted by Ernst & Young Limited Liability Company" by Anh, N.
These research studies evaluate the auditing of particular accounts in financial statement audits by comparing them against a theoretical framework. The objective is to identify recommendations for enhancing audit procedures at Ernst & Young Vietnam. To summarize, prior research has primarily concentrated on ensuring the quality of assurance at Ernst & Young Vietnam and the audit procedures pertaining to particular accounts. However, there has been a scarcity of studies examining the assessment of assurance quality by comparing audit methodology with a theoretical framework, particularly in the context of auditing tangible fixed assets.
Thus, the objective of this paper is to assess the assurance quality at Ernst & Young Vietnam by juxtaposing audit methodology with a theoretical framework and presenting suggestions to improve the auditing of tangible fixed assets in financial statement audits conducted by Ernst & Young Vietnam. Research objectives The main purpose of this thesis is to examine the existing audit procedures related to tangible fixed assets in the financial statement audit carried out at EY Vietnam Company Limited. The specific objectives of this study are as follows: Firstly, the thesis provides a comprehensive overview of the theoretical foundation concerning tangible fixed assets items, along with the process involved in auditing tangible fixed assets in the financial statement audits.