UNIVERSITY OF ECONOMICS AND LAW FACULTY OF ACCOUNTING AND AUDITING GRADUATION THESIS COMPLETION OF AUDIT PROCEDURE FOR ACCOUNT RECEIVABLE AT PWC VIET NAM LIMITED LIABILITY COMPANY Supervisor: Duong Trong Nhan Student: Dao Van Hieu Student’s ID: K194050746 Class: K19405CA TP.HCM, 04/2023 University of Economics and Law ACKNOWLEDGEMENT Firstly, I want to thank the Faculty of Accounting and Auditing at University of Economics and Law (UEL) for delegating to me the great chances to learn and develop as a professional in industry. The accomplishment of this report is the outcome of the contribution of a number of people to whom I am truly grateful for. I feel proud to have this moment as an intern in PricewaterhouseCoopers (PwC), one of the world's largest professional-services firm and received support and caring from my supervisor, lecturer Mr Duong Trong Nhan. Mr Duong Trong Nhan has been guiding me throughout the course of this assignment and help me every step of the way, and his motivation is what helped me complete this assignment successfully.
I am using this opportunity to express my gratitude to everyone who supported me throughout the course of this report. I would also like to express my sincere gratitude to my friends and parents, who stood by me and encouraged me to work on this assignment. This thesis is the result of my 3 months internship at PwC (Vietnam) Limited. During the process of being intern, it has been strengthening me to become more experiences and to be an ethical professional.
Ho Chi Minh City, April,2023 Dao Van Hieu 1|Page University of Economics and Law INTERNSHIP DIARY General information Student’s name: Dao Van Hieu Class code: K19405CA Student code: K194050746 Supervisor: Mr Duong Trong Nhan Organization’s Name: PwC (Vietnam) Limited Address: Unit 405, Floor 4, Saigon Tower 29 Le Duan Street, Ben Nghe Ward, District 1, HCM City. Department: Line audit and assurance Position: Intern Period of Internship: 19/12/2022 – 19/3/2023 No. Week Descriptions Intern self-assessment for performance review 1 From Joining training programs: Excellent 19/12/2022 Introduction about audit program at to PwC (preparation for lead schedule 29/12/2022 each section) Get used to with administrative work of assurance Get used to work with the PwC system: ➢ Documentation in Aura ➢ Raise and accumulated data in Connect ➢ Roll financial statement in spreadsheet of Icore 2|Page University of Economics and Law 2 From Perform audit procedures for inventory Excellent 30/12/2022 count: to Complete and document PIO (Physical 7/01/2023 inventory observation) checklist, perform initial procedures and test count. Observe the physical inventory count Obtain the numbers of the last GDNs and GRNs before the year-end and the first GDNs and GRNs after the year- end and check that these have been included in the correct financial year.
3 From Perform counting inventory (work in Excellent 08/1/2023 process). to Create and document in physical 15/1/2023 inventory observation (PIO) for first counting inventory new client. 4 From Perform audit procedures in cash, Excellent 9/1/2023 account receivable, account payable, to payroll expense and equity section. 15/1/2023 Prepare and send confirmation letter of account payable, account receivable and interco company to client company.
Support testing for revenue, purchase. Vouching for supporting document: invoice, Airway bill, bill of lading. 3|Page University of Economics and Law 5 From Perform testing section cash, account Excellent 16/1/2023 payable, account receivable, equity. To Follow-up bank, account payable, 21/1/2023 account receivable confirmation.
Support testing for sale, purchase cut- off, test airway bill, bill of lading of all sale, purchase sample Perform alternative test, for section account payable and account receivable. Vouching for invoice, purchase requisition, purchase order. Rolling and reconcile for completion, appendix of audit report. 4|Page University of Economics and Law SUPERVISOR EVALUATION ……………………………………………………………………………………….
5|Page Contents ACKNOWLEDGEMENT. 5 List of figures. 8 List of Diagrams. 9 List of Tables.
The necessity of this research. Subject matter and scope of the research. Structure of the research. Limitation of the research.
13 CHAPTER 1: GENERAL OVERVIEW ABOUT PWC (VIETNAM) LIMITED.1 General introduction about PwC .2 Purpose and value.3 Mission and Vision .4 Organizational Structure and Governance .5 Computer Assisted Audit Techniques (CAATs). 23 CHAPTER 2: THE CONCEPT OF AUDIT AND ACCOUNT RECEIVABLE IN BALANCE SHEET .2 Risk-based approach to audit .3 Benefits of assurance reports .5 Limitations of the audit and materiality .6 Levels of assurance .7 Account receivable under Circular 200 .1 The concept of account receivable .2 Account 131 – Trade receivable .8 Account receivable under IFRS 9. 29 University of Economics and Law CHAPTER 3: AUDIT PROCEDURES FOR ACCOUNT RECEIVABLE AT PWC (VIETNAM) LIMITED .1 Initial planning for the engagement .2 Understanding the entity and its environment .3 Risk assessment procedures .5 Communication with management and those in roles of governance .6 Risk and response .2 Execute audit procedures of account receivables .1 Overview about receivables .2 Assertion of account receivables .3 Audit objective and audit program of account receivables in the sale and collection cycle .4 Understand the business process and evaluate controls to assess risks and plan the audit .5 Confirmation of accounts receivable .6 Alternative procedures for account receivable .3 Completion and review the engagement .4 Auditing procedures of account receivable of PwC Vietnam Ltd at client .1 Understand client and its industry .2 Understanding the applicable financial reporting framework .4 Understanding the entity’s system of internal control on account receivable, sale and collection cycle.5 Execution on audit procedures (account receivable) in ABC Company .6 Completion and review of an audit engagement. 81 CHAPTER 4: COMMENTS AND RECOMMENDATIONS ON AUDIT PROCEDURE OF ACCOUNT RECEIVABLE AT PWC (VIETNAM) LIMITED .1 Strength in audit and assurance unit at PwC (Vietnam) Limited.2 Deficiency and suggestion in audit and assurance unit at PwC (Vietnam) Limited .3 Discussion and recommendation for improving audit efficiency at PwC .2 Execution on account receivable .3 Completion and review.
91 7|Page University of Economics and Law List of figures Figure 1: PwC’s Logo and Symbol .15 Figure 2: PwC’s Core Value .19 Figure 4: Illustration for calculation of overall materiality .36 Figure 5: Illustration for calculation of performance materiality .38 Figure 6: Illustration for calculation of De minimis SUM posting level .39 Figure 7: Timing of control testing .43 Figure 8: Aura view for control testing plan .44 Figure 9: Substantive testing plan .46 Figure 10: Documentation of accounts receivable in Aura view .54 Figure 11: Documentation of confirm accounts receivable in Aura view .56 Figure 12: Sample of confirmation letter for account receivable at ABC Company .78 Figure 13: Adjustments raised by PwC engagement team in fieldwork days.81 8|Page University of Economics and Law List of Diagrams Diagram 1: The organizational structure of PwC (Vietnam) Limited.20 Diagram 2: Assurance department structure at PwC (Vietnam) Limited .21 Diagram 3: Summary of audit process at PwC (Vietnam) Limited .30 Diagram 4: Risk assessment process at PwC (Vietnam) Limited .33 Diagram 5: Components of materiality in audit program .34 Diagram 6: Aura view risk strategy.42 Diagram 7: Accounts receivable in sale and collection cycle .46 9|Page University of Economics and Law List of Tables Table 1: Application of PwC’s Audit Technology Platform .23 Table 2: Assertion of account receivables .48 Table 3: Walkthrough procedures for ABC Company .66 Table 4: Lead schedule for account receivable of ABC Company .67 Table 5: Breakdown account receivable into nature chart of account provided by ABC Company .68 Table 6: Account receivable turnover analysis of ABC Company .69 Table 7: Test sale and account receivable cut-off .73 Table 8: Amount of population for cut-off assessment .74 Table 9: Detailed listing by invoices of account receivable provided by ABC Company .75 Table 10: Control sheet for account receivable confirmation .79 Table 11: Subsequent testing of balance in account receivable .79 Table 12: Accept – reject testing of account receivable aging report of ABC Company .80 10 | P a g e University of Economics and Law INTRODUCTION 1. The necessity of this research Audited financial statements are important for capital market and capital allocation decisions because they increase the reliability of the information. The global auditing market is dominated by four international audit firms known as the Big Four: EY, KPMG, Deloitte, and PwC. Their combined market share among listed firms (firms listed on a stock exchange) in the EU and US is greater than 85%.
Auditors need to possess a wide range of hard and soft skills, regardless of where they are employed. The nature of the job demands high attention to detail, financial and business acumen, and immense integrity in order to give a true and fair presentation to reasonable users. Auditing can be complex due to its critical responsibility of reviewing financials to make sure it corresponds to regulations and legal standards. Therefore, the purpose of this paper is to explore whether the quality of an audit program in PwC based on risk- based audit approach is effectively applied.
This study enables auditors to gain understanding of overall financial statement audit in Big 4 Company, indicating a complete process for audit procedures of account receivable. Moreover, auditors can identify the strengths and weaknesses of each stages in the audit cycle and perform additional procedures when needed. Research objectives This study was undertaken to describe the problems and requirements perceived by general practitioners (auditors) in relation to the implementation of quality assurance and assurance in general practice. The results may also help other practitioners to learn about the problems and requirements in this field.
Therefore, a study was performed to answer the following questions: ❖ The complete procedure for financial statement audit and account receivable in the sale and collection cycle ❖ The perceived obstacles to using these procedures 11 | P a g e University of Economics and Law ❖ The perceived strengths and weaknesses for the implementation of quality assurance at PwC Ltd 3.1 Data collection The study relies on primary and secondary data collected from the record of the audit procedures performed, relevant audit evidence, and conclusions the auditor reached, complemented by principles from existing professional assurance standards, International Standards on Auditing (ISA), to develop interpretively completed procedures. Some common data collection methods to accumulate audit evidence included in the study is confirmation from third parties, inspection, observations and inquiry.2 Data analysis The data collected through these methods can then be analyzed by and used to support research and draw conclusions about the study's subject matter. Comparative approach This is the process of comparing items to one another and distinguishing their similarities and differences. When auditors wants to analyze numerical data or question, conducting a comparative analysis allows it to better understand the issue and form strategies in response.
Analytical approach Analytical approach using analytical procedures consist of evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data. Analytical procedures are used extensively in practice, and are required during the planning and completion phases on all audits 4. Subject matter and scope of the research Subject matter • Audit process for financial statement of PwC (Vietnam) Limited. • Audit program for account receivable of PwC (Vietnam) Limited at ABC Company.
12 | P a g e University of Economics and Law Scope: • This study focus on audit of receivables in the sale and collection cycle at PwC (Vietnam) Limited. • The data and any relevant information collected by auditors was conducted from 19/12/2022 to 19/03/2023. Structure of the research • Introduction • Chapter 1 General overview about PwC (Vietnam) Limited • Chapter 2: Concept of audit and account receivable in balance sheet • Chapter 3: Audit procedure for account receivable at PwC (Vietnam) Limited • Chapter 4: Comments, discussion and recommendations for audit procedures of account receivable at PwC (Vietnam) Limited 6. Limitation of the research With this research work, there are limitations involved.
Interpretation of the results can be done with the following limitations. First and foremost, the study focused on the audit procedures of account receivable in particularly ABC Company.