BANKING ACADEMY FACULTY OF ACCOUNTING – AUDITING ---------***--------- GRADUATION THESIS Topic: IMPROVING THE AUDIT PROCESS FOR FIXED ASSETS IN FINANCIAL STATEMENT AUDITS CONDUCTED BY DELOITTE VIETNAM COMPANY LIMITED Supervising instructor : Dr. NGUYỄN TIẾN ĐẠT Student researcher : ĐẶNG HOÀNG QUÂN Class : K24CLC-KTA Student ID : 24A4022379 Batch : 2021 – 2025 Hanoi, April, 2025 i AUTHOR’S DECLARATION I hereby affirm that this graduation thesis is an independent research work conducted by myself under the guidance of Dr. Nguyễn Tiến Đạt. This thesis's data, images, tables, and diagrams are properly cited, ensuring authenticity.
All reference materials have been sourced. If any dishonesty is found, I take full responsibility before the School Council. Hanoi, April 15, 2025 Author of the Thesis Đặng Hoàng Quân ii ACKNOWLEDGEMENTS First and foremost, I would like to express my deepest gratitude to the faculty members of the Banking Academy, especially the lecturers of the Accounting and Auditing Department, for their dedicated teaching and for imparting valuable knowledge throughout my academic journey. I would like to sincerely thank Dr.
Nguyễn Tiến Đạt, who wholeheartedly guided and supported me during the completion of this graduation thesis. I would also like to extend my heartfelt thanks to the leadership and colleagues in Audit Room 3 of Deloitte Vietnam Company Limited for creating favorable conditions and assisting me throughout my internship. Over more than three months there, I gained a wealth of knowledge and invaluable professional experience, which greatly enhanced my skills. Lastly, I am deeply grateful to my family and friends for their constant encouragement and support during my studies and research.
I sincerely hope to receive further feedback and guidance from my professors to improve this thesis and my future research endeavors. Thank you very much! iii CONTENTS AUTHOR’S DECLARATION. ii LIST OF ABBREVIATIONS. vi LIST OF TABLES, DIAGRAMS, AND ILLUSTRATIONS.
The relevance of the topic .xiii CHAPTER 1: THEORETICAL BASIS OF THE AUDITING PROCESS FOR THE FIXED ASSET ITEM IN FINANCIAL STATEMENT AUDITS. Characteristics of the Fixed Asset Item. Concept and Nature of the Fixed Asset Item. Accounting for the Fixed Asset Item.
Violations and Risks Related to the Fixed Asset Item. Internal Control and the Fixed Asset Item. Audit Process for the Fixed Asset Item in Financial Statement Audits. The Role of Auditing the Fixed Asset Item.
Objectives and Basis for Auditing the Fixed Asset Item. Audit Planning Stage. Execution Stage of Auditing Fixed Assets. Audit Completion Stage.
17 CONCLUSION OF CHAPTER 1. 21 CHAPTER 2: CURRENT STATUS OF THE AUDIT PROCESS FOR FIXED ASSETS IN FINANCIAL STATEMENT AUDITS CONDUCTED BY DELOITTE VIETNAM CO. Overview of Deloitte Vietnam Co. History and Development of Deloitte Vietnam Co.
Characteristics of Management and Business Operations of Deloitte Vietnam 25 2. Organizational structure of business operations of Deloitte Vietnam. General Audit Process of Deloitte Vietnam. Characteristics of Audit File Organization.
References in the audit file. Current Status of Auditing the Fixed Assets Item for the Client ABC Joint Stock Company in the Financial Statement Audit Conducted by Deloitte. Prepare for the Audit. Perform Detailed Testing Procedures .3 The assessment of the fixed asset audit process of Deloitte Vietnam .1 Advantages in the Audit Process for Auditing Fixed Assets in Financial Statement Audits Performed by Deloitte Vietnam LLC .2 Limitations in the Audit Process for Auditing Fixed Assets in Financial Statement Audits Performed by Deloitte Vietnam LLC.
75 CONCLUSION OF CHAPTER 2. 78 CHAPTER 3: SOME SOLUTIONS TO IMPROVE THE AUDIT PROCESS OF THE FIXED ASSETS ITEM IN THE FINANCIAL STATEMENT AUDIT CONDUCTED BY DELOITTE VIETNAM CO. Development Orientation of Deloitte Vietnam Co. Development Orientation for Market Expansion.
Human Resource Development Orientation. Innovation Orientation and Technology Application. Solutions in the Fixed Asset Audit Process in Financial Statement Audits Performed by Deloitte Vietnam LLC. Audit Planning Stage.
Audit Execution Stage. Audit Completion Stage. 82 CONCLUSION OF CHAPTER 3. TEXTBOOKS, BOOKS, AND SCIENTIFIC RESEARCH WORKS.
89 INTERNSHIP VERIFICATION LETTER. 2 vi LIST OF ABBREVIATIONS No Abbreviation Full Meaning 1 FA Fixed assets 2 FS Financial statements 3 SAP Substantive Analytical Procedures 4 TOD Tests of Details 5 WPs Working papers 6 PIE Public interest entity 7 PPE Plant, Property, and Equipment 8 AUC Assets Under Construction 9 CWIP Capital Work in Progress vii LIST OF TABLES, DIAGRAMS, AND ILLUSTRATIONS TABLES Table 1.1: Internal Control Checklist for Fixed Assets .2: Materiality Calculation at Deloitte Vietnam .3: Audit Procedures for Fixed Assets .4: Types of Audit Opinions .1: Income Statement for the Last 3 Years .2: Assessment of Engagement Risk in Performing the Audit Contract .3: Audit Team for the Client ABC Vietnam Joint Stock Company for the Financial Year Ending December 31, 2024 .4: Independence Declaration Form of Auditors Participating in the Audit of ABC Vietnam JSC Co .5: Illustration of working paper No.01 - Understanding the Business Fixed Asset Management .6: Illustration of working paper No.T01 - Understanding the procurement – disposal – depreciation process of fixed assets .7: Excerpt from Working Paper: Preliminary Analysis of Fixed Asset Balances of ABC Vietnam JSC .8: Determination of Materiality Level at ABC Vietnam JSC in 2024 .9: Analysis of Fixed Asset Fluctuations in 2024 Compared to 2023 .10: Analysis of Fixed Asset Depreciation Expense Fluctuations in 2024 Compared to 2023… .1: Organizational Structure of Deloitte Vietnam. 27 viii FIGURES: Figure 2.1: Illustration of the Contents of the Audit Contract for ABC Co.2: IPE Testing Procedures Presented Collectively in the Same Working Paper for the Fixed Assets Section: Wps No. Fixed Assets as of December 31, 2024 .3: Procedure for Reconciling Balances and Fluctuations of Fixed Assets in the General Ledger with the Trial Balance.
4: Number of samples and selected samples for detailed testing of additions to tangible fixed assets and finance-leased fixed assets .5: Recalculation table for depreciation of fixed assets of ABC Joint Stock Company….6: Explanation of differences from the recalculated depreciation table .7: Table listing assets with under-calculated depreciation months in the period .8: Comparison of the depreciation table with the depreciation framework under Circular 45 .9: Table checking the allocation of depreciation expenses to accounts 642 and 627…… .10: Summary of the Value of Depreciated Assets Still in Use and Assets Used as Collateral from the Recalculated Depreciation Table .11: Number of Selected Samples for FA Sighting and Results .12: Illustration of the procedure for evaluating the operational efficiency of the EU factory.13: Illustration of the procedure for evaluating the operational efficiency of the TS factory .14: Illustration of the procedure for evaluating the operational efficiency of the MĐ factory .15: Illustration of the procedure for evaluating the operational efficiency of the TB factory .16: Excerpt from the Audit Report for the Financial Statements of ABC Vietnam Co. The relevance of the topic In today's economy, financial statement auditing plays a crucial role in maintaining the transparency and reliability of the financial system, thereby fostering stability and sustainable economic development. Businesses and stakeholders such as investors, credit institutions, and regulatory agencies rely heavily on the financial information provided through financial statements to make critical economic decisions. While financial items such as cash, inventory, revenue, and expenses are often the focus of audits, fixed assets (FA) remain a particularly important item for most businesses.
Fixed assets account for a significant portion of a company's total assets and directly impact on its long-term development, especially in the manufacturing, construction, and transportation industries. Auditing fixed assets not only helps assess the accuracy of financial information but also detects and prevents errors or irregularities related to the recognition and management of fixed assets. Fixed assets are high-value, long-term assets, and therefore, the audit process for these assets requires precision, diligence, and strict compliance with accounting standards. Errors in recognizing, depreciating, or revaluing these assets can significantly affect a company's business performance and financial position.
Thus, improving the audit process for fixed assets to ensure the accuracy and reasonableness of these items in financial statements is an essential task. With the strong development of the market economy, businesses are increasingly facing changes and challenges in asset management, especially in the context of deep international integration and the rise of Industry 4. Companies must continuously expand production scale, invest in new machinery and equipment, and maintain fixed assets to meet development needs. However, managing and auditing these assets is not always straightforward, as transactions related to fixed assets are often complex and have a significant impact on other items in financial statements.
Audit firms, particularly Deloitte Vietnam, must constantly strive to improve their audit processes to meet the growing demands of clients while ensuring transparency and accuracy in financial reporting. Especially in the context of Vietnam's rapidly transforming and developing economy, the demand for high-quality financial auditing has become increasingly urgent. x Improving the fixed asset audit process will enhance the overall quality of audits, minimize the risk of errors and fraud, and ensure the stability and reliability of financial statements. This not only benefits businesses but also enhances the reputation and service quality of audit firms, including Deloitte Vietnam.
Recognizing the importance of fixed assets in financial statement auditing, I have chosen the topic "Improving the Audit Process for Fixed Assets in Financial Statement Audits Conducted by Deloitte Vietnam Company Limited" for my graduation thesis. This topic is not only theoretical but also highly practical, helping to improve the audit process at Deloitte Vietnam and the auditing industry in general, while contributing to the enhancement of audit service quality in an ever-changing economic environment. Research Overview In the field of financial statement auditing, fixed assets (FA) have always been an important and complex item, attracting the attention of numerous studies. These studies primarily focus on improving the audit process for fixed assets to enhance audit efficiency and reduce risks in evaluating and confirming the accuracy of these items in financial statements.
One notable study is the thesis by Nguyễn Trường Giang (2021) titled "Improving the Audit Process for Fixed Assets in Financial Statement Audits Conducted by Deloitte Vietnam Company Limited." This research provides a detailed look at the fixed asset audit process at Deloitte, particularly the application of information technology to support auditors, and compares Deloitte's process with that of smaller audit firms. In the same year, Nguyễn Khánh Duy Anh, in his thesis "Evaluating the Differences Between Vietnamese Accounting Standards (VAS) and International Financial Reporting Standards (IFRS) Affecting the Audit Process for Fixed Assets in Financial Statements," clarified the differences between the two accounting standards and their impact on the fixed asset audit process. These analyses help identify changes in the recognition and evaluation of fixed assets and highlight necessary adjustments in the audit process. Additionally, Nguyễn Thị Quỳnh's (2022) research on "Improving the Audit Process for Fixed Assets in Financial Statement Audits Conducted by AASC Auditing xi Firm" clarified the theory of tangible fixed asset auditing while evaluating the strengths and weaknesses of AASC's audit process, proposing solutions and recommendations for improvement.
However, despite the numerous studies on the fixed asset audit process, there remains a gap in this research, particularly in smaller audit firms such as CPA Vietnam Auditing Company Limited. Furthermore, while tangible fixed asset auditing has been studied, it has not been presented in a detailed and systematic manner. Notably, research also indicates that, in practice, the tangible fixed asset audit section is often assigned to interns or less experienced auditors, making the audit process challenging and risky. Further research into the theory and process of fixed asset auditing will help refine the audit process, reduce risks, and improve the quality of financial statements.
To date, many theses have studied the fixed asset audit process at major audit firms such as Deloitte, AASC, and BDO. Each study outlines the theory and current state of the audit process at these firms, evaluates strengths and weaknesses, and proposes improvement solutions.
