BANKING ACADEMY ACCOUNTING AUDITING FACULTY BACHELOR THESIS TOPIC: AUDIT OF SALES AND CASH COLLECTION CYCLE IN FINANCIAL AUDITS CONDUCTED BY KPMG VIETNAM LIMITED COMPANY Student’s name : Nguyen Thuy Linh Speciality : Audit Class : K24CLC-KTA Student’s ID : 24A4023148 Supervisor : Dr. Nguyen Thi Thanh Mai Ha Noi - 2025 BANKING ACADEMY ACCOUNTING AUDITING FACULTY BACHELOR THESIS TOPIC: AUDIT OF SALES AND CASH COLLECTION CYCLE IN FINANCIAL AUDITS CONDUCTED BY KPMG VIETNAM LIMITED COMPANY Student’s name : Nguyen Thuy Linh Speciality : Audit Class : K24CLC-KTA Student’s ID : 24A4023148 Supervisor : Dr. Nguyen Thi Thanh Mai Ha Noi - 2025 i STATUTORY DECLARATION I hereby commit to writing my thesis titled “Audit of sales and cash collection cycle in financial audits conducted by KPMG Vietnam Limited Company” independently and in compliance with academic integrity standards. I affirm that the work presented will be my own, and any references to other sources will be properly cited.
I understand that plagiarism or any form of academic dishonesty is a violation of institutional policies, and I take full responsibility for the authenticity and originality of my work. I have explicitly identified and separately listed all the references and sources, whether quoted directly or referenced in substance, that I used in the creation of this academic work. Ha Noi, 11 April 2025 Signature Nguyen Thuy Linh ii ACKNOWLEDGEMENTS Following four years of academic pursuit at the Banking Academy, I have equipped myself with extensive professional knowledge and essential soft skills. I extend my profound gratitude to the entire faculty of the Academy for their dedicated guidance, unwavering support, and valuable sharing of practical experiences, which have significantly contributed to my growth and development throughout my time at the institution.
In particular, I express my boundless appreciation to my supervisor, Dr. Nguyen Thi Thanh Mai, for her invaluable insights and suggestions on my graduation thesis. Her guidance and feedback were pivotal throughout the research and writing process. Without her exceptional expertise and unwavering support, I could not have completed my bachelor's thesis to such a high standard.
I also offer my sincere thanks to KPMG Vietnam Limited Company for providing me with the opportunity to intern in the audit field over the past three months. During my internship, the company fostered a professional and welcoming work environment that facilitated my understanding of audit practices. This allowed me to apply theoretical knowledge to practical scenarios and gain a deeper comprehension of the audit process, particularly the sales and collection cycle of financial statements. Lastly, I extend my gratitude to all the staff at the company.
Despite the busy audit season, they consistently provided enthusiastic guidance and assistance, shared their valuable auditing experiences, and offered support whenever I encountered challenges in my work. Their enthusiasm and willingness to help enriched my learning experience during the internship. iii TABLE OF CONTENT STATUTORY DECLARATION. ii LIST OF ABBREVIATION.
vi LIST OF FIRGUE ,TABLE, DIAGRAM. 1 CHAPTER 1: THEORETICAL FRAMEWORK OF AUDITING THE SALES AND CASH COLLECTION CYCLE IN FINANCIAL STATEMENT AUDITS CONDUCTED BY INDEPENDENT AUDITORS. Overview of sales and cash collection cycle. Nature of sale and cash collection cycle.
Steps in sale and cash collection cycle. Acounting for the sales and cash collection cycle. Common misstatements in the sales and cash collection cycle. Internal control for sale and cash collection cycle.
Audit procedure for sale and cash collection in financial audit. Completing the audit. 40 CHAPTER 2: CURRENT AUDIT PRACTICES FOR THE SALES AND CASH COLLECTION CYCLE IN FINANCIAL STATEMENT AUDITS CONDUCTED BY KPMG VIETNAM. Overview about KPMG Limited Company.
Formation and development process. Overview of the current status of the audit process sale and cash collection cycle in the audit of Financial Statements performed by KPMG Company Limited. Audit procedures sale and cash collection cycle in company A’s financial statement conducted by KPMG. Assessment of the Audit Practices in Financial Statement Audits Conducted by KPMG.
Limitations and causes. 84 CHPATER 3: PROPOSED MEASURES TO IMPROVE THE AUDIT PROCESS FOR FIXED ASSET ITEMS IN FINANCIAL STATEMENT AUDITS PERFORMED BY KPMG. Development Orientation of KPMG Limited Liability Company. Recommendations for strengthening the auditing of sale and cash collection cycle at KPMG.
Condition to complete the solution. On the part of government authorities:. On the part of professional associations. On the part of auditors and KPMG.
On the part of client. 94 vi LIST OF ABBREVIATION Abbreviation Primary meaning AMPT Audit Misstatement Posting Threshold AR Account receivable CERAMIC Control activities, Environment (Control environment), Risk assessment, Accounting system (Information system), Monitoring, Information and communication, Compliance CR Control risk DnI Design and Implementation DR Detection risk GDN Goods despatch note GPM Gross profit margin IC Internal control IFRS International Financial Reporting Standards IR Inherent risk KAEG KPMG Audit Execution Guide M Materiality MIC Manager in charge MUS Monetary Unit Sampling PBTCO Profit before Tax from Continuing Operation PIC Partner in charge PM Performance Materiality PO Purchase order RAWTC Risk associate with the control ROS Return on sale SIC Senior in charge TOE Test of effectiveness VAS Vietnam Accounting Standard VAT Value added tax vii LIST OF FIRGUE ,TABLE, DIAGRAM Diagram 1. 1: Process of steps in sale and cash collection cycle. 2: Process of document circulation of sale and cash collection cycle.
3: Process of recording sale and cash collection cycle. 4: Audit process of sale and cash collection cycle in financial audits. 5: Process of completing the audit. 1: Organization chart in KPMG.
1: KCW software interface. 2: Preliminary analytical procedures for sale and trade receivable account. 3: Details of sale revenue in 2023 and 2024. 4: Sale revenue in 2023 and 2024.
5: Sale by customer in 2024. 6: Details of GPM in 2023 and 2024. 7: Gross sale, COGS and GPM in 2024. 8: Account receivable turnover day in 2024.
9: Account receivable balance in 31/12/2023 and 31/12/2024. 1: Rate for allowances for doubtful receivables. 2: Common misstatements in the sales. 3: Common misstatements in the cash collection.
4: Audit objective of sale transactions and cash receipt transaction. 5: Audit objectives of the account receivable balance. 1: Fiancial position of KPMG Vietnam in the period 2022 - 2024. 2: Examine, Verify and Assess Revenue During the period.
3: Examine the Cut-off of Revenue recognition. 4: Send Accounts Receivable Confirmations. 5: Information about audit contract. 6: Inherent risk assessment.
The Urgency of the Topic The audit of the sales and cash collection cycle is a critical component of financial audits, particularly in ensuring the reliability and accuracy of financial statements. This cycle encompasses the recognition of revenue, accounts receivable, and cash receipts, all of which are fundamental to an organization’s financial health and performance. Given the increasing complexity of business transactions, evolving accounting standards, and the heightened scrutiny on financial reporting, the necessity of a thorough audit of this cycle cannot be overstated. In recent years, regulatory bodies and stakeholders have placed greater emphasis on revenue recognition and cash flow management due to their direct impact on a company’s financial stability and transparency.
Misstatements or fraud in this cycle can lead to material misrepresentation of financial results, undermining investor confidence and leading to severe legal and financial consequences. High- profile financial scandals have demonstrated the devastating effects of revenue manipulation, reinforcing the importance of stringent audit procedures to detect and prevent such risks. KPMG Vietnam Limited Company, as one of the leading audit firms, plays a crucial role in upholding financial integrity by applying international audit standards and best practices. The company’s audit approach is designed to assess the effectiveness of internal controls, verify the accuracy of revenue recognition policies, and ensure compliance with financial reporting regulations.
Given the dynamic nature of business environments and the adoption of new accounting standards such as IFRS 15 (Revenue from Contracts with Customers), auditors must continuously refine their methodologies to address emerging challenges in revenue and cash collection audits. Additionally, Vietnam’s economic growth and increasing integration into global markets have led to more sophisticated business operations, necessitating enhanced audit procedures. Companies in Vietnam, especially those in industries 2 with complex sales structures such as retail, e-commerce, and financial services, require rigorous audit processes to mitigate risks associated with revenue recognition and cash collection. The role of auditors in ensuring proper documentation, identifying anomalies, and assessing the effectiveness of internal controls has become more vital than ever.
This study on the audit of the sales and cash collection cycle conducted by KPMG Vietnam Limited Company is essential in shedding light on the practical challenges and solutions auditors face in maintaining financial transparency. It provides valuable insights into audit techniques, risk assessment methodologies, and compliance measures that contribute to the credibility of financial statements. By analyzing KPMG’s audit procedures, this research aims to highlight best practices and recommendations for enhancing audit quality, ultimately strengthening trust in financial reporting within Vietnam’s corporate landscape. Literature review Revenue is a sensitive and easily manipulated account in financial statements, making it a subject of extensive research and academic studies aimed at enhancing audit procedures for this area.
At universities, this topic is also widely explored in graduation theses, as many students focus on evaluating both the theoretical foundations and practical applications of revenue audit procedures at their internship firms. Several notable studies in recent years include the thesis "Audit of Sales and Cash Collection Cycle in Financial Audits Conducted by KPMG Vietnam Limited Company" by Dang Thuy Quynh (2024). This study provided a detailed analysis of the revenue audit process for clients operating in the manufacturing and trading sectors. It also examined the latest updates to KPMG’s audit procedures.
Nevertheless, the paper hasn't addressed the requirements for carrying out those solutions. Similarly, Nguyen Tran Thai Duong conducted research on this topic in the thesis "Enhancing the Audit Process for the Revenue Account in Financial Statement Audits Conducted by VACO Limited Company" (2021). This study 3 explored the theoretical aspects of revenue accounting and analyzed the audit procedures applied by VACO. The author identified several shortcomings in VACO’s revenue audit approach and proposed improvements across different audit stages.
Additionally, the study emphasized the role of government agencies, professional associations, and client-side cooperation in strengthening revenue audits. However, this thesis primarily focused on evaluating the overall financial statement audit process rather than providing a detailed assessment of the revenue audit procedures specifically. In the same year, Nguyen Tuan Anh published a thesis titled "Audit Process for the Revenue Account in Financial Statement Audits Conducted by UHY Limited Company." This study offered a more comprehensive set of recommendations for improving revenue audit procedures. However, since revenue is closely linked to accounts receivable, the study would have been more insightful if it had examined the sales and cash collection cycle as a whole.
This represents a limitation of the research, as it did not consider the interdependence of these accounts. Overall, existing studies have successfully outlined revenue audit procedures, identified strengths and weaknesses, and suggested enhancements to the audit process. However, these studies still present certain limitations. Moreover, each audit firm develops its own audit methodology, resulting in both similarities and differences across firms.
Notably, revenue audit procedures may vary depending on specific clients. Therefore, I have chosen the topic "Audit of Sales and Cash Collection Cycle in Financial Audits Conducted by KPMG Vietnam Limited Company" to provide a more in-depth analysis of the sales and cash collection audit process for manufacturing and trading enterprises. Objectives and significant of the topic This study aims to systematize, generalize, and clarify the fundamental theoretical aspects of the audit process for the sales and receivable in financial statement audits conducted by independent auditing firms.
