UNIVERSITY OF ECONOMICS AND LAWS FACULTY OF ACCOUNTING AND AUDITING GRADUATION THESIS AUDIT PROCEDURES FOR SALES AND COLLECTION CYCLE AT BDO VIETNAM WHEN AUDITING XYZ COMPANY INSTRUCTOR: MS. TRAN THANH THUY NGOC STUDENT NAME: NGUYEN ANH THY STUDENT ID: K175031683 CLASS: K17405CA Ho Chi Minh city, 05/05/2021 ii ACKNOWLEDGEMENT Dear Lecturer, First of all, I would like to show my warmest appreciation coming from the bottom of my heart to the teachers of the Faculty of Accounting and Auditing in particular and University of Economics and Law in general because of the dedication their blood, spirit and love to educate me extremely useful lessons, which are indispensable elements for success on the career path in the future. In particular, I would like to express my sincerely thanks to Miss Tran Thanh Thuy Ngoc - Instructor for all her support, necessary tips and guidelines so that I can well completed my graduation thesis. With my limited experience and knowledge, the enthusiasm of the lecturer created an opportunity for me to make good my shortcomings and bring out of my best performance.
Besides, it is not possible not to mention the wholehearted assistance from BDO Vietnam gave me assembly experiences during three months working in a professional workplace. Thanks, all auditor in the company conscientiously instructed and patiently answered the questions in order for me to be able to complete the internship period well. Your experience is such an excellent source of knowledge that no other place can offer. I sincerely thank you.
Finally, I wish all of the teachers in UEL and auditors in BDO Vietnam good health, happiness and success in your life. Best regard, Ho Chi Minh city, May 5 th 2021 Student Nguyen Anh Thy iii COMMENTS OF INSTRUCTOR ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- iv EXECUTIVE SUMMARY This report is a detailed overview of my internship journey at BDO Vietnam. During my internship period I have gained knowledge about audit services and its different applications. I have known about the audit procedures of sale, purchase and other process by companies.
I have learned to work in a dynamic space which not only enriched me professionally but also helped me grow personally as well. My contribution was appreciated by my supervisor and other members of the department. The career path I would be selecting for myself is quite influenced from my internship as I have had a great opportunity to practically see how audit procedure from planning to completing. However, this report has been written in a short time.
I have tried my level best to make it meaningful by reflecting my works at BDO Vietnam. Also, I have summarized my overall experience, with my learning and challenges faced as an intern. v TABLE OF CONTENTS TABLE OF CONTENTS. v LIST OF APPENDICES.
viii LIST OF ABBREVIATIONS. Aims of Study. Object and Scope. 3 CHAPTER 1: INTRODUCTION ABOUT BDO VIETNAM .2 Foundation and Development .6 Organization Chart of BDO .7 Job positions and professional level.8 Purpose and Value.
9 CHAPTER 2: THEORETICAL BASIS AND ANALYSIZING BDO’S PROCEDURES FOR AUDITING SALE AND RECEIVABLE CYCLE AT XYZ COMPANY .1 Theoretical basis about auditing sales and collection cycle.1 Definition and nature about sales and collection cycle .2 Feature about sales and collection cycle .3 Objective of auditing sale and collection cycle .4 Revenue recognition standard.5 Components in sale and collection cycle .6 Risks and controls in internal control in sale and receipts cycle .7 Overview of audit procedures of sales and collection cycle .1 The importance of auditing accounts receivable in financial statement .2 General audit procedures of sales and collection cycle .2 General audit process at BDO Vietnam .1 Plan and design an audit approach.2 Test of detail .3 Complete an audit and issue an audit report .3 Illustrated audit procedure for sales and collection cycle at XYZ company .1 General introduction about XYZ company .2 Understand internal control system of XYZ company .3 Planning an audit and designing an audit approach .1 Preliminary analytical procedures .2 Assess control risks in XYZ company .3 Identify materiality level .5 Complete an audit .1 Gathering audit result .2 Organizing establishment archives. 29 CHAPTER 3: CONCLUSION AND RECOMMENDATION OF BDO’S PROCEDURES FOR AUDITING SALE AND RECEIVABLE CYCLE .1 Basic of recommend .2 Some recommendations for BDO to complete the process of auditing accounts receivable. 29 APPENDIX viii LIST OF APPENDICES Table 1: Organization chart of BDO Vietnam Table 2.1 Risks and controls in internal control Table 2.2 Extracted from the assessment of internal control system at XYZ company Table 2.3 Materiality calculation Table 2.4 Horizon analysis the balance of Accounts Receivable in 2020 Table 2.5 Vertical analysis the balance of Accounts Receivable in 2020 Table 2.6 Reconciliation table between trial balance and general ledger Table 2. Reconciliation table between trial balance and subsidiary ledger Table 2.8 Check against the receivable confirmation letter Table 2.9 Summary table of confirmation mail response Table 2.10 Assess debts age Table 2.11 Review provision for doubtful debts Table 2.12 Provision for bad debts Table 2.13 Evaluate foreign exchange differences Table 2.14 Test cut-off Table 2.15 Gathering the errors ix LIST OF ABBREVIATIONS ABC The company name is used as an illustrative example BDO BDO company limited OM Overall Materiality PM Performance Materiality SUM De Minimis SUM Posting Level VAS Vietnam accounting standard VSA Vietnam auditig standard ISA International Standards on Auditing 1 INTRODUCTION 1.
Reason Along with the development of the current economy, auditing has made great strides and play an important role for state management agencies, organizations, companies, and businesses and investors. Auditing activities actively participate in the assessment, inspection and ensure the reliability of information on financial statements, and to contribute to improving the quality of business management, attracting foreign investment. and create favorable conditions for national economic development. Auditing of financial statements is a basic characteristic of audit.
Financial information is very important to investors, it is shown most on financial statements of business. Therefore, the information on the financial statements must reflect true and fair way for investors to evaluate the business performance. As result, make investment decisions based on the information reflected in the financial statements. With the current situation, when Vietnam is entering the 4.0 industrial revolution and the Ministry of Finance also plans to apply IFRS international accounting standards in Vietnam, the auditing field plays an important role further in giving a more conservative and accurate audit opinion.
Auditing of financial statements is a basic type of audit, including many complicated operations and cycles in which the revenue cycle is an item playing a critical role in the financial business. This item directly affects the cash flow as well as reflects how the company operate effectively and efficiency. In fact, in enterprises often appear overstate this item, so it is necessary to effectively audit through the capacity and prudence of the auditor and also must ensure a process. reasonable and scientific, save money and time.
Realizing the importance of audit procedure for revenue cycle, during the internship at BDO Vietnam the writer chose the topic: Audit Procedures for Revenue cycle for XYZ company of BDO Vietnam. Through the topic to help readers better understand the audit of revenue cycle in reality as well as realize the risks and errors that may occur in this cycle. Aims of Study - Finding out the audit process of revenue cycle of BDO Vietnam Co. - Describing the practical application of the audit process for revenue cycle from customers at XYZ Company performed by BDO Vietnam Co.
- Drawing conclusion, assessments and giving recommendations to improve the process more effectively in the BDO's audit activities. Object and Scope - This topic focuses on describing the process of auditing for revenue cycle of XYZ company in the year end December 31th 2020 of BDO company - Giving an assessment of the audit procedures about this revenue cycle of BDO Vietnam - The overall objective in the audit of the sales and collection cycle is to evaluate whether the account balances affected by the cycle are fairly presented in accordance with accounting standards. Limitation - Only illustrating a specific client company in a specific industry should not cover comprehensiveness of the report - The report also cannot avoid certain restrictions, due to time or limitation in research conditions - Because the confidentiality of the information, customer data is for illustrative purposes only. Research Methodology - Collecting the procedures of learning about the internal control system of the auditing company BDO Vietnam, studying some audit working papers provided by the company - Analysis - synthesis: on the basis of theory and data, analyzing the rules, then synthesizing and drawing comments and recommendations.
- Comparing: comparing the item differences over the years and finding out the reasons for this differences 3 _ Discussing and interviewing the auditors at BDO Vietnam 6. Layout The report has 3 chapters: Chapter 1: Introduction about BDO Vietnam Chapter 2: Theoretical basis and Analysizing BDO’s procedures for auditing sale and receivable cycle at XYZ company Chapter 3: Conclusion and Recommendation of BDO’s procedures for auditing sale and receivable cycle 4 CHAPTER 1: INTRODUCTION ABOUT BDO VIETNAM 1.1 Business Overview BDO was founded in 1963 in United Kingdom. In 1973 the network adopted the name BDO, made up from the initials of the three founding European member firms: Binder (UK), Dijker (Netherlands) and Otte (Germany). The firms have representation over 1,658 offices in 167 countries, BDO International employs over 91,054 partners and staff all over the world.
BDO in Vietnam is one of member firms of BDO International Limited, the world's fifth largest network of professional firms providing audit, advisory and tax services to businesses ranging from established multinational conglomerates to growth- oriented organizations, whether public or private.2 Foundation and Development BDO in Vietnam includes 02 entities: - BDO Consulting Vietnam Company Limited - a foreign investment company, was established on 20 July 2012, based on investment certificate No.: 411043001989 issued by the People's Committee of Ho Chi Minh City and 7th amendment on 13th June 2019 English Name: BDO CONSULTING VIETNAM COMPANY LIMITED - BDO Audit Services Company Limited – a foreign investment company, was established on 09 December 2012, based on investment certificate No.: 0101333767 issued by the Business Department – Ha Noi Planning and Investment Office and 16th amendment on 24 December 2015. English Name: BDO AUDIT SERVICES COMPANY LIMITED It has two (02) offices at Hanoi and Ho Chi Minh City: - Ho Chi Minh office: Floor 11, The ADDRESS Building, No. 60, Nguyen Dinh Chieu Street, Da Kao Ward, District 1, Ho Chi Minh City, Vietnam. Email: bdo@bdo.vn - Ha Noi office: 20th Floor, 243A De La Thanh Street, District Dong Da, Ha Noi, Vietnam.vn 5 This move will effectively expand BDO’s service offering in Vietnam to encompass a full range of audit, advisory and tax services, provided by a team of highly regarded industry professionals.3 Business Achievement Global fee income of all BDO member firms, including the members of their exclusive alliances, for the year ended 30 September 2020 announced a total combined fee income of US$ 10.2 billion, representing year on year growth of 7.8% at constant exchange rates (+7.
In October 2018, BDO was announced as the winner of the Network of the Year award at the International Accounting Bulletin (IAB) Awards 2018. BDO won the same award in 2015.4 Organization Feature BDO demonstrates objectivity and independence when dealing with clients’ business issues, and this helps BDO to build relationships based on trust. There are five key components that describe BDO and our consistently exceptional service delivery: Client needs BDO anticipate clients’ needs and are forthright in views, in order to ensure the best outcome for clients. Communication BDO are always clear, open & swift in communication.
Commitment BDO agree to and meet our commitments, meaning that BDO deliver what BDO promise, every day, for every client.