VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL GRADUATION THESIS COMPLETING AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD Nghiêm Thu Hiền Hanoi – 2021 1 VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL GRADUATION THESIS COMPLETING AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD SUPERVISOR: M. Ngô Trí Trung STUDENT: Nghiêm Thu Hiền CODE: 17071263 COHORT: AC2017A MAJOR: Accounting, Analyzing and Auditing Hanoi – 2021 2 Acknowledgement Firstly, I would like to express my special gratitude and deeply regard to my supervisor, M. Ngo Tri Trung, who supports and guides me in the thesis, for his patience, motivation, enthusiasm, and immense knowledge. His guidance helped me during the research and provided suggestions helping me accomplish the thesis well.
I also would like sincerely thank to the Board of Directors of Thang Long – T.K Auditing and Valuation company, Ltd for providing the essential documents of the company as well as the auditors for your enthusiastic guidance and facilitating me to study and work. Finally, I would like to thank International School, Vietnam National University, Ha Noi for giving me a chance to experience and supports me for my thesis. Yours sincerely, Nghiem Thu Hien i Letter of Declaration I hereby declare that the Graduation Thesis titled “Completing the audit procedures for cash and bank accounts on Financial Statements at Thang Long – T.K Auditing and Valuation company, Ltd” is the results of my own research and has never been published in any work of others. During implementing this thesis, I have seriously taken research ethics; all findings of this project are results of my own research and surveys; all references in this project are clearly cited according to regulations.
I bear full responsibility for the fidelity of the number and data and other contents of my graduation project. Hanoi, Jun 1st, 2021 Nghiêm Thu Hiền ii LIST OF ABBREVIATIONS Thang Long – T.K Audit and Valuation Company, Ltd T.K ABC Joint Stock Company ABC Financial Statement FS International Standards on Auditing ISA Vietnam Association of Certified Public Accountants VAPCA iii TABLE OF CONTENT ACKNOWLEDGEMENT. I LETTER OF DECLARATION .II LIST OF ABBREVIATIONS. LITERATURE REVIEW ON AUDIT PROCEDURE FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENT .1 Definition and classification .2 Rules for cash accounting .3 Characteristics of cash and bank on Financial Statement.2 CONCEPT OF AUDIT PROCEDURE FOR CASH AND BANK ACCOUNT ON FINANCIAL STATEMENT .2 Resources and documentations for the audit .3 FRAMEWORK OF AUDIT PROCEDURE FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENT .ACTUAL AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .1 OVERVIEW OF THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .2 History of establishment and development of the company.4 Types of service of the company .5 The quality control of assurance services process .2 THE AUDIT PROCESS FOR FINANCIAL STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .3 AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCILA STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .4 ACTUAL AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCILA STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .59 PROPOSALS FOR COMPLETING THE AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENT AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .1 COMMENTS ON THE ACTUAL AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS PERFORMED BY THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD.3 Reasons for restrictions .2 DEVELOPMENT ORIENTATION AND NECESSITY OF COMPLETING THE AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCILA STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .1 Development orientation of Thang Long .2 The necessity of completing the audit procedures for cash and bank accounts on financial statements at Thang Long – T.K Auditing and Valuation company, Ltd .3 REQUIREMENTS AND RULES FOR COMPLETING THE AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCILA STATEMENTS AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .1 Requirements for completing the audit procedures for cash and bank accounts .2 Rules of completing the audit procedures for cash and bank accounts.4 PROPOSALS FOR COMPETING AUDIT PROCEDURES FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENT AT THANG LONG – T.K AUDITING AND VALUATION COMPANY, LTD .5 CONDITIONS TO IMPLEMENT PROPOSALS .1 To Thang Long – T.K Auditing and Valuation Company, Ltd .6 PROPOSALS FOR THE THESIS .1 Limitations of the thesis .2 Recommendations for thesis success.
Rationale of research Along with the strong development of the economy, public audits are also constantly growing and become an essential demand on the economic race. Currently, in the economy, the information on FS does not only describe the whole picture of operating and doing business in the fiscal year of businesses, to stakeholders, they base on those to make their decisions and investments, thus, the information on FS is required to become more true and fair, objective and high reliable. Therefore, auditing is becoming necessary for operating and doing business and improvement the management quality of all type businesses. The audit report is more concerned by stakeholders because it expresses the degree of reliance of information on FS.
Along with Non-current assets and inventory accounts normally are high value and pervasive to FS, Cash and Bank accounts also plays importance role on FS, as Cash and Bank accounts are closely relative to the most of accounts on FS, particularly, Financial Position and Statement of cash flow and almost relate to sales and purchase cycles and payment transactions, which are important to the entity’s operation. Besides that, Cash and Bank accounts both are the most high-liquidity assest, therefore, almost transactions related to cash and bank are high value and high possibility of having frauds and errors. However, not all audits of cash and bank achieve audit objective and effectiveness. Moreover, the real story about Wirecard's bankruptcy caused by the disappearance of 1.9 billion euros in cash and bank accounts that was audited by a famous audit firm in June 2020 has been leading to controversy whether the audit procedure for cash and bank accounts on FS currently has been really focused.
Besides, understanding the importance of audit procedure for cash and bank accounts on FS and through internship at Thang Long - T.K Auditing and Valuation Company, Ltd, I realized that in fact, audit procedure for cash and bank account still has difficulties and restrictions. Therefore, I choose the thesis topic is : “Completing audit procedures for cash and bank accounts on Financial statements at Thang Long - T.K Auditing and Valuation Company,Ltd”. vii 2/ Aims and Objective Aims: The research aims to complete audit procedures for cash and bank on Financial statement which helps auditor have a more reasonable assessment for these accounts and reduce audit risk of providing reasonable audit opinion. Objectives: The research need to implement these main objectives: - Systemization basic arguments on the audit process for cash and bank on FS; - Study about actual audit procedures for cash and bank on FS which performed by Thang Long - T.K Auditing and Valuation Company,Ltd.
- Assessing and giving proposals to complete the audit process for cash and bank on FS at Thang Long - T.K Auditing and Valuation Company,Ltd. 3/ Scope of the research - Subject of the research: Audit procedures for cash and bank accounts on Financial statement. - Scope of the research : Audit procedures for cash and bank accounts on Financial statement which performed by Thang Long - T.K Auditing and Valuation Company,Ltd in 2020. - Method of studying documents: Base on documents, standards on Accounting and Auditing, accounting regime; using documentations and audit files of at Thang Long – T.K Auditing and Valuation company, Ltd in order to obtain necessary information served for the thesis.
+ Refer Accounting Regime Circular 200/2014/TT-BTC “Guidlines for accounting policies for enterprises”, Standards on Auditing issued by International Federation of Accountants (ISA 200, ISA 300, ISA 315, ISA320, ISA 520) to provide a basis for studying the thesis. + Obtain the information of overview of Thang Long – T.K Auditing and Valuation company, Ltd base on documents and website of T.K viii + Obtain the information about audit procedures for cash and bank accounts for clients at Thang Long – T.K Auditing and Valuation company, Ltd through audit files provided by auditors. - Observation and Inquiry: Observe directly the actual audit performance for cash and bank accounts on FS at Thang Long – T.K Auditing and Valuation company, Ltd during internship. Inquiry auditors and audit associates at Thang Long – T.K Auditing and Valuation company, Ltd in order to gather other relevant information.
- Synthesis and analysis: Synthesize the information and documentation collected for analysis and evaluation. Then the results are gathered in order to make objective comments thereby detecting pros and cons in audit procedures for cash and banks accounts at T.K, then finding the causes and proposals for completing the audit procedures for cash and banks accounts at Thang Long – T.K Auditing and Valuation company, Ltd. 5/ Structure of research The thesis including 3 main part: Chapter 1: Concept and framework of Audit procedures for Cash and Bank accounts on Financial Statements Chapter 2: Actual Audit procedure for Cash and Bank accounts on Financial Statement at Thang Long – T.K Auditing and Valuation company, Ltd. Chapter 3: Proposals for completing the Audit procedures for Cash and Bank accounts on Financial Statement at Thang Long – T.K Auditing and Valuation company, Ltd ix LITERATURE REVIEW ON AUDIT PROCEDURE FOR CASH AND BANK ACCOUNTS ON FINANCIAL STATEMENT 1.1 Definition and classification In the economy, Trade in commodities is the essential activity in the development stage.
In the past, the exchange of goods is made through directly trade off between objects. When the types of goods and services are variety, the trade is expanded in scope and volume, thus it is necessary to have specific and unified unit to trade, so the money occurs. “Economists define money as anything that is generally accepted as payment for goods or services or in the repayment of debts”.95) Mishkin (2016) pointed out 3 functions of money: - Medium of exchange: money is used to make payments - Unit of account: money is used to measure value in an economy - Store of value: it is a repository of purchasing power available over time. Money has taken different forms at different times, money currently exists as 3 main types: cash on hand, cash in bank and cash in transits based on the charateristic of stored.
Cash on hand is the actual amount of cash stored in the enterprise, which aims to make payments for commodities or payroll for employees. Cash on hand could exist in many forms as Vietnamese Dong, foreign currencies or Monetary Gold. Cash on hand is the most liquid in forms of money because it can be used to make payments immediately without having to be converted into anything else. Cash in bank is the cash deposit in bank aims to reserve for payments or term deposits.
Cash in bank can be Vietnamese Dong, foreign currencies or Monetary Gold. For the enterprises which frequently have trade commodities with foreigners or import/ export 1 goods, the transactions and account balaces of cash in bank are relatively large and make up high portion in total cash. Cash in transit is the amount of money deposited in Bank or State treasury but the firm, or the firm made payments through bank accounts for others but not receive the bank Statements or Credit notes. Cash in transit can be Vietnamese Dong or Foreign currencies.
The classification of cash and bank above is a common way, but also is the way that cash and bank accounts are presented on Statement of Financial Position of the enterprises according to Circular 200/2014/TT-BTC.
