UNIVERSITY OF ECONOMICS & LAW DEPARTMENT OF ACCOUNTING – AUDITING GRADUATION THESIS APPLICATION OF COMPUTER ASSISTED AUDIT TECHNIQUES BY PRICEWATERHOUSECOOPERS VIETNAM LIMITED COMPANY MENTOR : MAI THI PHUONG THAO STUDENT : NGUYEN THANH NHA STUDENT CODE : K174050616 CLASS : K17405CA HO CHI MINH CITY, MAY 2021 i ACKNOWLEDGEMENT After completing the internship report for the record of the internship period I have when working at PwC (Vietnam) Ltd., I would like to present the graduation thesis which I have been contributing and developing since then. It is my radiant sentiment to place on record my best regards, deepest sense of gratitude to Mr. Tran Ngoc Duy Quang, Manager in charge of audit tools development for his great knowledge and warm support on my inquiry for technology tools used for auditing, and Ms. Nguyen Thi Huong Thanh, Senior Associates for her careful and precious guidance which were extremely valuable for my study both theoretically and practically.
Furthermost, I would like to mention my graduation thesis mentor, Mrs Mai Thi Phuong Thao for her dedication and support that she gives me a lot of encouragement to pursue this topic for my internship report and graduation thesis. I hope she would continue to embrace other later generations of University of Economics & Law students in cultivating accounting and auditing practices. I perceive this opportunity as a big milestone in my career and education development. I will strive to use gained skills and knowledge in the best possible way, and I will continue to work on their improvement, in order to attain desired career objectives.
I am looking forward to thrive and be excelsior in the accounting and auditing fields in the near future. Sincerely, Nguyen Thanh Nha, Ho Chi Minh City, 29 April 2021. ii COMMENTS OF MENTOR _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ iii EVALUATION FORM FOR GRADUATION THESIS – MENTOR iv v COMMENTS OF REVIEWER _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ vi EVALUATION FORM FOR GRADUATION THESIS – REVIEWER vii viii COMMENTS OF JUDGES _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ ix TABLE OF CONTENTS 1. Purposes of chosen topic.
Scope of study. CHAPTER 1: LITERATURE REVIEW. Overview of PricewaterhouseCoopers. Lines of service.
CHAPTER 2: USE OF COMPUTER ASSISTED AUDIT TECHNIQUES. Introduction to computer assisted audit techniques of PwC. Description and illustration. Explanation and documentation.
CHAPTER 3: CONCLUSION AND RECOMMENDATION .36 x LIST OF GRAPHICS List of chart mentioned Chart 1. Organizational chart at PwC Vietnam List of table mentioned Table 1. Required audit procedures when using GL Revenue List of illustrations mentioned Illustration 1. Depiction of Aura Platinum interface in the Executive view Illustration 2.
Microsoft Excel file for an Account Payable section evidence gathering activity Illustration 3. Targeted testing test of details form for Accounts Payable section Illustration 4. Non-statistical sampling test of details form for Accounts Receivable section Illustration 5. Accept-reject test of details form for Accounts Receivable section Illustration 6.
Two-step revenue approach demonstrations Illustration 7. PwC’s iCore general information interface Illustration 8. Depiction when using iCore to prepare auditor’s report Illustration 9. Depiction when copying from Excel and pasting to Word xi LIST OF ACRONYMS English ACL Audit Command Language CAAT Computer Assisted Audit Technique EGA Evidence Gathering Activity ERP Enterprise Resource Planning PIE Public Interest Entities PwC PricewaterhouseCoopers xii ABSTRACT Computer assisted audit techniques, known for short as CAATs are tools and systems formed by the information technology transformation.
CAATs have been applied by those leading professional service firms since the early twenty-first century. PricewaterhouseCoopers or PwC is one of the first companies to develop CAATs for their own discretionary uses. The development team of PwC network has been proudly presenting various CAATs which assist and support the auditors in different auditing aspects. For performing audit procedures, CAATs help the auditors to plan audit strategy, assess risk, select the number of samples, analyze anomalies, and test the control of clients’ systems as well as test the details of every transactions data.
CAATs can also aid the auditors to extract clients’ data, request for additional information, assign tasks to involved personnel, record audit work, keep track on workflow, store audit evidences digitally and prepare auditor’s report. This graduation thesis points out the benefits of using CAATs from the planning stage, performing audit procedures in testing phase to completion phase and presenting auditor’s report. With the high-velocity development of information technology and automation nowadays, CAATs need to be progressed and improved in accordance with the usage trend of the auditors and the auditing requirement. To conclude, CAATs play an important and essential role in every audit engagement of PwC as they solve the riddle with an ease on audit workload.
Purposes of chosen topic For more than two decades, the auditors have been experiencing various significant changes in technology. The developments in information technology have led to automation, which reduces time spent on work originally required manual manpower, and the improvement on information processing and communicating system, which enhances security protection and better-quality correspondence between individuals and business entities. In general, information technology has been bringing many advantages to many professions and also to accounting and auditing field specifically. As an outcome, computer assisted audit techniques (CAATs) are adopted as one of information technology means used in the auditing fields by auditors to automate audit processes which were previously done by personnel and made up a lot of time to cover.
Even though CAATs have been advanced for such a long period, there are, still, not many comprehensive knowledges mentioned in university curriculum as this subject is quite vast and mostly for practice uses only. As a matter of fact, several notable professional services firms are using CAATs as an auditing support instrument to help their auditors perform sufficient data processing procedures and obtain reasonable judgements. Hence, this graduation thesis interprets “Use of computer assisted audit tools and techniques by PricewaterhouseCoopers Vietnam Limited Company”, which is expanded from my internship report with the same name. The purposes of this paper are not only to portray CAATs application in practice but also to get understanding CAATs by either in practice or in theory.
Thesis objectives There are two objectives of the graduation thesis trying to resolve: • Depiction of CAATs used by PricewaterhouseCoopers (PwC). • Analysis of CAATs, comment on any strength or drawback witnessed and recommend any improvement for CAATs operation of PwC. Research methodology The graduation thesis is implemented by using these research methods: • Qualitative method: pursue research into theoretical basis, collect and analyze non- numerical data such as prior research papers as well as research articles about the chosen topic to get in-depth insights then encapsulate and represent a brief abstract in terms of the theories obtained, experience recalled, explanation attained, conclusion drawn and recommendation suggested. • Observation method: observe procedures and carry out procedures with instructions for CAATs in practice at the company.
• Information collecting method: obtain available information and data during performing procedures for CAATs, understand instructions and policies required to use CAATs at the working company. • Interview method: inquire and discuss with experienced auditors and of the company. Scope of study This graduation thesis primarily focuses to the extent of operations of PwC in Vietnam area and for the ending year of 2020. Disposition Except for the abstract and introduction of the graduation thesis, the main content comprises of three chapters which are: • Chapter 1: Literature review – definition of CAATs and overview of PwC.
• Chapter 2: Use of CAATs by PwC – illustration, explanation, and analysis. • Chapter 3: Conclusion and recommendation on CAATs renovation for PwC. CHAPTER 1: LITERATURE REVIEW 2. Theoretical basis Auditing is an attestation of financial statements prepared by an entity and its result is to express an independent opinion about the creditability of those financial information.
Audit and assurance services are intended for the demands of many stakeholders including individuals and organizations who have interest, whether they are making decisions to invest and finance or divest their contribution, in that audited entity. Besides, audit services are also provided to the managers and owners of the audited entity as they are willing to receive any recommendation or suggestion for the improvement of their financial statements preparation, laws and regulations compliance and the effectiveness of their internal control systems. To generate an audit opinion, the independent practitioner, usually a professional services firm, must execute numerous audit procedures for different financial statements line items. For most of the cases, there are six typical stages for audit process (Sutton, 2007).
Firstly, the auditors need to gain knowledge of the profiles as well as get understanding of the business activities of the client who they have audit engagement with. Secondly, the auditors set audit plan and strategy. It is a crucial stage of an audit. In this stage, audit plan shows a more detailed picture of audit strategy as it sets out the nature, timing, the extent of audit procedures and it also assigns work to team members and facilitate direction, supervision as well as review of work.
Thirdly, the fieldwork stage takes place in order to collect information and obtain sufficient appropriate audit evidence for the audit. Next, the auditors will have an analysis: they evaluate and assess the impact of evidence towards the overall financial statements in a material aspect by performing differing audit procedures with professional skepticism. Then, if need, the auditors may exercise professional judgement in accordance with the standards, laws, regulations, or principles of the applicable financial reporting framework. This is a required and typical trait of each audit engagement.
Lastly, the auditors will draw a reasonable conclusion, based on their obtained audit evidence, which is also documented in audit report. According to Redmayne (2007), back to the medieval era, when the manual bookkeeping was prevailing, the audit work was carried out as the auditors in Western countries listened to the accounts which were read out for them and then checked to ensure that these accounts did not contain any misstatement or fraud made by the accountant personnel. Moyer (1951) then specified that the most important duty of an auditor was to detect fraud. Sir Michael Chatfield later discovered that the early United States auditing was viewed mainly as verification of bookkeeping detail, Johnson (1975).
When the companies and organizations started to grow bigger, the auditors needed to perform more required procedures along with obtaining more sufficient evidences which were necessary to conclude their audit opinion. Therefore, they began to keep more audit documentations as paper forms. 3 Not until 1990s, technology has made a great impact on many distinct professions and special fields. There is no longer document-keeping work as more firms become paperless.
Instead, they begin making use of electronic workpapers which bring a lot of benefits, as Janvrin, D. Electronic files can be accessed to many involved personnel as they are stored on sharing clouds and only personnel who are granted access can launch and work on the workpapers. Nevertheless, those electronic files can also be updated and tailored for various purposes of work. Therefore, professional services firms such as auditing firms are modifying their computerized systems for information technology purposes as instruments to automate audit work with their own patterns and guidelines.
(2003) noted that using information technology does improve work performance., (2014) also clarified that the use of information technology tools by larger auditing firms might differ depending on the scale of each firm and their audit approaches for each specific audit client with distinctive sophisticated financial reporting systems.