FINANCIAL STATEMENT AUDITING

FAT AWARENESS ABOUT FINANCIAL AUDIT SERVICES

1. Purpose and requirements of the audit

a. Purpose of the audit

Through the audit to determine:

• Does the information in the financial statements give a true and fair view of the financial position, results of operations and cash flows of the audited entities?
• Are the audited entity’s financial statements prepared in accordance with current (or accepted) Vietnamese Accounting Standards and Regulations?
  Are the audited entity’s financial statements prepared on the basis of compliance with the issued financial regulations?
• Has the entity selected suitable accounting policies and then applied them consistently, and made accounting judgments and estimates that are reasonable and prudent?

In addition, through the audit of financial statements, your company needs an auditor (KTV) and an audit firm to check compliance with internal control measures and regulations (internal control), assess the suitability of the financial statements. design aspects of internal control procedures and evaluating the effectiveness of internal control and accounting systems.

From the information and conclusions after the audit, your company’s leaders can make decisions in accordance with the actual situation.

b. Request

The audit must comply with Vietnamese Standards on Auditing, International Auditing Standards accepted in Vietnam and other current regulations on finance, accounting and auditing of the State of Vietnam. involve.

At the end of the accounting year, the audit firm must participate in the planning of the inventory and witness the inventory of assets at the audited entity; carry out reconciliation, debt confirmation and other necessary audit procedures. In cases where it is not possible to perform the above audit procedures at the end of the financial year, the Auditing Company must perform alternative audit procedures in order to reach a conclusion on the existence, the correctness of the information presented in the financial statements of the audited entity.

Completing the audit of financial statements, the auditing company must fulfill the following requirements::

• Issuing an audit report stating the opinion of the auditor and the auditing company on your Company’s financial statements.
• Issuance of Management Letters mentioning contents related to capital in cash, liabilities, inventories (HTK), capital construction investment (XDCB), revenue, expenses and other items; It states:
  • Limitations in the management and accounting of the above issues;
  • Assess compliance with current financial and accounting regulations; evaluate the compliance with the instructions and internal regulations of your Company on finance and accounting; also indicate potential risks in the entity’s current management system;
  • Offer solutions or suggest specific measures to overcome.

2. Determine the objectives and tasks of the auditor and the audit firm

Being aware of your company’s purpose and requirements for the audit, FAT always clearly defines its goals and duties when participating in the audit of financial statements at your company.

a. Target

The objective of the audit of the financial statements is to enable the auditor and the audit firm to express an opinion on whether the financial statements give a true and fair view in all material respects of the financial position and results of operations. and cash flows of the audited entities, in accordance with applicable (or accepted) Vietnamese Accounting Standards and Regulations. From there, it helps users of financial statements to make economic decisions in line with the reality of the business.

In addition to the main objective stated above, the audit of financial statements also brings businesses many benefits: That is, during the audit process, the auditors will carefully review and evaluate the effectiveness of the internal control system and the effectiveness of the internal control system. accounting system at the enterprise, clearly identifying the shortcomings and errors; thereby giving ideas to help enterprises improve their internal control and accounting systems, in order to detect and prevent risks due to limitations in management, especially in financial management, improve the quality of the audited entity’s financial information.

b. Mission

The task of the auditor and the audit firm is to perform the audit according to the schedule and plan agreed with the client and then give their opinion on the financial statements.

As stated in Section 2.2.1, the objective of an audit of financial statements is to express an opinion as to whether the financial statements give a true and fair view in all material respects and are consistent with Accounting Standards and Regimes. Vietnam and current legal regulations are relevant or not and clearly identify the shortcomings and errors to help the audited entity detect and prevent possible risks. These two objectives can only be achieved when the auditor and the audit firm successfully complete the following tasks:

• The principle of “identification, assessment and management of risks” must be put on the top and be the guideline throughout the entire audit (from the audit planning stage, audit implementation to the audit phase). end of the audit).
• During the audit process, the auditor and the auditing firm must strictly comply with Vietnamese Standards on Auditing, International Standards on Auditing accepted in Vietnam and other current regulations on finance and accounting. Auditing and auditing of the relevant State of Vietnam. The audit focused on the following two issues:
  • Review of the enterprise’s internal control system: The auditor must perform tests of controls to obtain sufficient evidence about the effectiveness of the accounting and internal control systems in the following respects:

+ Design: Whether the accounting system and internal control system of the audited entity are designed to be capable of preventing, detecting and correcting material misstatements;

+ Perform: The accounting system and internal control system of the audited entity existed and operated effectively during the review period.

• Conduct substantive tests and collect audit evidence to evaluate the truthfulness and reasonableness of the items presented in the financial statements of the audited entity.

3. Approach and methodology

a. Approach

Complying with Vietnam Auditing Standards, international auditing practices accepted in Vietnam, the audit methodology consistently applied by FAT in the audits is an audit method based on management principles. risk. This is an audit method designed in accordance with the approach and principles of building a system of International Standards on Auditing, effective from December 15, 2009. Accordingly, the identification, assessment and design of procedures to handle risks are carried out throughout the audit process.

Under this method, FAT auditors are required to understand the design of the customer’s internal control system. That is, to learn the rules and control procedures developed and applied by the auditee to ensure compliance with laws and regulations, to check, control, prevent and detect fraud. , errors; to prepare honest and reasonable financial statements; to protect, manage and effectively use the assets of the entity; as well as to ensure that the audited unit operates in a compatible manner with the entire system of the superior unit. The internal control system includes the control environment, accounting system and control procedures. At the same time, the auditor must evaluate whether key control procedures are being implemented by the client.

Thereby, FAT will determine the most appropriate content, timing and extent of audit procedures. Specifically:

• Through research on design and implementation, if FAT judges that the customer’s internal control system is operating effectively, the auditors will conduct tests of controls to collect audit evidence to confirm that judgment. This is true, and at the same time select a sample to conduct substantive tests to demonstrate the truthfulness and reasonableness of the items on the client’s financial statements.
• If FAT judges that a customer’s internal control system is not operating effectively, we will only conduct substantive tests (including analytical procedures and detailed examination of transactions and balances) with the number of samples selected is large enough to be able to determine the truthfulness and reasonableness of the items on the client’s financial statements.

b. Methodology

Methodology is a way to conduct an audit effectively and achieve the goal of helping the auditor and the audit firm to express an opinion on the truthfulness and reasonableness of the client’s financial statements in all respects. material, consistent with the provisions of the current Vietnamese Accounting Standards and Regulations and relevant legal regulations.

On the basis of the provisions of Vietnamese Auditing Standards and recognized international auditing practices, FAT has researched and built for itself a scientific audit process to help the Company manage the audit. rigorously, in order to identify, evaluate and manage audit risks on the basis of compliance with Vietnamese auditing standards and in accordance with Vietnamese accounting standards. The entire audit process is managed and controlled by experienced audit directors. This audit process can be summarized by the following diagram:

The diagram above shows that:

• An audit is conducted through 3 stages: (1) Audit planning; (2) Performing audits; and (3) Summarizing, concluding and making reports;
• The two pink columns mean: The entire audit was carried out in accordance with Vietnamese Standards on Auditing, international auditing practices recognized by Vietnam and in accordance with Vietnamese Accounting Standards. current;
• The orange boxes show that: Throughout all three phases, the auditor and the audit firm must always promote risk identification, assessment and management;
• In each audit phase, the importance of the steps is shown through the lightness of the colored boxes.

c. Meaning, effects and general content of each stage in the audit

(1) Audit planning:

Meaning and effects: Audit planning is to ensure that the audit is conducted in an effective manner. An audit plan is effective when it covers all material aspects of the audit; detect fraud, risks and potential problems; and ensure the audit is completed on time. The audit plan helps the auditor to assign appropriate work to the audit assistant and coordinate with the auditor and other experts so that the audit is conducted on schedule, scientifically, closely and with risk management.

General content: Audit planning includes the entire process from surveying, preliminary understanding of the client and assessment of contract risk, to accepting the client; make audit contracts, prepare human resources to participate in contracts; understand customers and operating environment; learn accounting policies and key business cycles; Preliminary analysis of financial statements, determination of materiality. The auditor must discuss with the internal auditors, management and relevant personnel of the audited entity about the audit plan and audit procedures in order to improve the effectiveness of the audit through the coordination of work. together. From the results of the research and assessment of the above issues, the auditors have professional judgments about the client’s internal control system, identifying key areas where risks may occur. Thereby, establishing the appropriate scope, schedule and audit procedures, assigning work in accordance with the capabilities of team members to control the risks or ensure that the risks have an impact. material to the financial statements were detected.

(2) Conduct audits:

Meaning and effect: The implementation of an audit plan by performing audit procedures and collecting appropriate and sufficient audit evidence to serve as a basis for expressing an audit opinion on the financial statements of the company. customer.

General content: During this phase, the auditor performs: tests of controls and substantive tests:

+ Test of controls: A type of test to gather evidence about the effectiveness of the internal control system in preventing, detecting and correcting fraud and errors for each business cycle.

Substantive testing: A type of test that includes procedures to gather evidence to detect material misstatements in the financial statements. There are two basic types of tests: analytical procedures (the auditor compares information and studies trends to detect unusual fluctuations) and detailed tests (the auditor delves into examining the balances). or transactions arising through accounting documents or audit evidence).

In many cases, we will use an approach based on tests of controls. Accordingly, we will interview relevant individuals; check relevant documents; observing the operation of the main cycles and main operations; retest and gather some additional evidence about the control procedures whether they work, or work effectively. If this test results that the internal control system is operating effectively, then the auditor has a basis to make a decision to perform the basic test at a moderate or low level. On the contrary, we will conduct basic tests at a high level.

At the end of the audit period, if the criteria selected to determine materiality fluctuate too much, the auditor must redefine materiality and consider whether additional audit procedures are needed. or not.

(3) End of audit:

Meaning and effects: It is the stage of synthesizing and reviewing the collected evidence for the auditor to form opinions on the audit report.

General content: This is the final stage of the audit, at this stage, the Auditor and the main auditor perform a detailed review of the working paper, summarizing the errors occurring during the audit. audit, meeting with the accounting department and leaders of the audited unit, the management agency; Agree with the client on the adjusted entries, summarize the unadjusted errors and compare them with the materiality of the audit, discuss issues to be recorded in the financial statements, analyze the final financial statements as a whole, collect collect explanatory letters from the Client’s Board of Directors (if any), issue drafts, issue official audit reports, issue management letters on findings related to weaknesses of the internal control system, solutions and advice Useful problem to fix.

AUDIT METHODOLOGY OF FAT .’s financial statements

FAT’s operating motto is “Quality builds trust”, which clearly shows the audit methodology and goal of providing audit services of FAT;

Summary of steps to perform the audit performed by FAT is as follows:

Step 1	The process of signing contracts and agreements on auditing services	Board of Directors
Step 2	Synthesize and develop an audit plan	– Board of Directors – Head of Audit
Step 3	Performing audits at the unit	– Head of Audit – Auditor and KTV’s assistant – Consultant (if needed)
Step 4	Synthesize and process audit results	– Head of Audit – Board of Directors – Consultant (if needed)
Step 5	Issuance of draft audit report	– Board of Directors – Head of Audit
Step 6	Summarize and handle data issues after the audit	– Board of Directors – Head of Audit
Step 7	Issuance of Audit Report	– Board of Directors – Head of Audit
Step 8	Post-issuance of audit reports, post-contract	– Board of Directors – Head of Audit

1. The process of signing contracts and agreements on auditing services

Our motto in this period is to constantly learn about the Company, the Company’s Board of Directors, business activities and business risks of the Company, learn about the organizational structure, the scale of the Company’s activities. activities, the Company’s requirements on the services to be provided…from there, approach and build a contract with the appropriate schedule, scope, and fee. The goal of this phase is to exchange and share to facilitate mutual cooperation.

2. The process of compiling an audit plan

Based on the signed contract, in accordance with the system of Vietnamese Auditing Standards and recognized International Standards on Auditing; We conduct the overall audit planning to orient the audit, make detailed audit plans, arrange the audit team in accordance with the contract signed with the Company. During this process, we will send to the unit written requests to prepare data, documents, written notices about the plan, schedule, official personnel of the audit, the expected time of the audit. Time to issue reports, organize meetings…

3. Auditing process at the unit

This is an important process that determines most of the quality of the audit. This is the process by which FAT auditors collect data and perform audit procedures from summarizing to detailed data related to the audited report. In this process, in addition to normal audit procedures, the auditors may also use procedures such as confirmation, interview, inventory, and observation to strengthen audit evidence in order to express an opinion. opinion on financial statements;

In this process, the appearance of the Board of General Directors, technical advisors (if necessary) will help the auditors supplement and complete the audit procedures in order to collect audit evidence;

The unit audit will be focused on key areas through risk analysis and the use of audit techniques with audit software support. This is our basic feature compared to other domestic auditing firms. With the support of audit software, it allows us to prepare reports and handle detailed adjustment issues to each member unit while still meeting the scheduled time schedule of the audit. Auditing software will be extremely useful for the purpose of company-wide reporting consolidation for units with many members.

Paying attention to financial and tax issues as prescribed from time to time and from each accounting year and considers it a focus in the annual financial statement audits. FAT always pays attention to this issue and considers this issue as a central item in all audits of financial statements with the goal of providing the most effective evaluation and advice to customers. about the annual financial report.

4. Synthesize and process audit results

After completing the audit at the unit, the audit team leader will make a summary of the audit results (1), a summary of accounting issues that need to be completed (2), a summary of accounting issues. tax needs to be completed (3)… and other summary tables in accordance with the content of the audit contract. These figures will be sent to the enterprise as an integral part of the Draft Audit Report.

The contents on the summary tables are sent to the FAT Board of Directors for inspection before officially sending to customers. In some special cases, the audit contract will involve the participation of consultants (attorneys, engineers, etc.) to handle issues arising in the audit.

5. Issuance of draft audit report

On the basis of aggregated audit results, combine aggregated information from relevant data (reports on explanatory notes of the Board of Directors, report on confirmation letter, report on inventory , Report on the results of observation, analysis, etc.). The Board of General Directors and the audit chairpersons will prepare a draft: the audit report on the financial statements, the list of entries to be adjusted and other relevant data summaries.

The audit report and other accompanying reports are prepared in compliance with Vietnam Auditing Standards, regulations on tax, accounting, finance and other regulations (of the parent company, the Corporation, etc.) and FAT audit process.

6. Summarize and handle problems

During this period, the Auditor continues to learn about events arising after the cut-off date and after the audit closing date (according to Vietnamese Standards on Auditing) to consolidate audit evidence; This is also the period when businesses and audit firms share knowledge of accounting, taxation, finance… through exchanges between levels of the two companies to reach consensus and respect financial regulations. administration, accounting, tax in the processing of financial data;

After this period, FAT will officially issue the Audit Report on the Entity’s financial statements;

7. Issuance of the official audit report

Depending on the requirements and contents in the Audit Contract, the Audit Report will be issued in Vietnamese or English or another language… However, the Vietnamese language report will be considered the priority report in litigation in the territory of Vietnam.

The number of reports will be specified in the audit contract; The basic principle of FAT is to issue 5 sets, of which the customer is 4 sets and the FAT stores 1 set;

When a client needs to use part or all of the information in the audit report for a report or information to be disclosed to the outside, it is necessary to get the opinion of FAT, this ensures the use information in accordance with the law and more optimal for the requirements of information provision of the Enterprise.

8. Post-issuance of audit reports, post-contracts

We always strive to meet your needs and make the audit process a management tool;

We investigate your satisfaction to ensure that we meet your wishes and continuously improve the quality of our services;

During this process, we will coordinate with your company in publishing the Audited Report and Completed project settlement report auditing;

This stage also includes coordinating with the unit to handle the results of inspection and examination by financial authorities, tax authorities and other agencies and subjects if necessary.

FAT .’S PRODUCTS AND SERVICES

Audit report

The audit report attached to the Completed project settlement report auditing will be issued in Vietnamese and translated into English (if required) in compliance with the provisions of Vietnamese Standards on Auditing.

Audited Report and Completed project settlement report auditing are attached including:

• Report of the Board of Directors of the Company;
• Auditor’s report;
• Completed project settlement report auditing attached;

The Completed project settlement report auditing Audit Report is of great value to your related party disclosure requirements.

Mail management

Management letters will be issued and sent to the Board of Directors with the aim of evaluating and proposing in an overall and detailed manner the control and financial affairs of the Company. Management letter will be an effective management tool for business leaders in corporate governance and administration.

Report for special request

As a form of Review Report for special requirements of the Board of Directors: The report shall clearly express the opinions of FAT on the matters which have been requested by the Board of Directors (subject to special agreement). ).

PRINCIPLES FOR BUILDING SERVICE CHARGES

• FAT offers a reasonable fee for the high quality of service that you care about. The service provided to you by FAT has a high added value, thanks to its initiative and extensive approach in the audit and consulting process.
• The advantage of FAT is to provide you with the best service while ensuring the work is done in the most efficient and rewarding way. FAT is committed to providing high quality services at competitive and market-appropriate fees.
• The fee level of FAT is determined on the basis of the audit time and the qualifications and experience of the auditors. FAT is always committed to arrange a team of qualified auditors and experts to perform audits and consultations in order to bring the highest benefits to enterprises.
• The fee will reflect your desire to cooperate as well as our commitment to the desire to develop a comprehensive and long-term partnership.
• Fees are usually built on the basis of several factors:

+ Estimated time of the audit;

+ Personnel participating in the audit;

+ Level of organization of accounting work and internal control system;

+ Revenue/Cost/asset value of the enterprise;

+ Size of business organization/operation;

+ Type of business;

+ Industry specificity of the enterprise.