Applying audit data analytics in financial statement audit a case study at AASC

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

Ho Chi Minh University of Banking

DUONG THUY HANG

APPLYING AUDIT DATA ANALYTICS IN

FINANCIAL STATEMENT AUDIT:

A CASE STUDY AT AASC

GRADUATION THESIS

MAJOR IN ACCOUNTING

CODE: 7340301

Ho Chi Minh City, 2022

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

Ho Chi Minh University of Banking

DUONG THUY HANG

APPLYING AUDIT DATA ANALYTICS IN

FINANCIAL STATEMENT AUDIT:

A CASE STUDY AT AASC

GRADUATION THESIS

MAJOR IN ACCOUNTING

CODE: 7340301

SUPERVISOR

DANG DINH TAN (PhD)

Ho Chi Minh City, 2022

i

ABSTRACT

Big Data (BD) and Data Analytics (DA) are hot topics in many fields today.

Enterprises with strong development strategies such as economic groups and large

companies are interested in implementing and applying them to their operation

processes, and the audit field is no exception. However, to apply them in practice, it

is necessary to carefully consider and calculate the potential positives and negatives

of BD and DA. In the article, the author summarizes some key features of the

application of data analysis and big data in auditing financial statements, and points

out the benefits and challenges for business auditing when applicable. Thereby, the

author discusses solutions to reduce challenges when applying DA and BD for

auditing firms in modern financial statement audits.

Keywords: Audit data analytics, data analysis, financial statement audit

ii

DECLARATION OF AUTHENTICITY



I declare that all materials presented hereinafter are my own work based on

my best knowledge during university and with the support of my supervisor Dang

Dinh Tan (PhD). This thesis is guaranteed to be free from plagiarism, in which any

cites or quotes are fully acknowledged in the references.

At any time, I am responsible for my works if it is shown that I have violated

this declaration of authenticity.

Ho Chi Minh City, June 2022

Duong Thuy Hang

iii

ACKNOWLEDGEMENTS



First and foremost, I would like to thank my supervisor, Dang Dinh Tan

(PhD), for his excellent direction, assistance, and attention to this thesis. This would

not have been possible without his unending encouragement and support.

Second, I would like to express my heartfelt gratitude to all instructors at

Banking University of Ho Chi Minh City for their tremendous efforts in giving me a

solid foundation of knowledge in both academic and professional life.

Last but not least, I would like to express my heartfelt gratitude to my loving

family and friends for their unending patience, support, and faith in me that has

enabled me to reach this point. This would not have been feasible without their

constant encouragement.

Ho Chi Minh City, June 2022

Duong Thuy Hang

iv

TABLE OF CONTENTS

ABSTRACT ................................................................................................................ i

DECLARATION OF AUTHENTICITY................................................................... ii

ACKNOWLEDGEMENTS ...................................................................................... iii

TABLE OF CONTENTS .......................................................................................... iv

LIS OF ABBREVIATIONS..................................................................................... vii

LIST OF TABLES AND FIGURES....................................................................... viii

CHAPTER 1: INTRODUCTION .............................................................................. 1

1.1. The necessity of the topic....................................................................1

1.2. General, specific objectives and research questions ...........................2

1.3. Research objects and research scopes.................................................3

1.4. The research methodology ..................................................................4

1.5. Contribution of the research ................................................................4

1.6. Structure of the thesis..........................................................................4

CONCLUSION OF CHAPTER 1.............................................................................. 6

CHAPTER 2: PRIOR STUDIES ON THE APPLICATION OF AUDIT

ANALYTICS ...................................................................................................................... 7

2.1. Foreign.................................................................................................7

2.2. Domestic............................................................................................11

CONCLUSION OF CHAPTER 2............................................................................ 14

CHAPTER 3: THEORETICAL PERSPECTIVES.................................................. 15

3.1. Related concepts................................................................................15

3.1.1. Concept of audit data analytics.....................................................15

v

3.1.2. Purpose of audit data analytics......................................................18

3.1.3. Auditor‟s approach to developing specific data analysis tools.....20

3.1.4. Reliability of audit data analytics..................................................20

3.1.5. Risks associated with the application of audit data analytics .......21

3.2. Applying audit data analytics in financial statement audit ...............22

3.2.1. Applying audit data analytics in the audit planning phase............22

3.2.2. Applying audit data analytics in the audit implementation phase 24

3.2.3. Applying audit data analytics in the audit reporting phase ...........27

CONCLUSION OF CHAPTER 3............................................................................ 28

CHAPTER 4: RESULTS AND DISCUSSIONS..................................................... 29

4.1. Apply some new audit analytics techniques to two client cases of this

audit firm accrual 2021..........................................................................................29

4.2. Interviewing results on the advantages, opportunities and challenges

of applying those new audit analytics techniques in the context of the audit firm39

4.2.1. The advantages..............................................................................39

4.2.2. The opportunities and challenges..................................................41

CONCLUSION OF CHAPTER 4............................................................................ 44

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS ............................. 45

5.1. Conclusion.........................................................................................45

5.1.1. Advantages....................................................................................45

5.1.2. Challenges.....................................................................................47

5.2. Recommendations .............................................................................50

5.2.1. Training on data analytics skills for audit staff.............................50

vi

5.2.2. Support for auditing firms to apply big data and data analytics in

professional practice...........................................................................................51

5.2.3. Auditing firms need to consider carefully before investing in big

data and data analytics........................................................................................52

REFERENCE ........................................................................................................... 54

APPENDIX A: The process of implementing a typical contract at AASC

Auditing Firm.................................................................................................................... 58

APPENDIX B: Illustrative Data of Company A for the year 2021 ......................... 64

APPENDIX C: Illustrative Data of Company B for the year 2021 ......................... 69