Audit of financial income and financial expense in financial audits conducted by asian auditing

NATIONAL ECONOMICS UNIVERSITY

EXCELLENT EDUCATIONAL PROGRAM

BACHELOR’S THESIS

Major: Auditing

Topic:

AUDIT OF FINANCIAL INCOME AND FINANCIAL

EXPENSE IN FINANCIAL AUDITS CONDUCTED BY

ASIAN AUDITING COMPANY

PHAM THI PHUONG THAO

HANOI - 2020

NATIONAL ECONOMICS UNIVERSITY

EXCELLENT EDUCATIONAL PROGRAM

BACHELOR’S THESIS

Topic: Audit of Financial Income and Financial Expense in

financial audits conducted by Asian Auditing Company

Student : Pham Thi Phuong Thao

Speciality : Auditing

Class : Auditing 58B

Student’s ID : 11164828

Supervisor : Dr. Le Quang Dung

HANOI - 2020

TABLE OF CONTENTS

ACKNOWLEDGEMENTS

STATUTORY DECLARATION

LIST OF ABBREVIATIONS

LIST OF TABLES AND FIGURES

INTRODUCTION.....................................................................................................1

CHAPTER 1: CHARACTERISTICS OF AUDIT OF FINANCIAL INCOME AND

FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN

AUDITING COMPANY...........................................................................................4

1.1. Characteristics of financial income and financial expense of clients affecting

financial audits..........................................................................................................4

1.1.1. Features of financial income and financial expense on financial statements....4

1.1.2. Accounting for financial income and financial expense...................................6

1.1.3. Common misstatements related to financial income and financial expense.....7

1.1.4. Internal controls over financial income and financial expense.........................8

1.2. Audit objectives of auditing financial income and financial expense in financial

audits conducted by Asian Auditing Company..........................................................8

1.3. Audit of financial income and financial expense in financial audits process

conducted by Asian Auditing Company..................................................................10

1.3.1. Planning the audit..........................................................................................10

1.3.2. Implementing the audit..................................................................................14

1.3.3. Completing the audit......................................................................................17

CHAPTER 2: PRACTICE OF AUDIT OF FINANCIAL INCOME AND

FINANCIAL EXPENSE IN FINANCIAL AUDITS CONDUCTED BY ASIAN

AUDITING COMPANY– AT ABC COMPANY LIMITED..................................20

2.1. Planning the audit.............................................................................................22

2.2. Implementing the audit.....................................................................................38

2.2.1. Performing tests of controls...........................................................................38

2.2.2. Performing analytical procedures...................................................................42

2.2.3. Performing tests of details..............................................................................49

2.3. Completing the audit........................................................................................56

CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING

THE AUDIT OF FINANCIAL INCOME AND FINANCIAL EXPENSE IN

FINANCIAL AUDITS CONDUCTED BY ASIAN AUDITING COMPANY.......61

3.1. Assessments of the audit of financial income and financial expense in financial

audits process conducted by Asian Auditing Company...........................................61

3.1.1. Strengths........................................................................................................61

3.1.2. Weaknesses and causes..................................................................................63

3.2. Recommendations for improving the audit of financial income and financial

expense in financial audits process conducted by Asian Auditing Company..........66

3.2.2. Implementing the audit..................................................................................69

3.2.3. Completing the audit......................................................................................70

CONCLUSION.......................................................................................................71

REFERENCES........................................................................................................72

APPENDIX.............................................................................................................73

ACKNOWLEDGEMENTS

The process of implementing the graduation thesis is the most

important stage in the life of every student. Graduation thesis is a premise to

equip us with research skills, valuable knowledge before starting a career.

First of all, I would like to express my sincere thanks to the lecturers of

School of Accounting and Auditing of National Economics University, who

have devotedly taught and equipped me with the necessary knowledge during

my time in the university, it is the basis for me to complete this thesis.

I would like to express my sincerest appreciation to Dr. Le Quang

Dung for his guidance, assistance, supervision and encouragement from the

beginning to the accomplishment of the thesis. These are very valuable

suggestions not only in the process of doing this thesis but also as a luggage

for me in the process of studying and making a career in the future.

And finally, I would also like to express my gratitude with much

appreciation to Asian Auditing Company for helping and guiding me during

my internship period.

STATUTORY DECLARATION

I herewith formally declare that I myself have written the submitted

Bachelor’s Thesis independently. I did not use any outside support except for

the quoted literature and other sources mentioned at the end of this paper.

I clearly marked and separately listed all the literature and all other sources

which I employed producing this academic work, either literally or in content.

Hanoi, ...../....../ 2020

Signature

LIST OF ABBREVIATIONS

ASA Asian Auditing Company

VACPA Vietnam Association of Certified Public Accountants

LIST OF TABLES AND FIGURES

Table 2.1: Members of the audit team.................................................................................21

Table 2.2: Assignment of audit team members....................................................................21

Table 2.3: Working papers search about ABC customer base information.........................23

Table 2.4: Preliminary analysis of business performance of the unit..................................26

Table 2.5: Evaluation of internal control systems................................................................29

Table 2.6: Determination of materiality...............................................................................31

Table 2.7: Audit program financial income and financial expenses....................................34

Table 2.8: Working papers Summary of financial income..................................................40

Table 2.9: Working papers Summary of financial expense.................................................41

Table 2.10: Working papers Analysis of fluctuations Financial Income this year compared

to the previous year..............................................................................................................43

Table 2.11: Working papers Analysis of fluctuations Financial Expense this year compared

to the previous year..............................................................................................................44

Table 2.12: Working papers Analysis of monthly fluctuations financial income................46

Table 2.13: Working papers Analysis of monthly fluctuations financial expenses.............48

Table 2.14: Working papers Reference with the results of auditing the other parts of

financial income...................................................................................................................50

Table 2.15: Working papers Reference with the results of auditing....................................51

the other parts of financial expense......................................................................................51

Table 2.16: Working papers Tests of Details of Financial Income......................................53

Table 2.17: Working papers Tests of Details of Financial Expense....................................54

Table 2.18: Working papers checking the test cut-off of Financial Income........................55

Table 2.19: Working papers checking the test cut-off of Financial Expense......................56

Table 2.20: Working papers Summary of adjusting entries for Financial Income..............57

Table 2.21: Working papers Summary of adjusting entries for Financial

Expense.............................................................................................................................58

Table 2.22: Working papers Summary of figures after auditing Financial

Income...............................................................................................................................59

Table 2.23: Working papers Summary of figures after auditing Financial Expense...........60