Auditing accounts payable for trade creditors in financial statements by KPMG Company Limited

BANKING ACADEMY

ADVANCED PROGRAM

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GRADUATION THESIS

TOPIC:

AUDITING ACCOUNTS PAYABLE FOR

TRADE CREDITORS IN FINANCIAL

STATEMENTS BY KPMG COMPANY LIMITED

Supervisor: Associate Prof, Dr. Le Van Luyen

Student: Hoang Thuy Linh

Student No.: 20A4010340

Department: Advanced Program in Accounting

Class: K20CLCI

Ha Noi, 2021

ASSURANCE

I hereby undertake that the entire content of the thesis is my own research, under the

guidance and guidance of the Ass Prof.Dr. Le Van Luyen. The research content and

results in this subject are honest. The data reported in the table serves for evaluating

the indicators in the topic collected and statistically from different sources and clearly

stated in the references. In addition, in the article using the reviews, as well as the data

of others, I have quoted and stated the origin.

If you find any fraud, I take full responsibility for the content of my graduation thesis..

Ha Noi, 1

st June 2021

Student

Hoang Thuy Linh

THANK YOU NOTE

First of all, allow me to send my sincere and deepest thanks to Ass Prof. Dr. Le Van

Luyen, who always inspired, urged and guided me wholeheartedly during the course of

the research thesis. I would also like to thank all teachers of Banking Academy for

imparting valuable knowledge, readily to answer questions and help whenever I have a

problem. For me, having a chance to defend the thesis is a great honor in my life, I am

very grateful and grateful to have this opportunity. I hope that I can stand beside with

all wonderful teachers to do other research topics in the future.

Next, I would like to thank all of you, the Auditors Department as well as the entire

staff, KPMG Vietnam Co., Ltd. for creating conditions for me to have the opportunity

to practice and approach. With documents and data that are extremely important in my

research. I would also like to thank the scholars and authors of previous works and

studies for providing valuable information and references in the research process.

Finally, I would like to wish all of our teachers and teachers more health and more

success in this noble career.

Ha Noi, 1st June 2021

Student

Hoang Thuy Linh

TABLE OF CONTENTS

ASSURANCE

THANK YOU NOTE

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

CHAPTER 1: THEORETICAL BASIS FOR AUDITING ACCOUNT PAYABLE

FOR CREDITOR IN FINANCIAL STATEMENT AUDIT OF THE

INDEPENDENT AUDITING INSTITUTES............................................................. 6

1.1. Content and characteristics of the account payable for creditor.............................. 6

1.1.1. Definition about account payable for creditor..................................................... 6

1.1.2. Record account payable for creditor.................................................................... 7

1.1.3. Common mistakes with account payable for creditor ........................................ 10

1.1.4. Internal control over the account payable for creditor...................................... 11

1.2. The account payable for creditors audit in financial statement performed by an

independent auditor....................................................................................................... 12

1.2.1. Objectives and principle of auditing account payable for creditor.................... 12

1.2.2. In the planning the audit step ............................................................................. 14

1.2.3. In the audit implementation stage....................................................................... 19

1.2.4. In the end stage of the audit................................................................................ 26

CONCLUSION OF CHAPTER 1 ................................................................................ 28

CHAPTER 2: CURRENT STATUS OF THE AUDIT FOR THE ACCOUNT

PAYABLE FOR CREDITOR IN THE FINANCIAL STATEMENT AUDIT

PERFORMED BY KPMG VIETNAM COMPANY LIMITED............................ 29

2.1. Overview of KPMG Vietnam Company Limited.................................................. 29

2.1.1. The formation and development of KPMG Vietnam Company Limited ............. 29

2.1.2. Characteristics of business activities and main business lines of KPMG Vietnam

Company Limited.......................................................................................................... 32

2.1.3. Organize the management apparatus of KPMG Vietnam Company Limited..... 34

2.1.4. Audit process of general financial statements at KPMG Vietnam Company

Limited .......................................................................................................................... 38

2.1.5. Quality control audit........................................................................................... 39

2.2. The account payable for creditor audit in the financial statement performed by

KPMG Company Limited............................................................................................. 41

2.2.1. In the audit planning stage ................................................................................. 41

2.2.2. In the audit implementation stage....................................................................... 52

2.2.3. In end stage of the audit...................................................................................... 67

2.3. Assessing the status of the audit of the account payable for creditor in the financial

statement audit performed by KPMG Vietnam Co., Ltd.............................................. 69

2.3.1. Advantages.......................................................................................................... 69

2.3.2. Limited and causes ............................................................................................. 70

CONCLUSION OF CHAPTER 2 ................................................................................ 74

CHAPTER 3: SOLUTIONS FOR COMPLETING THE AUDIT OF ACCOUNT

PAYABLE FOR CREDITOR IN THE FINANCIAL STATEMENT AUDIT

PERFORMED BY KPMG VIETNAM COMPANY LIMITED............................ 75

3.1. Development orientation of KPMG Vietnam Company in the coming period ..... 75

3.2. Solutions for completing the audit of account payable for creditor in financial

statements at KPMG Vietnam Co., Ltd. ....................................................................... 76

3.2.1. In the audit planning stage ................................................................................. 76

3.2.2. In the audit implementation stage....................................................................... 77

3.2.3. In the end stage of the audit................................................................................ 81

3.3. Recommendation to complete the audit of account payable for creditor .............. 82

3.3.1. On the side of the State and the Ministry of Finance ......................................... 82

3.3.2. On the side of professional associations ............................................................ 83

3.3.3. To the side of KPMG Vietnam Company Limited .............................................. 83

3.3.4. On the customer unit side ................................................................................... 84

CONCLUSION OF CHAPTER 3 ................................................................................ 85

CONCLUDE ............................................................................................................... 86

LIST OF REFERENCES........................................................................................... 88

TABLE LISTS

Table 1.1. Audit objectives for account payable for creditor....................................... 13

Table 1.2. An audit program detailing the amount of liabilities to the creditor .......... 18

Table 1.3. Internal control purchase - payment cycle’s questionnaire ........................ 20

Table 1.4. Test control for internal control of the purchase - payment cycle .............. 21

Table 2.1. Financial figures of KPMG Vietnam Co., Ltd in the last 3 years ............... 31

Diagram 2.1. The organizational structure of KPMG Vietnam Company Limited...... 35

Diagram 2.2. Organizational structure of auditing personnel at KPMG Vietnam ...... 37

Diagram 2.3. Auditing process of financial statements at KPMG Vietnam Company

Limited .......................................................................................................................... 39

Diagram 2.4. Quality control process at KPMG Vietnam Company Limited.............. 40

Diagram 2.5. Business purchase - payment cycle ........................................................ 42

Table 2.2. How to determine overall materiality at KPMG ......................................... 43

Table 2.3. How to determine performance materiality................................................. 44

Table 2.4. Detailed audit program of account payable for creditor at KPMG............ 45

Table 3.1. The table illustrates the questionnaire in the assessment of internal control

of the account payable for creditor in HTL Company.................................................. 78

Banking Academy Graduation Thesis

Hoang Thuy Linh 1 Class: K20CLCI

INTRODUCTION

Introduce the research topics

The rapid fluctuations of the national and international economies, as well as

the increasingly diverse production and market sectors and types of companies, present

the need for information transparency. Financial statements are one of the most

important issues for those who use financial statements, such as banks, lenders, and

investors. As a result, the growth of the audit industry in general, and especially

independent auditing, is critical. Independent auditors have helped to improve the

accounting standards system by ensuring that financial statement information is

accurate and fair.

Account payable for creditor’s audit is one of the things that all auditors and

audited companies, as well as consumers, should be aware of as part of the financial

statements audit. The explanation for this is that liabilities to creditor are factor that

represent how companies use financial leverage or capital allocation capabilities, as

well as being misappropriated between businesses. As a result, it carries a high risk of

failure and is one of the leading causes of company failure due to insolvency. Auditing

the account payable for creditor allows the auditor to learn about the monitoring and

payment of the customer's debts. As a result, the auditor must devise and execute audit

procedures to ensure the truthfulness and reasonableness of details for the account

payable for creditor. That is why a account payable for creditor’s audit is so crucial.

During my internship at KPMG Vietnam Co., Ltd. (KPMG), I was exposed to a

variety of audit procedures, including the Company's audit of the account payable for

creditor. With the goal of completing the audit process of the accounts payable in the

financial statement audit performed by KPMG Company Limited, I chose the thesis

topic: “Auditing Accounts Payable for Trade Creditors in Financial Statements by

KPMG Company Limited” in order to systematize the knowledge and practical

experience gained during the internship as well as derive from the above theoretical

and practical urgent issues.

Banking Academy Graduation Thesis

Hoang Thuy Linh 2 Class: K20CLCI

A review of previous studies related to the problem under investigation.

Due to the importance of the subject, research topics related to the audit of

account payable for creditor in financial statements auditing, from various perspectives

such as: "Auditing process of payables selling in auditing financial statements

performed by XYZ auditing company" or "Completing the process of auditing account

payable for creditor in auditing financial statements performed by XYZ auditing

company”. As a result, one of the most common topics in the thesis - graduation

subject of accounting and auditing majors is "Auditing the Account Payable for

Creditor in Auditing Financial Statements by KPMG Company Limited”.

Some examples include:

- Student Nguyen Thi Tu Quynh from the Banking Academy completed the task

of auditing the accounts payable in the financial statement audit conducted by Kreston

Auditing and Consulting Co., Ltd. (in 2018). In that report, the author introduced and

examined the current state of the Kreson account payable for creditor’s audit

mechanism before commenting on the benefits and drawbacks of the regulation. From

the audit preparation point, the author demonstrates that the method of auditing Kreson

accounts payable to creditors is very strict: accepting clients, assembling the audit

team, and collecting details; a client control checks are conducted in detail and fully by

the auditor during the audit implementation stage, with thorough testing procedures

designed for each account and the rationale of the test process. business math;

auditing's final stage: The audit reports are summarized and thoroughly examined. The

author also points out the following shortcomings in the account's audit process: The

materiality has not been properly distributed because auditors do not insist on

collecting essential details and information about the accounts payable . The

explanation for this is that the method of selecting comprehensive test samples is still

limited because auditors usually choose only representative samples of high value,...

The author concludes the article with advice and solutions for completing the testing

process. The account payable for creditor are paid by the company.

- Subject: "Audit method of account payable for creditor in financial statement

audit conducted by Thang Long Auditing and Valuation Co., Ltd., TDK-Dong Nai"

(2017) by Ho Chi Minh City University of Economics student Pham Tran Hanh

Banking Academy Graduation Thesis

Hoang Thuy Linh 3 Class: K20CLCI

Nhung. The author has highlighted the very detailed and straightforward audit process

for the account payable for creditor. However, this topic's drawback is that it does not

discuss the level review stage after the audit in general, or for this account in

particular. Furthermore, the advantages and disadvantages of each stage of the audit

have not been explicitly specified. As a result, at each point, the proposed solutions are

still lacking in detail.

- "Completing the task of auditing account payable for creditor during ACC

Vietnam Auditing and Consulting Co., Ltd's audit of financial statements." - 2017.

Nguyen Thi Thanh Hoai, a student at the Finance Academy. The author has

highlighted the strengths and weaknesses of the audit process in general, as well as the

account payable in particular, in this topic. However, the author's suggested solutions

to improve the above method are still macro, in general, and not unique to the

shortcomings in the current state of the ACC Vietnam business.

- Comparing student Nguyen Thi Ha Trang of Real Banking Academy to the

subject "Completing the process of auditing account payable for creditor in the

financial statement audit conducted by KPMG Vietnam Co., Ltd." (in 2018). The

author discussed the advantages and disadvantages of auditing account payable for

creditor at KPMG Vietnam Co., Ltd. and offered some solutions, but the

recommendations were minimal and the author concentrated on analysis. For the fiscal

year ending on December 31, 2018, the audit procedure for account payable for

creditor at customer ABC, whose primary business is the manufacture of toys and

children's games.

In addition, a number of other research projects go into a number of fields such

as real estate, companies operating in the field of toys and confectionery. However, at

present, there is no author doing research in the field of manufacturing spare parts and

auxiliary parts for motor vehicles and vehicle engines.

- Furthermore, there is no knowledge about any doctoral dissertations or master

theses on the subject I am studying, according to analysis and information gathered

from one's own sources.

As a result, my thesis was written to fill in gaps, solve problems from previous

studies, and broaden the reach of the research profession for this subject, and it was