BT CHƯƠNG I

Họ và tên MSSV Hoàn thành

Lê Ngọc Vân Nhi (Nhóm trưởng) 220H0089 100%
Hà Thi Diễm 220H0330 100%
Huỳnh Kim Phụng 220H0428 100%
Nguyễn Thị Kim Nhung 220H0419 100%
Ngô Thanh Thảo 220H0445 100%
Câu 1:

The individuals or entities most likely to wish to be certain that the financial statements
of a major public company have been properly prepared are:

c. People thinking of buying shares in the company.

d. The government.

e. The council of the local Stock Exchange.

f. A supplier of goods to the company.

Câu 2:

The rotation of senior personnel on the engagement team is typically mandated by

regulatory bodies or professional standards to ensure independence, objectivity, and the
integrity of the audit process. The specific duration for rotation can vary depending on
the regulatory requirements in different jurisdictions or the policies of the auditing firm.

Generally, rotations may occur every few years, typically between 3 to 7 years, to prevent
familiarity or conflicts of interest from developing between the auditors and the company
being audited. This periodic rotation helps maintain a fresh perspective and reduces the
risk of complacency or undue influence.

SELF-ASSESSMENT QUESTIONS:
Câu 3: For each of the following situations indicating heightened fraud risk, discuss how
a professionally skeptical auditor might interpret the situation.
a. The company is not as profitable as its competitors, but it seems to have good products.
However, it has a deficiency in internal control over disbursements that makes it subject
to management override.
 Although they have good products, the company is not profitable as their competitors
which mean that sooner or later the company might be out of business. And to keep that
from happenning, they might be subjected to committing a fraud, by having lack of
internal control over the disbursementsm they have to opportunity to commit fraud by
overriding disbursements.
b. The company is doing better than its competitors. Although sales are about the same as
competitors, net income is significantly more. Management attributes the greater
profitability to better control of expenses.
 This would raise some flags to me, management wants what is best for them and the
company, meaning doing things such as committing fraud, by giving management the
control of the expense and highlighting only the profitable and not all expenses. For
example, they can budget the amount for a department such as decreasing the orders of
certain departments and increasing the orders on other departments that doing great.
Management hide the fact that the other department is doing poor by only featuring the
profitability of another department.
c. The company is financially distressed and is at some risk of defaulting on its debt
covenants. The company improves its current ratio and other ratios by making an
unusually large payment against its current liabilities, accompanied by highly discounted
sales if their customers paid before year end.
 From my perspective, it seems likely an opportunity to commit fraud because of its
debt. They want to improve ratios by making large payment against its current liabilities
and allow customers to structure fraudulent transaction such as discounted sales if their
customers paid before year end. They would try to save company by committing fraud as
they might believe that the fraud is justified due to many employees will lose their jobs
that leading to financial crisis the families would have to be in.
d. A smaller public has a CFO who has centralized power under her. Her style is very
intimidating. She is not a CPA; and she has limited accounting experience. The company
has not been able to increase profitability during her time with company.
 The CFO might just get profit to fulfill her lifestyle. She might be using all the
company’s money to her benefit and not the company’s wellbeing; she has the power to
give incentives to employees or management to commit fraud. And since the company
has not been able to increase its profitability during her time as a CFO, she is more likely
to commit fraud and could not be trusted if I were to audit this company. I need to obtain
strong evidence and analyzed document they have thoroughly, be patience and pay
attention to not only errors but also inconsistences.
TRUE-FALSE QUESTIONS:
Câu 4:
1. Independence is referred to as the cornerstone of the auditing profession
  True. As regard in technical competence, auditor independence is the most
important factor in establishing the credibility of the audit opinion. Auditor
independence is commonly referred to as the cornerstone of the auditing profession
since it is the foundation of the public's trust in the accounting profession.
2. The internal audit function is designed primarily to assist the external auditor in
providing assurance to third party users of the financial statement.
 False. The internal audit function provides management and the audit committee
with assurance on internal controls and reports.
3. The Big 4 audit firms are the only types of firms that conduct financial statement
audits.

 False. In addition to their auditing services, the Big Four provide tax, consulting,
valuation, market research, assurance, and legal advisory services.

 Type of firms that conduct financial statement, including:

a) Enterprises with foreign investment.

b) Credit institutions established and operating under the Law on Credit Institutions.
c) Financial institutions, insurance businesses, insurance environmental businesses.
d) Public companies, issuing organizations and securities trading organizations.

4. One of the key drivers of audit quality is the gross of margin achieved by the audit
firm and the ability of the engagement partner to maintain those margins over the
duration of the audit engagement.

 True. A definition of audit quality published by the GAO (2003) states that a
quality audit is one performed"in accordance with generally accepted auditing
standards (GAAS) to provide reasonable assurance that the audited financial
statements and related disclosures are (1) presented in accordance with GAAP and
(2) are not materially misstated whether due to errors or fraud."