AUDIT PROCEDURES

I. CASH AND BANK

For cash and bank, there would not be so many errors, but risks may be caused by fraud

First, there are some required documents for this audit procedures:

- General ledger, sub ledger

- Cash book, Minutes of cash count
- Documents for cash in/out bank, cash receipt
- Bank statement/Bank confirmation

Second, these are some essential procedures:

● Physical observation:
- Observe the cash count perform by client
- Obtain the minutes of cash count

● Reconciliation:
- Reconcile between balance on bank statement and balance on ledger, trial balance.
- Record into working paper and check if there is any misstatement that exceed materiality.

● Revaluation:
- Revaluate foreign currency by using buying rate exchange rate
- Reconcile with recorded accounting book balance and investigate material misstatement

● Confirmation:
- Collect the balance on ledger and information of the bank to send confirmation letter

● Test cut-off:
- Collect transactions from ledger and bank statement which occur around the year end date
- Reconcile to check whether it was recorded in proper accounting period

There are some notes for this procedures:

- Although it doesn’t have many errors but frauds exist, we must be careful when performing
tests of control
- Review abnormal transactions, such as cash on hand payment, which value is over 20 million
VND
- Only auditor send confirmation letter, client must not access to the letter
II. PREPAID EXPENSE
There are some common type of prepaid expenses: rental, insurance, high value of repair cost for fixed
asset, interest, tools and supplies etc…

First, there are some required documents for this audit procedures:

- General ledger, sub-ledger with opposite account

- Financial statement, Trial balance;
- Prepaid expenses listing;
- Minutes/Decision of assets liquidation;
- Contract, invoice,…

Second, these are some audit procedures:

● Reconciliation
- Compare the closing balance in last year audit report with opening balance on trial balance to
ensure the opening balance is correct
- Reconcile general ledger with trial balance, balance sheet
- Reconcile prepaid listing with general ledger

● Additions testing
- Filter Debit transaction to check the prepaid exp account whether the value is excess materiality.
- Review contracts, minutes of handover, invoices to ensure the record

● Review allocation
- Understand client’s prepaid expenses allocation method.
- Review allocation table and reconcile with related expense account

● Test other addition/ other reduction:

- Any abnormal increase by transferred assets
- Reduction by liquidating, check whether there is liquidation report

There are some notes for this procedures:

- Time allocation
- Expense should have been recorded in related period, but was recorded as prepaid expense
- Same kind of prepaid expense but time allocation not consistent
III. INVENTORIES
First, there are some required documents for this audit procedures:

- Sub ledger, general ledger

- Inventory record
- Good receive/delivery notes
- Inventory valuation
- Other documents

Second, these are some essential procedures:

● Test cut-off:
- When counting inventories, ensure that entity must stop all in/out activities
- Check ordinal number (stt) on in/out report before and after counting inventories to ensure
continuity

● Observe the physical inventory count:

- Observe until the counting procedure is completed
- While observing, choose sample to check
- Confirm about where are inventories of clients, and inventories that are kept by clients

● Reconcile the inventory count to the general ledger (occurrence)

● Test high-value items: Check amount and invoices to ensure they are evaluated and recorded
right

● Test error-prone items

● Test inventory in transit: Review documents to ensure that inventory is transited status

● Test item costs:

- Check buying cost
- Reconcile with related documents: invoices and price quotation from suppliers

● Review freight costs:

- VAS 02 – freight cost is recorded in value of inventory
- Check to ensure the reasonable value of inventory

● Test for lower of cost and review NRV: Compare historical cost and NRV

● Review COGS:
- Review expense (materials, labor, overhead cost) by review related documents: payroll,
purchase invoices, in out report
- Review inventory valuation method and consistency in applying. Recalculate the COGS
● Work-in-progress testing: Check % of completion

● Inventory ownership: Review purchase documents to ensure entity’s ownership

IV. Fixed assets

Fixed assets are often an item of high/significant value. However, the level of risk will
depend on case by case as well as the type of business. Audit procedures will be quite
“clear” but it will become complicated if there are additional items related to construction
in progress or capitalization of costs (such as interest expenses).

1. Document required
• GL with opposite account
• Financial statement, Trial balance;
• Fixed assets registered;
• Minutes/Decision of assets liquidation;
• Contract, invoice,…

2. Audit procedures
Reconciliation of balance sheet with general ledger, sub ledger, trial balance, depreciation
record according to categories such as Plant, Equipment, Mean of transportation, Tools
Reconcile opening balance, closing balance, additional and disposals records in the period.

● Test additions and disposals

Review supported documents to ensure the history cost of additions and disposals are recorded
correctly.
• Sale contract;
• Invoice;
• Minutes of asset handover;
• Minutes of disposals;

● Review repair and maintenance fee

Review operating lease expenses, repair and maintenance fee to determine whether those
expenses are capitalized.

● Depreciation and amortization

Review the depreciation method, useful life which is applied in the entity, according to
regulation 45, is suitable or not.

● Impairment review
Using information collected from the audit procedure to determine whether the board of
directors can identify the impairment of the asset.
V. Account payable
Document required
• Balance sheet, general ledger, sub ledger;
• Documents, invoice, payment voucher, purchase contract, goods receipt notes
• Purchase journal log.

1. Audit procedure
● Reconciliation
⮚ Reconciliation of Sub ledgers with General ledger, then reconciliation of General ledger and
trial balance to determine whether it has difference
● Revaluation
⮚ Searching for foreign exchange ratio in the bank which entity opens an account, then
multiplying it by the closing balance, recalculating and reconciling with book value.
● Confirmation
⮚ Select samples to send confirmation letters to ensure the values in book value are recorded
correctly. Moreover, the auditor needs to inquire if the reply of the confirmation letter must
be sent directly to the auditor, not through the client's address.
● Cut-off test
⮚ Review the date on relevant documents such as minute of asset handover, goods received
note with the date on book value to ensure whether it is recorded in correct consistent
period
● Unrecorded expenses review
⮚ Review regular expenses which occur every single year but are not recorded in the current
year.
⮚ Inquire the accountant whether there have been invoices which are received lately but
account did not record or forgot to record as an accrual expense.

VI. Payroll

● Reconciliation of Payroll with General ledger

⮚ Value on payroll and general ledger has differences (Payroll has a lower value than general
ledger). In that case, the auditor must find the causes. Some factors cause that difference
such as additional wages, wages for part-time employees, bonus which is not recorded in
payroll.

● Analytical procedures
⮚ Filter from general ledger those expenses can be recorded as a wage expense.
⮚ Compare the total value of wage expense in current year with previous year to fine some
changes if any. If there had some significant fluctuations, auditor would inquire accountant
whether policies of calculating wage expense have been changed.

● Test underlying data

⮚ Select sample of wage expenses to recalculate to ensure that those expense are calculated
based on entity’ s policy.
⮚ Compare that value to the payroll to find differences.

● Test of details
 ⮚ Inquire human resource about internal control of wage expense, then auditor can
understand and find the deficiencies of internal control system.
⮚ Collect documents about 1 or more employees include: CV, labour contract, monthly payroll
to ensure that workers are real and the calculation of wage expenses based on contract
labour.

● Presentation and disclosure

⮚ 2 information must be presented in financial statement:
- The number of employees at the end of the year
- The wage and bonus for board of director

VII. Selling expense, General and Administrative expense

First, there are some required documents for this audit procedures:

- General ledger, sub ledger

- Selling policy
- Invoices, related documents

Second, these are some essential procedures:

- Analytical procedures and Test of details

- Compare and analyze by months and years to find abnormal costs. Find the reason to check
whether it is material

VIII. Expense and Revenue for financial activities

Revenue: interest, dividend, royalties (tiền bản quyền) and revenue from other financial activities

Expense: financial investing activities, borrowings, bonds, ...

First, there are some required documents for this audit procedures:

- Loan agreement contract

- Interest income/ expenses calculation sheets
- Foreign exchange gain or loss
- Sub ledger

Second, these are some essential procedures:

● Circular 200
● Inquiry: Entity’s policy about timing of foreign exchange differences revaluation
● Recalculation:
- Filter entries of foreign exchange revaluation
- Reevaluate (circular 200).
- Compare with client’s valuation
IX. Other expenses and Other revenue
First, there are some required documents for this audit procedures:

- Sub ledger, General ledger

- Asset disposal policy
- Related invoices, documents

Second, these are some essential procedures:

- For transaction with high value, inquiry and collect related evidence
- Review whether those transactions had been recorded correctly

X. Account receivable
Document required
• Balance sheet, general ledger, sub ledger;
• Documents, invoice, receipt voucher, sale contract, goods delivery notes, bill of lading (for
export)
• Sale journal log.

2. Audit procedure
● Reconciliation
⮚ Reconciliation of Sub ledgers with General ledger, then reconciliation of General ledger and
trial balance to determine whether it has difference
● Revaluation
⮚ Searching for foreign exchange ratio in the bank which entity opens an account, then
multiplying it by the closing balance of account receivable denominated in foreign
currencies, recalculating and reconciling with book value.
● Confirmation
⮚ Select samples of account receivables to send confirmation letters to ensure the values in
book value are recorded correctly. Moreover, the auditor needs to inquire if the reply of the
confirmation letter must be sent directly to the auditor, not through the client's address.
⮚ Carry out an analysis of after-date receipts and check subsequent payment.
● Cut-off test
⮚ Review the date on relevant documents such as minute of asset handover, goods delivery
note, bill of lading (for export) with the date on book value to ensure whether it has been
recorded in correct period.
● Review bad debt and provision
⮚ Obtain an analysis of aged debts at the year end (aging report) from receivables ledger
records and review it for debt in excess of the company’s published credit terms.
⮚ Consider whether any of the debt requires provision/writing off in the financial statements.
This amount should be entered on a list of potential adjustments.
Một số câu hỏi technical khi phỏng vấn final interview
1. Các điều kiện ghi nhận doanh thu là gì? Trường khợp xuất nhập khẩu thì dựa vào chứng từ
nào để xác định thời điểm ghi nhận doanh thu
2. Kiểm toán viên có cần thiết phải gửi thư xác nhận ngân hàng không khi mà khách hàng đã
cung cấp sao kê ngân hàng và số liệu trên sao kê đã khớp với sổ sách
3. Thủ tục kiểm toán phần hành tiền là gì (tham khảo nội dung ở các trang trước)
4. Quy trình kiểm toán gồm mấy bước? Theo em thì internee sẽ tham gia vào bước nào là chủ
yếu?
5. Có mấy loại rủi ro trong kiểm toán? Và rủi ro nào là khách quan và sẽ không phụ thuộc vào
kiểm toán viên?
6. Có mấy loại ý kiến kiểm toán? Theo em thì sự khác nhau giữa ý kiến kiểm toán ngoại trừ và
ý kiến từ chối đưa ra ý kiến là gì?
7. Hai tiêu chuẩn cần phải có của bằng chứng kiểm toán là gì?
8. Kể tên cơ sở dẫn liệu liên quan đến khoản mục tiền, tài sản cố định,…
9. Trường hợp kiểm toán viên không thể quan sát kiểm kê vào thời điểm kết thúc năm tài
chính thì kiểm toán viên cần làm gì để đảm bảo cơ sở dẫn liệu của tiền mặt?