12 improving the process of collecting audit evidence in the audit of financial staements performed by nam viet auditing and accounting financial consulting services company

MINISTRY OF FINANCE
ACADEMY OF FINANCE
FACULTY OF ACCOUNTING
----------

DAO LAN HUONG

GRADUATION THESIS
IMPROVING THE PROCESS OF COLLECTING AUDIT EVIDENCE
IN THE AUDIT OF FINANCIAL STAEMENTS PERFORMED BY
NAM VIET AUDITING AND ACCOUNTING FINANCIAL
CONSULTING SERVICES COMPANY
Major

: Auditing

Class

: CQ56/22.CLC.02

Id Student

: 18CL73403010181

Mentor

: PhD. Nguyen Vu Viet
M.E Phi Thi Kieu Anh

Hanoi, 2022

DECLARATION
I hereby declare that this thesis is my own work and effort and that has
not been submitted anywhere for any award. Where other sources of
information have been used, they have been acknowledged. 
The data and results described in the thesis are derived from the actual
situation of the practice company.
Student
Dao Lan Huong

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TABLE CONTENT
DECLARATION..............................................................................................i
TABLE CONTENT........................................................................................ii
LIST OF FIGURES.......................................................................................vi
LIST OF TABLES........................................................................................vii
INTRODUCTION...........................................................................................1
CHAPTER 1.....................................................................................................5
BASIC THEORY ON THE PROCESS OF COLLECTION OF AUDIT
EVIDENCE

IN

AUDIT

OF

FINANCIAL

STATEMENTS

BY

VIETNAM FINANCIAL ACCOUNTING AND AUDITING SERVICES
CO., LTD (AASCN)........................................................................................5
1.1. GENERAL OVERVIEW OF FINANCIAL STATEMENTS
BECAUSE OF COVID AND TECHNIQUES FOR COLLECTING
AUDIT EVIDENCE IN AUDIT OF FINANCIAL STATEMENTS.......5
1.1.1. Overview of Financial Statements due to the impact of COVID 19.5
1.1.2. Concept and classification of audit evidence....................................6
1.1.2.1. Concept.......................................................................................6
1.1.2.2. Classification of audit evidence..................................................7
1.1.3. Judgment requirements of audit evidence.......................................11
1.1.4. Techniques for gathering audit evidence........................................14
1.1.5. Some special audit evidence to collect............................................22
1.2. PROCESS OF COLLECTION BY AUDIT EVIDENCE IN AUDIT
OF FINANCIAL STATEMENTS............................................................27
1.2.1. Audit planning stage.......................................................................27
1.2.2. Audit implementation stage............................................................31
1.2.3. End stage of audit............................................................................33
CHAPTER 1 CONCLUSION......................................................................35
CHAPTER 2...................................................................................................36

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THE STATUS OF THE PROCESS OF COLLECTION BY AUDIT
EVIDENCE IN THE AUDIT OF FINANCIAL STATEMENTS

IMPLEMENTED BY NAM VIET AUDIT COMPANY...........................36
2.1. HISTORY OF FOUNDATION AND DEVELOPMENT OF NAM
VIETNAM FINANCE, ACCOUNTING AND AUDIT SERVICES CO.,
LTD – NORTH BRANCH.........................................................................36
2.1.1.   About AASCN North Branch.......................................................38
2.1.2.   Operational characteristics of AASCN Northern Branch Auditing
Company...................................................................................................40
2.1.3. Organizational and management characteristics of AASCN
Auditing Company in the North Branch...................................................45
2.1.4. Characteristics of organization of audition group...........................50
2.1.4.1. Head of Audit (Audit Manager)................................................50
2.1.4.2. Audit team leader......................................................................51
2.1.4.3. Audit assistants.........................................................................52
2.1.5. Characteristics of organization of audit..........................................52
2.1.5.1. Audit planning stage.................................................................53
2.1.5.2. Stage of implementing audit plan.............................................54
2.1.5.3. End stage of audit......................................................................57
2.1.6. Organizational characteristics of auditing documents of Nam Viet
financial accounting consulting services CO., LTD (AASCN) – Hanoi
Branch.......................................................................................................57
2.1.6.1. Permanent profile......................................................................58
2.1.6.2. Annual audit file........................................................................59
2.1.7. Quality control of AASCN - North Branch....................................64
2.1.7.1. Controlling audit personnel.......................................................64
2.1.7.2. Controlling audit process..........................................................66
2.1.7.3. Control of audit records...............................................................69

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2.3. TECHNIQUES FOR COLLECTING AUDIT EVIDENCE IN
AUDIT OF FINANCIAL STATEMENTS IMPLEMENTED BY
AASCN........................................................................................................74
2.3.1. Audit................................................................................................74
2.3.1.1. Collecting background information, information on legal
obligations..............................................................................................74
2.3.1.2. General assessment of the internal control system...................75
2.3.1.3. Data analysis............................................................................77
2.3.2. Closing period.................................................................................84
CONCLUSION CHAPTER 2......................................................................86
CHAPTER 3...................................................................................................87
SOME RECOMMENDATIONS TO COMPLETE THE COLLECTION
AND EVALUATION PROCESS.................................................................87
3.1. GENERAL COMMENT....................................................................87
3.2. PRINCIPLES AND REQUIREMENTS FOR COMPLETING
THE PROCESS OF COLLECTION AND ASSESSMENT OF AUDIT
EVIDENCE UNDER THE IMPACT OF COVID 19.............................89
3.2.1. Perfection Principle.........................................................................89
3.2.2. Requirements for improvement.......................................................89
3.3. SOME RECOMMENDATIONS TO COMPLETE THE PROCESS
OF COLLECTION AND ASSESSMENT OF AUDIENCE IN AUDIT
OF FINANCIAL STATEMENTS IMPLEMENTED BY NAM VET
AUDIT COMPANY...................................................................................90
3.3.1. Completing the application of evidence collection techniques due to
the impact of COVID in the audit planning stage by Nam Viet Auditing
Co., Ltd......................................................................................................90
3.3.1.2. Practical lessons learned through practical follow-up
applying AASCN evidence-gathering techniques:............................96

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3.3.1.3. Some general limitations still exist:.......................................97
3.3.2. Some recommendations to improve the technique of collecting
audit evidence at AASCN Accounting and Auditing Co., Ltd............98
3.3.2.1. During the planning phase.....................................................98
3.3.2.2. During the implementation of the audit plan.....................100
3.3.2.3. At the end of the audit.............................................................106
3.4.

CONDITIONS

FOR

IMPLEMENTATION

OF

RECOMMENDATIONS TO COMPLETE THE PROCESS OF
COLLECTION AND ASSESSMENT OF AUDIT EVIDENCE IN
AUDIT OF Financial Statements............................................................107
3.4.1. On the side of functional management agencies and professional
associations.............................................................................................107
3.4.2. On the side of the audit client.......................................................108
CONCLUSION CHAPTER 3....................................................................109
References....................................................................................................110

v

LIST OF FIGURES
Figure 2.1. Organizational and management structure of AASCN
Company
Figure 2.2. Organizational and management structure at AASCN
Company – Northern Branch
Figure 2.3. Organization chart of the audit team at AASCN North
branch
Figure 2.4. Audit organization process at AASCN Northern branch
Figure 2.5. Process of issuing audit report
Figure 2.6. The order of participation in reviewing working papers

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LIST OF TABLES
Table 2.1: Business performance of Nam Viet Auditing and Financial
Consulting Services Co., Ltd - Northern Branch from 2016 to 2018
(Source: Transparency report of the company in 2016, 2017, 2018)
Table 2.2: Index of audit records of permanent records
Table 2.3: Section of audit records summarizing annual audit records
Table 2.4. Summary, conclusion and report paper
Table 2.5. Order of arrangement of working papers
Table 2.6. ABC Company's Balance Sheet
Table 2.7. ABC’S Business performance report
Table 2.8. Cash inventory paper template of ABC Company

vii


INTRODUCTION

Auditing activity in the world has a history of more than 100 years, but
in Vietnam this activity only appeared in the early 90s. Initially, the
appearance of independent auditing firms in Vietnam. 1991, then state audit
in 1994 and in 1997 for internal audit. Since its official appearance up to now,
auditing activities have developed rapidly. Especially with the type of
independent audit, auditing firms in Vietnam are gradually improving both in
quantity and quality to promptly respond to the development of the economy.
Enterprises that want to develop well need to improve the quality of
management, in which accounting plays an important and decisive role.
Auditing always goes hand in hand and is a continuation of accounting
activities. If accountants are responsible for organizing the collection,
processing and providing information, then the audit is the confirmation of
truthfulness and reasonableness. of financial statements, it is important to
make recommendations to improve management processes and to serve
effectively those who need to use accounting information.
One of the most important factors for the success of an audit is audit
evidence. Audit evidence is the basis on which the auditor can express his or
her opinion on the truthfulness and reasonableness of the financial statements
and the auditor also relies on it to draw audit conclusions. If the amount of
audit evidence collected is not enough in terms of quality as well as quantity,
it will affect the audit conclusion, the risk of ignoring errors and fraud is very
large. This can have serious impacts on the performance of the client
company, as well as those interested in and using the business's financial
statements. To collect evidence with high reliability, it depends on the
capacity and experience of the auditor as well as the technical methods of
collecting audit evidence applied throughout the audit process. The

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techniques for collecting audit evidence are the summarization and
generalization of audit experiences on the basis of dialectical methods,
specific scientific methods, analysis of planning, of probability, and of
systematics. accounting. It is for that reason that the techniques for collecting
audit evidence must be constantly improved and perfected to respond to the
diversity of information, the increasingly sophisticated level of fraud.
Recognizing the importance of the problem, as an auditing student in the
process of researching and researching documents, I boldly chose the topic:
"Audit evidence and techniques for collecting audit evidence." in financial
audit”. Through the process of researching this topic, it has helped me better
understand the methods as well as the importance of collecting audit
evidence. The main content of the topic consists of three parts as follows:
Chapter 1: The basic theory of the process of collecting and evaluating audit
evidence in the audit of financial statements issued by Financial Accounting,
Auditing and Consulting Services Co., Ltd. Nam Viet (AASCN) implements
Chapter 2: Status of the process of collecting and evaluating audit evidence
in the audit of financial statements by Nam Viet Auditing and Financial
Consulting Services Company Limited (AASCN) implementing
Chapter 3: Some recommendations to improve the process of collecting and
evaluating audit evidence due to the impact of covid 19 in the audit of
financial statements by Nam Viet Auditing and Financial Consulting Services
Co., Ltd. (AASCN) implemented
 
1. Research objectives
- Overall research objective
The writer conducts research on the topic with the general objective of:
Understanding the role of the financial statement collection technique on the
results of the audit of financial statements and perfecting the technique of

2

collecting financial statements in the audit. Financial statements at Nam Viet
Auditing and Financial Consulting Services Company Limited (AASCN).
- Specific research objectives
Learn some issues about financial statements and techniques for collecting
financial statements according to VSA 500, ISA 500, ISA 300, etc. Studying
techniques for collecting financial statements in auditing financial statements
to learn about techniques applied in the audit of financial statements at Nam
Viet Auditing and Financial Consulting Services Company Limited (AASCN)
at specific audited items and periods. From there, evaluate the advantages and
limitations of the applied techniques to have a more objective view when
choosing techniques to collect financial statements.
2. Research object and scope
- Research
object Research object: Techniques for collecting financial statements in
auditing financial statements at Nam Viet Auditing and Financial Consulting
Services Company Limited (AASCN).
- Research scope
Nam Viet Auditing and Financial Consulting Services Co., Ltd (AASCN)
3. Research methods
- Document research method:
Refer to documents on auditing; accounting and auditing standards; current
accounting regime; using documents and audit records of Nam Viet Auditing
Company to collect necessary information for the research process.
- Methods of analysis and synthesis of documents:
To make statistics of collected information and data to conduct analysis and
evaluation. From there, make general and objective judgments in order to
detect advantages and disadvantages and find solutions to overcome.
- Observation method:

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Directly observing the audit process at the company's customers during field
trips to collect relevant information.
 
 
 
 
 
 
 
 
 

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CHAPTER 1
BASIC THEORY ON THE PROCESS OF COLLECTION OF AUDIT
EVIDENCE IN AUDIT OF FINANCIAL STATEMENTS BY
VIETNAM FINANCIAL ACCOUNTING AND AUDITING SERVICES
CO., LTD (AASCN)
1.1. GENERAL

OVERVIEW

OF

FINANCIAL

STATEMENTS

BECAUSE OF COVID AND TECHNIQUES FOR COLLECTING
AUDIT EVIDENCE IN AUDIT OF FINANCIAL STATEMENTS
1.1.1. Overview of Financial Statements due to the impact of COVID 19
- Financial statements are economic information presented by an entity
in the form of tables, in order to provide information on the financial
position, business and cash flows of the entity to meet the information
use needs of the entity. decision-making by the parties involved.
Financial statements are not only an important tool to provide useful
financial information about an enterprise, but also an effective tool to
create confidence for those who read and use the company's financial
statements. The situation of COVID-19 epidemic in the world is still
complicated, causing difficulties and challenges for businesses in many
fields. This leads to a few issues that need attention in the preparation,
presentation and approval of financial statements.
- From the perspective of studying financial statements to serve the
process of collecting and evaluating audit evidence, it can be seen that,
due to the global impact of the Covid epidemic, some indicators and
contents of the financial statements may be affected.include:
o Accounting estimates: Changes in market circumstances due to the
impact of the COVID-19 pandemic, some previous accounting

5


estimates may no longer be relevant (e.g. provision for doubtful
receivables), estimate the useful life of fixed assets as the basis for

calculating depreciation and provision for warranty obligations).
o About inventory: Currently, many businesses are experiencing
supply chain disruptions; Businesses with seasonal inventories and
perishable products may be at risk from spoilage, obsolescence, and
decline in value.
o In addition, real estate businesses may be affected by falling real
estate prices due to the economic downturn.
o Assumption of going concern: According to the General Standards,
financial statements must be prepared on the assumption that the
enterprise is in going concern and will continue in normal business
in the near future. That is, the enterprise has neither the intention nor
the force to cease operations or significantly reduce the scale of its
operations. With the current situation of COVID-19 epidemic, many
businesses are at risk of dissolution or have to stop operating in
some areas, leading to financial statements having to be prepared on
an alternative basis (for example, the liquidation price basis). or
actual exercisable price). These influences will change the type of
evidence, the techniques for collecting and evaluating evidence in
the audit of financial statements.
1.1.2. Concept and classification of audit evidence
1.1.2.1. Concept
According to Auditing Standard 500 (ISA 500), audit evidence is all
documents and information collected by the auditor in connection with the
audit and based on these documents and information, the auditors draw
conclusions and thereby form an audit opinion. Audit evidence includes
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documents, vouchers, accounting books, financial statements and other
documents and information. Thus, audit evidence includes both witness and

physical information that the auditor collects to serve as a basis for verifying
and expressing an opinion on the financial statements of the enterprise. The
word concept shows the basic characteristics of audit evidence and the
relationship of the evidence to the audit conclusion. Audit evidence is not
only the basis for drawing conclusions, but also creates confidence for users
of the company's financial statements. Because of the diversity of audit
evidence, auditors need to be well aware of the types of evidence so that they
can make an accurate assessment when performing an audit.
1.1.2.2. Classification of audit evidence 
In practice, there are many types of audit evidence, each with different
reliability. In order to make the study, judgment and use of audit evidence
convenient and effective, it is necessary to classify audit evidence as follows
based on the source of information and documents related to the financial
statements that the auditor obtains during the audit. According to this
classification, audit evidence is divided into the following categories: 
(1) Audit evidence is self-exploited and discovered by auditors by: 
- Actual asset inventory: inventory, fixed asset inventory, fund
inventory...
- Calculation Re-calculate the spreadsheets of the enterprise's
calculation tables: the data and documents recalculated by the auditors
confirmed by the enterprise or related people are reasonable 
- Observe the operation of the internal control system complete set: the
information and documents recorded by the auditor through the observation
of the enterprise's internal control system 
This is a type of reliable evidence. y is highest because it is performed
directly by the auditor. But many times, it is still temporal at the time of

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inspection, such as observing the operation of the internal control activities of
the enterprise, the auditor must conduct it secretly to ensure that the collected
evidence is valid. For greater reliability, inventory counts depend on their
physical properties from time to time, with different results.
(2) Audit evidence issued by other entities and stored at the enterprise:
sales invoices, purchase invoices, minutes of handover of fixed assets, bank
sub-numbers,... Type of evidence has high persuasion because it is generated
from the outside, however, this type of evidence is still capable of erasing,
adding or reducing the impact on the audit's reliability for control activities in
the enterprise.
(3) Audit evidence issued by the enterprise and circulated outside the
entity documents and documents issued by the enterprise and transferred to
other units and then returned to the entity such as payment authorizations,
sales invoice... This is a highly persuasive form of proof because it is
provided by a third party, but it needs to ensure the independence of the
supplier from the business. 
(4) Audit evidence for the enterprise issues and circulates to the internal
departments of the entity and the information that the enterprise provides to
the auditors. 
- Documents and documents issued by the enterprise and circulated
within the enterprise, such as payment slips, material delivery notes, sales
invoices, time sheets, salary payment books, general ledgers, books details,
product inspection slips, stock release notes, warehouse receipts, etc.
- The accounting books and accounting reports of the enterprise are
made.
- Information (speech, notes, ...) of managers, professional staff or
explanations of related people in the unit to the auditors... 

8

This evidence accounts for a large amount of information. large, quite
popular because it is an available source of documents and is kept at the unit.
Since this evidence is derived from within the enterprise, they are only really
reliable when the enterprise's internal control system is judged to be operating
effectively and effectively. The recovery of this type of evidence is not high. 
- Classification of audit evidence by type of evidence 
Reliability is also assessed through the form of evidence, with the
assessment of reliability through the principle: Evidence in the form of
documents, images is more reliable. evidence recorded from speech. The
classification of evidence by type of evidence includes: \
- Physical evidence is evidence obtained by the auditor during an
inspection or during an inventory of tangible assets such as inventory. ,
tangible fixed assets, cash, securities, etc. This category includes inventory
records, cash fund inventory records, securities, and asset inventory minutes.
tangible fixed assets, ... Physical evidence has the highest reliability, because
physical evidence is given from direct inspection to verify whether the asset is
real or not. 
- Documentary evidence: is the evidence that the auditor collects through
the provision of documents and information of related parties at the request of
the auditor. This category includes: Accounting records and business records
of the enterprise, accounting reports, explanations of managers, .... Vouchers
and documents issued by external parties provided by the enterprise such as:
documents, certifications, reports of 3rd parties related to the financial
statements of the audited enterprise such as tax authorities, customs, sellers,
buyers, etc. ..; Auditor's recalculation documents: through the verification and
analysis of data, the auditors recalculate the audited enterprise's data to give
evidence for the opinions. management, such as: recalculating the prices of
invoices, calculating depreciation of fixed assets, calculating costs, allocating

9


costs, closing accounting books, the process of getting data to make
accounting

reports...

These

documentary

evidences

reinforce

the

persuasiveness, but the reliability is not as high as the physical evidences,
their reliability depends on the effectiveness of internal control 
- Type of evidence obtained from words: This type of evidence is usually
collected through the interview method, it is not very convincing, but it
requires the interviewer's understanding of the subject matter to be
interviewed quite high 
- In addition, there is a way to classify audit evidence according to
persuasiveness
Because audit evidence is used to directly express different opinions on the
truthfulness of the financial statements, the issuing auditor should audit
Members need to consider their reliability. The extent to which the auditor's
opinion is expressed in the auditor's report is relative to the persuasiveness of

the evidence. In this way evidence is classified as follows: 
- Fully Convincing Evidence: This is the type of evidence obtained by
the auditors by self-inventory, evaluation, and observation. This evidence is
generally judged to be objective, accurate, and complete. Based on this
opinion, the auditors express an unqualified opinion. 
- Partial convincing evidence such as: Evidence obtained from
interviews requires analysis and re-examination, the types of evidence usually
warranted by internal control systems. They are only really convincing when
the internal control apparatus of the enterprise really exists and is effective.
Based on this type of evidence, the auditor can only express an admissible
opinion. 
Evidence has no persuasive value: is evidence that has no value in
making the auditor's opinion or decision on the audit.  

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1.1.3. Judgment requirements of audit evidence
Auditing evidence must meet certain requirements in terms of quality
and quantity, two concepts that are appropriate and sufficient to indicate the
judgment requirement of audit evidence 
a,

Relevancy 

-

Relevancy is a measure of the quality of audit evidence,

including the relevance and reliability of audit evidence in helping the auditor

to draw conclusions on which to form the audit opinion. The reliability of
audit evidence is influenced by the source and content of the audit evidence
and depends on the specific circumstances in which the auditor obtained it.
-

Reliability also depends on the type of audit evidence such as: (i)

Physical evidence obtained as a result of an inventory or participating in an
inventory and the auditor's knowledge of the audit area are considered two
factors. the most reliable form of evidence; (ii) Evidence in the form of
documents (documents, books) has less reliability than the physical form; (iii)
Evidence collected through interviews is less reliable than documentary
evidence; (iv) Original evidence is more reliable than photocopy or fax
evidence; (v) The entity's internal control system: If a department has
effective internal control, the audit evidences related to the accounting
documents, control system, etc. of that department will have high degree of
accuracy. higher reliability. 
-

Combination of types of evidence 

A group of audit evidence obtained from different sources, in different
forms, but with the same confirmation on an issue will have greater reliability
than individual evidence. Conversely, when evidence from different sources
gives conflicting results, the auditor must consider the matter with caution,
and may have to perform additional audit procedures to verify. 

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-

Timing of collecting audit evidence: Timing of audit evidence

will be especially important in verifying current assets and current liabilities.
Evidence gathered closer to the date of the financial statements is more
reliable. For example, for a cash account, the closer the inventory date is to
the cut-off date, the more reliable the inventory evidence.
-

Other factors: In each specific case, reliability is also affected by

other factors. For example, interviewing procedures, the interviewee's
understanding of the problem under investigation will affect the reliability of
the evidence obtained. 
Relevancy (Conformity)
The audit evidence obtained is relevant to the audit objective. For
example, when the audit objective is the existence of an inventory, the auditor
must select a sample of the balances of the inventory items in the accounting
records and obtain documentation of their existence in the accounting period.
Actually, at the warehouse. However, when the audit objective is adequacy,
the auditor must select a number of inventories in the warehouse and obtain
evidence that these items have been adequately recorded in the books. Thus, it
can be seen that the audit evidence to be collected will be different for each
different audit objective, but to be considered appropriate, the audit evidence
must be related to the audit objective. It is clear that the auditor cannot use
evidence that verifies the existence of inventory as evidence of completeness
of records (example above). In addition to reliability, the appropriateness of
audit evidence in substantive tests also requires the appropriateness of the
evidence with the assertion that the auditor wishes to verify. 

b,

Completeness

Completeness is a measure of the quantity of audit evidence. The
amount of audit evidence to be obtained is influenced by the auditor's

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