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Luận văn kiểm toán khoản mục doanh thu bán hàng và cung cấp dịch vụ tại loại hình Resort do công ty Kiểm toán và Kế toán AAC thực hiện. Luận văn này được viết bằng Tiếng Anh do sinh viên trường Đại học Kinh tế Đà Nẵng viết. Bài viết này bao gồm đầy đủ các phần: bìa, lời mở đầu, lý thuyết, thực tế công ty, giải pháp và phần kết luận. Các bạn hoàn toàn có thể dựa vào bài viết này để viết thành bài viết hoàn thiện của các bạn.
DANANG UNIVERSITY OF ECONOMICS ACCOUNTING DEPARTMENT - - GRADUATION THESIS AUDIT PROCEDURE ON SALES AND ACCOUNTS RECEIVABLE FROM CUSTOMERS FOR HOTELS AND RESORTS COMPANIES CONDUCTED BY AAC AUDITING AND ACCOUNTING LIMITED LIABILITY COMPANY Academic advisor: Pham Hoai Huong, Ph.D Student : Nguyen Nha Truc Class 39K18-CLC : Da Nang, December 2017 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Contents INTRODUCTION CHAPTER 1: LITERATURE REVIEW ON AUDIT OF THE SALES AND ACCOUNTS RECEIVABLE FROM CUSTOMERS 1.1 Business functions and audit objectives in the sales and accounts receivable from customers .2 (Source: Gay & Simnett, 2010) .6 1.2 Accessing business risk and inherent risk for auditing sales and accounts receivable from customers .6 1.3 Understanding and documenting internal control of the sales and collection cycle .7 1.4 Tests of controls of the sales and accounts receivable 10 1.4.1 Test of control of sales .10 1.4.2 Test of control of related to accounts receivable 11 1.5 Substantive tests of the sales and accounts receivable from customers 13 1.5.1 Substantive tests of the sales 13 1.5.2 Substantive tests of accounts receivable 17 1.6 Main characteristic of accounting sales and accounts receivable from customers of hotels and resorts companies affecting audit procedures 20 CHAPTER 2: AUDIT PROCEDURE FOR SALES AND ACCOUNTS RECEIVABLE FROM CUSTOMERS OF HOTELS AND RESORTS COMPANIES CONDUCTED BY AAC AUDITING AND ACCOUNTING LIMITED LIABILITY COMPANY 22 2.1 Overview about AAC Auditing and Accounting Limited Liability Company (AAC) 22 2.1.1 Historical development of AAC Auditing and Accounting Limited Liability Company .22 2.1.2 Company’s mission 23 2.1.3 Types of services provided by AAC Auditing and Accounting Limited Liability Company .23 2.1.4 Management organization structure and human resources in the company 26 2.1.5 Overview of the process of financial statement audit conducted by AAC Auditing and Accounting Limited Liability Company .28 Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D 2.1.6 Performing the audit 29 2.1.7 Finishing the audit process 30 2.2 Audit procedure for sales and accounts receivable from customers of hotels and resorts companies conducted by AAC Auditing and Accounting Limited Liability Company 30 2.2.1 Performing initial audit planning .30 2.2.2 Audit planning for auditing sales and accounts receivable from customers 35 2.2.3 Audit procedure for sales conducted by AAC 36 2.2.4 Audit program for accounts receivable from customers 44 CHAPTER 3: SOLUTIONS TO IMPROVE AUDIT PROCEDURE FOR SALES AND ACCOUNTS RECEIVABLE FROM CUSTOMERS FOR HOTELS AND RESORTS COMPANIES CONDUCTED BY AAC 49 3.1 Comment on audit procedure for sales and accounts receivable from customers for hotels and resorts companies conducted by AAC 49 3.1.1 Positives in the audit procedure for sales and accounts receivable from customers for hotels and resorts companies conducted by AAC .49 3.1.2 Limitations in the audit procedure for sales and accounts receivable from customers for hotels and resorts companies conducted by AAC .49 3.2 Some solution for improving audit procedure for sales and accounts receivable from customers for hotels and resorts companies conducted by AAC 50 3.2.1 Analytical procedures 50 3.2.2 Performance materiality 51 3.2.3 Confirmation letters 52 3.2.4 Existence of accounts receivable from solo travelers 53 3.2.5 Sales cut-off test 53 3.2.6 Checking collaterals 54 3.2.7 Test of control 56 Appendix 1: Forms of confirmation letter i Appendix 2: Internal control over sales and accounts receivable‘s evaluation.iii References .v Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D INTRODUCTION A revenue and collections cycle represents the business activities associated with providing goods and services to customers and collecting their payments The revenue cycle processes should emphasize quick turnover of customer payment to ensure a strong cash flow, but managers should also separate duties to deter any chance of internal fraud and theft in revenue cycle The sales and accounts receivable from customers begins at the initial purchase and continues through billing and payment receipt for every transaction Since this is the core of revenue bookings, it is needed to be sure accurate at all times Auditing the records from sales and collections regularly will ensure to identify any procedural problems or potential errors right away The thesis based on the theoretical literature on auditing revenue and accounts receivable from customers as well as auditing standards related to the topic Other specific in the research methods include: documentary study, interview, comparison, analysis to analyze and evaluate the financial statement on auditing revenue and accounts receivable from customers at AAC, from which suggestions would be given to improve the quality and effectiveness of audit for sales and accounts receivable from customers process Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D CHAPTER 1: LITERATURE REVIEW ON AUDIT OF THE SALES AND ACCOUNTS RECEIVABLE FROM CUSTOMERS 1.1 Business functions and audit objectives in the sales and accounts receivable from customers The overall objective in the audit of the sales and accounts receivable from customers is to evaluate whether the account balances affected by the cycle are fairly presented in accordance with accounting standards The nature of the accounts may vary, depending on the industry and client involved There are differences in the nature of a service company, a retail company, and an insurance company, but the key concepts remain the same (Arens et al, 2012) The audit objectives for sales and receivable relate to obtaining sufficient appropriate evidence about each significant assertion for the applicable transaction and balances The main objectives would apply to most merchandising entities (Leung et al, 2011) While according to VAS 14, Revenue shall consist of only the total value of economic benefits the enterprises have gained or will gain Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and not result in increases in equity Therefore, they are excluded from revenue Similarly, in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which not result in increases in equity of the entity The amounts collected on behalf of the principal are not revenue Instead, revenue is the amount of commission According to Arens et al, (2012) the sales and accounts receivable from customers involves the decisions and processes necessary for the transfer of the ownership of goods and services to customers after they are made available for sale It begins with a request by a customer and ends with the conversion of goods or service into an account receivable, which refers to the outstanding invoices a company has or the money the company is owed from its clients, and ultimately into cash Table Business functions and related documents Business function Processing customer order Approving credit Related documents Customer order Customer order Shipping goods Invoicing customers and recording sales Shipping document Sales invoice Sale journal Monthly statement Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Processing and recording cash receipts Processing and recording sale returns and allowances Writing off uncollectible accounts receivable Making provision for bad debts Cash receipts journal Sales returns and allowances journal Uncollectible account authorization form General journal General journal (Source: Arens et al, 2012) Processing customer order: Customer orders need to be checked for their authenticity, the acceptability of terms and conditions, and the availability of the inventory Customer order is a request for merchandise by a customer It may be received by telephone, letter, a printed form that has been sent to prospective and existing customers, through salespeople, electronic submission of the customer order through the Internet, or other network linkage between the supplier and the customer Once accepted, the order is recorded on a sale order Sale order is a document for communicating the description, quantity, and related information for goods ordered by a customer Approving credit: Before goods are shipped, a properly authorized person must approve credit to the customer for sales on account or does so electronically, following prescribed procedures Weak practices in credit approval often result in excessive bad debts and accounts receivable that may be uncollectible Credit approval is normally refused if the order would take the balance over the customer’s credit limit or if the account is overdue Shipping goods: Most companies recognize sales when goods are shipped A shipping document is prepared at the time of shipment, which can be done automatically by a computer, based on sales order information The shipping document is essential to the proper billing of shipments to customers Companies that maintain perpetual inventory records also update them based on shipping records Shipping document is prepared to initiate shipment of the goods, indicating the description of the merchandise, the quantity shipped, and other relevant data Invoicing customers function involves preparing and sending sales invoices to customers Sale invoice is a document or electronic record indicating the description and quantity of goods sold the price, freight charges, insurance, terms, and other relevant data The most important aspects of invoicing are: Checking completeness: all shipments are invoiced to customers Checking occurrence: only actual shipments are invoiced Checking accuracy: Each one is invoiced for the proper amount Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Recording sales function involves entering sale invoices in a sale journal, posting the invoices to the account receivable subsidiary ledger, and posting the sale journal total to the general ledger The account receivable ledger balance is periodically compared with the general ledger control account Many companies prepare monthly statement, a document sent by mail or electronically to each customer indicating the beginning balance of their accounts receivable, the amount and date of each sale, cash payments received, credit memos issued, and the ending balance Processing and recording cash receipts includes receiving, depositing, and recording cash One risk is that cash is stolen before or after it is recorded All cash receipts must be deposited intact daily, ensure that only valid transactions are entered The daily cash summery is used to enter the cash receipts journal, a listing or report is generated from the cash receipts transaction file and includes all transactions for a time period Processing and recording sale returns and allowances: When a customer is dissatisfied with the goods, the seller often accepts the return of the goods or grants a reduction in the charges The company prepares a receiving report for returned goods and returns them to storage Returns and allowances are recorded in the sales returns and allowances transaction file, as well as the accounts receivable master file The journal used to record sales returns and allowances is called sales returns and allowance journal It performs the same function as the sales journal Many companies record these transactions in the sales journal rather than in a separate journal Writing off uncollectible accounts receivable: Regardless of the diligence of credit departments, some customers not pay their bills After concluding that an amount cannot be collected, the company must write it off Typically, this occurs after a customer files for bankruptcy or the account is turned over to a collection agency Proper accounting requires an adjustment for these uncollectible accounts Uncollectible Account Authorization Form is used internally to indicate authority to write an account receivable off as uncollectible Because companies cannot expect to collect on 100% of their sales, accounting principles require them to record bad debt expense for the amount they not expect to collect Most companies record this transaction at the end of each month or quarter According to Leung et al (2011), in the auditing of sales and receivable, the key issues needed to be ensured are as below: The sales actually occur and are neither understated nor overstated (related to the financial statement assertions of completeness and occurrence, also accuracy and cut-off) Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D The accounts receivable actually exist and are collectable, and allowances have been made for accounts receivable that have became bad debts or are doubtful to about their collectability (related to existence, valuation and allocation) All the audit objectives related to sales and accounts receivable are summarized in Table 2: Table 2: Audit objectives for sales and accounts receivable Audit Objectives Related to sales I Transaction objectives Occurrence Sales recorded in the accounts represent the goods shipped to customers during the period Completeness All goods shipped to customers during the period are recorded Accuracy All sale transactions are accurately recorded Cut-off Classification All invoices have been recorded in the right period All sales are recorded in the correct accounts II Balances objectives Existence Right and obligations Completeness Student: Nguyen Nha Truc- 39K18-CLC Related to accounts receivable Recorded accounts receivable resulted from sales to customers All accounts receivable from customers during the period are recorded All accounts receivable are recorded with exact amounts All accounts receivable have been recorded in the right period All accounts receivable are recorded in the correct accounts Accounts receivable represents amounts owed by customers at the end of accounting period Accounts receivable at the end of accounting period represents legal claims of the entity on customers for payment All amounts owed by customers are included in accounts receivable at the end of accounting period Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Valuation and allocation Accounts receivable from customers are identical to the amount in subsidiary ledger III Presentation and disclosure objectives Occurrence Sales transactions and events disclosed in the financial statements have occurred and related to the entity Completeness All sales transactions that All accounts receivable should have been balances that should have disclosed have been been disclosed have been disclosed in the financial disclosed in the financial statements statements Classification & Disclosed sales Disclosed accounts transactions have been receivable balances have Understandability classified appropriately been classified and presented clearly in a appropriately and manner that promotes the presented clearly in a understandability of manner that promotes the information contained in understandability of the financial statements information contained in the financial statements Accuracy & Sales transactions have Accounts receivable been disclosed accurately balances have been Valuation at their appropriate disclosed accurately at amounts their appropriate amounts (Source: Gay & Simnett, 2010) 1.2 Accessing business risk and inherent risk for auditing sales and accounts receivable from customers The auditor uses knowledge gained from the understanding of the client’s business and industry to assess client’s business risk, which makes the client l fail to achieve its objectives Client business risk can arise from any of the factors affecting the client and its environment such as: A significant declines in the economy that threaten the client’s cash flows; New technology eroding a client’s competitive advantage; Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D The new products and services are whether accepted in the market or not, The estimated demand associated with the expansion has not been accurately estimated; Loss of financing because of inability to meet debt covenant requirements; The inclusion of inherent risk in the audit risk model is one of the most important concepts in auditing It implies that auditors should attempt to predict where misstatements are most and least likely in the financial statement segments This information affects the amount of evidence that the auditor needs to accumulate, the assignment of staff and the review of audit documentation (Arens et al, 2012) According to Jubb et al, 2012, sales transactions are routine for many organizations and not pose a high risk Revenue should be recognized only when it is realized or is realizable and earned Some difficult audit issues are as below: The point in time when revenue should be recorded The impact of unusual terms, and whether title has passed to the customers All goods recorded as sales have been shipped and were new goods The proper treatment of sales transactions made with recourse or that have an abnormal or unpredictable amount of returns The primary risk associated with the receivable is that the net amount is not collectible If valid sales transactions does not exist, a valid accounts receivable does not exist Some of the risks affecting receivable are as below: Sales of receivables made with recourse and recorded as sales transaction rather than financing transactions Receivables pledged as collateral against specific loans with restricted use Disclosures of such restrictions are required Collection of a receivable contingent on specific events that can not currently be estimated Payment is not required until the purchaser sells the product to its end customers Once the auditors have obtained an understanding of the risk misstatement, the auditors need to understand the controls that the client has in place to address those risks (Jubb et al, 2012) Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Bill of lading, but in this company, they not use Bill of lading to record revenue for rental room services There are some items on the Notes to financial statement the auditors not check thoroughly, for example is the collaterals In auditing accounts receivable, the auditors only interview the chief accountant to identify any accounts receivable used as collaterals This evidence is not appropriate enough for the auditors to make a conclusion Most of the hotels and resorts use technology system to accounting and recording transaction automatically It can make the auditors uneasy to find audit trails 3.2 Some solution for improving audit procedure for sales and accounts receivable from customers for hotels and resorts companies conducted by AAC 3.2.1 Analytical procedures Analytical procedures play a very important role in the whole audit process For some industry that does not change much about its investment strategy and the government’s policies changes does not affect much on company’s operations, auditors can only use the financial analytical procedures to assess preliminary risks However, to some specific industry, to evaluate the business performance of a company, using financial analysis in the financial statements is not sufficient Sometimes, this financial information can not adequately and accurately reflect the business situation of the customers Even if only base on financial information, it may lead to mistakes in providing opinions Therefore, AAC should enhance the use of non-financial information in auditing financial statements The analysis of AAC for the indicators on the financial statement only stops at the analysis of financial ratios and fluctuations of company during years The company should widen the analysis on the industry average for a better analysis Nowadays, there is no authorized association to calculate the industry average ratio in Vietnam In this case, AAC can connect with other audit firm in Vietnam to collect data from the audited companies and then send to an internal data system between the audit firms This way can help the audit firm get a better analysis 3.2.2 Performance materiality AAC uses the performance materiality for the whole financial statement as the performance materiality for each item in financial statement This would not be appropriate and conservative for the whole audit process In fact materiality for each individual item depends on factors such as the possible risk of materiality misstatement of the item For example, for most of manufacturing company, profit is the main feature that easily relate to risks, so the tolerable misstatement Student: Nguyen Nha Truc- 39K18-CLC 52 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D assigned for profit should be high Besides, the size, complexity and the importance of the item plays vital role in allocating materiality for each item Firstly, auditors will determine which item does not need to assign tolerable misstatement or with little tolerable misstatement Those items are often with little or no risk of material misstatement (such as owner’s equity), or items with low audit cost and auditors can verify 100% After that, auditors would assign performance materiality for each item on financial statement This can be calculated depend on the importance and probability of the item related to material misstatement: Importance level of items High Moderate Probability related High Highest High to risk of material Moderate High Moderate misstatement Low Moderate Low Low Moderate Low Lowest Performance materiality for each item = Materiality depends on both the importance and risk-related of the items From the model we can see that there are five levels: lowest, low, moderate, high and highest, they will be scored on the 1-5 scale bases respectively This is coefficient R which is used to determine performance materiality applied for the item For example, revenue is an important and has high probability related to risk of material misstatement, thus it is assessed the highest level with R = 5, when accounts receivable level and probability to risk is moderate and moderate important assets, thus R=3 (moderate) Assume we calculate total R = 27 Revenue R Performance materiality for each item = (PM x R)/ 27 Accounts receivable 2,599,222 1,535,533 3.2.3 Confirmation letters AAC should design the procedure of sending and receiving confirmation letters more reasonably Because there is risk of sending closed confirmation letter The best way is that the auditors require the entity to send opened Student: Nguyen Nha Truc- 39K18-CLC 53 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D confirmation letters to obtain the reasonable evidences An opened external confirmation request asks the respondent to reply to the auditor in all cases by filling in the blank for the amount needed to be confirmed A response to an open confirmation request is ordinarily expected to provide reliable audit evidence Below is the sample of opened letter: CONFIRMATION LETTER Date 3rd January, 2017 Recipient: JNT Company Address: 9A NQC Street, PNL Ward, 1st District, HCM City Fax: Dear Sir/ Madam, “AAC Auditing and Accounting, Ltd” are conducting an annual audit of our financial statement for the fiscal year end December 31 st, 2016 Please fill in the blank for balance of our company as of December 31st ,2016 as below: Amounts we have to collect :…………………………… Amounts you pay in advance :…………………………… For the purpose of the audit of our accounts only, we would be grateful if you could confirm the correctness of the above balances directly to our auditors (not to us) at the following address: AAC Auditing and Accounting Lot 78-80 April 30 Street Danang City Hai Chau District Vietnam Attn: BTL Fax: 84 – 511 3655886 Tel: 84 – 511 3655886 Email: BTLaac@gmail.com All facsimile confirmation is required to be followed by a certificated true copy/original confirmation through mail It is very necessary for us to receive your reply, would you please forward your Student: Nguyen Nha Truc- 39K18-CLC 54 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D reply to us as soon as possible Thank you very much for your cooperation Yours faithfully, NM, Dated The information presented above by the customer is in agreement with our records Although we have not conducted a comprehensive, detailed search of our records, no other balances have come to our attention except as noted below [Customer Authorized Signature] [Date] 3.2.4 Existence of accounts receivable from solo travelers With the debit balances of accounts receivable, they related the guests who are staying in the hotel or resort at the current time In order to check the existence of those balances, the auditors can check the invoices issued in the next period which relates to the current accounts receivable balances If the accounts receivable at the end of the period is existent, the guests will check-out and make payment in the next period The auditor can review the invoices to check for date of rental room, they represent for the accounts receivable at the end of the period or not 3.2.5 Sales cut-off test The cut-off tests conducted for sales and account receivable can not be done by the normal way as examining the transaction from days before the ending date because of the characteristics of the hotel and resort companies In the company’ policies of recording revenue, revenue will be recorded on the occurred date There is a risk of recording revenue in the wrong period because the accountants can record revenue when issuing invoices in the next period and not allocate the revenue from the current period In this case, the auditors have to check the invoices 10 days after the ending date and then identify the invoices related to the revenues in the current period After that, the auditors check Student: Nguyen Nha Truc- 39K18-CLC 55 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D whether the entity allocate the revenue from the current period and the next period or not 3.2.6 Checking collaterals About checking whether any receivables are used as collaterals, the auditors should associate with the confirmation from the bank The banks need to provide information about the maturity date, interest rate and the related collateral to the loans Every confirmation from the third party is more reliable than only obtaining information from the chief accountants For example, below is the form of bank confirmation: Student: Nguyen Nha Truc- 39K18-CLC 56 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D STANDARD FORM TO CONFIRM ACCOUNT BALANCE INFORMATION WITH FINANCIAL INSTITUTIONS Financial institution’s name: Address: Dear Sir/ Madam, “AAC Auditing and Accounting, Ltd” are conducting an annual audit of our financial statement for the fiscal year end December 31 st, 2016, regarding our deposit and loan balances Please confirm the accuracy of the information, noting any exceptions to the information provided If the balances have been left blank, please complete this form by furnishing the balance in the appropriate space below Please confirm the correctness of the above balances directly to our auditors (not to us) at the following address: AAC Auditing and Accounting Lot 78-80 April 30 Street Danang City, Hai Chau District Vietnam Attn: BTL Fax: 84 – 511 3655886 Tel: 84 – 511 3655886 Email: BTLaac@gmail.com At the close of business on the date listed above, our records indicated the following deposit balance(s) Account name Account No Interest rate Balance We were directly liable to the financial institution for loans business on the date listed above as follow Account Balance Date Interest Date through No./ due rate which interest Description is paid at the close of Description of collateral Thank you very much for your cooperation Yours faithfully, Student: Nguyen Nha Truc- 39K18-CLC 57 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D NM, Dated The information presented above by the customer is in agreement with our records Although we have not conducted a comprehensive, detailed search of our records, no other deposit or loan accounts have come to our attention except as noted below [Financial Institution Authorized Signature] [Date] Exceptions and or comments 3.2.7 Test of control Most of the audit procedures conducted by AAC are highly focus on the substantive tests During the audit planning process, although the auditors indicate that the test of control is low, they tend to conduct more substantive tests This can extent the time for an audit, require auditor enlarge their work, which usually increases the cost of an audit When the auditor evaluate the internal control system is working effectively, or the control is low, they can choose to increase the test of control and reduce the substantive test to economize cost of an audit For example, based on the narrative description about sales and receivable of ABC resort, I recommend some tests of control: Control procedure Tests of control Related assertions General Director is the Checking the authorized Occurrence, person who decides the signature of the general director accuracy prices list in the price list, tour agreement with travel agencies Interview the general director about how he/she determines the price Reservation’s staffs process The auditors review the Occurrence the orders reservation order form to check the name of the person who Student: Nguyen Nha Truc- 39K18-CLC 58 Graduation thesis The Expected arrival will be sent to each related department to check and confirm information Accountants compare information in the payment request with the Reservation department (in the reservation forms) Academic advisor: Pham Hoai Huong, Ph.D process the order The auditors review the reservation email to examine the accept reply from the entity, check the authorized person who can accept the reservation emails Check the copies of the expected Accuracy arrival from each related department to indicate whether the same information or not Select audit sampling from the Occurrence, payment request and then accuracy compare with the information in the reservation forms Select audit sampling from the Occurrence, sales journal to check whether accuracy appropriate with the expected arrival or not Select audit sampling from the reservation form with the checkin summary form the system The Accountants compare the auditors check the room number revenue with the revenue in the reservation form with the recorded in expected check-in summary arrival Accountants compare the Compare the revenue in the Accuracy revenue with the revenue system with the revenue record in record in invoices (VAT invoices (VAT report) report) and find any Checking the number of the differences if happen invoices with the number of invoices recorded in the system Check in for customer through MCS system Chief receptionist will check the number of ordered rooms and checkin rooms on that day After conducting the test of control, the auditor will consider the effectiveness of those tests of control Based on the assertions and the effectiveness of test of control, the auditor will conduct substantive tests If the control risk is higher than the control risk determined in the planning period, the auditors tend to conduct additional substantive test Student: Nguyen Nha Truc- 39K18-CLC 59 Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Appendix 1: Forms of confirmation letter Positive form of confirmation CONFIRMATION LETTER Date Name of debtor Recipient:……………………… Address:……………………………… Dear Mr /Ms Our auditors are conducting an annual audit of our financial report Please confirm the balance due our company as of December 31 st,2016, which is shown on our records as …………… Please indicate in the space provided below if the amount is in agreement with your records If there are differences, please provide any information that will assist our auditors in reconciling the difference Please mail your reply directly to our auditor PLEASE DO NOT MAIL PAYMENTS ON THIS BALANCE TO OUR AUDITORS Yours sincerely, Controller Name of the entity: The balance due to ………………………… of $32012.38 as of 31/12/16 is correct with the following exception (if any): Signature: _ Title: _ Date: _ Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Positive form of confirmation Negative form of confirmation CONFIRMATION LETTER Date Name of debtor Recipient:……………………… Address:……………………………… Dear Mr /Ms Our auditors are conducting an annual audit of our financial report Please confirm the balance due our company as of December 31 st ,2016, which is shown on our records as …………… If the amount is not correct, please report any differences directly to our auditor…………………………………………… using the space below and the enclosed return envelope NO REPLY IS NECESSARY IF THIS AMOUNT AGREES WITH YOUR RECORDS PLEASE DO NOT MAIL PAYMENTS ON ACCOUNT TO OUR AUDITOR Very truly yours, Controller Name of the entity: Differences Noted (If Any) The balance due to ……………………… of $32012.38 at 31/12/2016 does not agree with our records because…………… (No reply is necessary if your records agree) Signature: _ Title: _ Date: Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Appendix 2: Internal control over sales and accounts receivable‘s evaluation Potential misstatement Occurrence Revenue and receivable not occur They are recognized but not delivered or not provided; same invoice is issued twice Completeness Goods that have been sold but have not been recognized for sales, or invoices have not been issued Main control description Domestic sales invoice are only issued when the order and the shipment order have been approved Compare recorded revenues and revenues on expected arrival to ensure that no revenues are fictions or recorded multiple times The accountants will compare accounts receivable with customers by mails at the end of month Differences must be investigated and dealt Accountants compare the revenue with the revenue recorded in expected arrival, make sure that there is no customer entered without check-in The accountants will compare accounts receivable with customers by mails at the end of month Differences must be investigated and dealt Accuracy The selling Sales prices on the price on invoices are checked Student: Nguyen Nha Truc- 39K18-CLC Design evaluation WalkImplementation through evaluation test Graduation thesis invoices is recorded higher / lower than the prescribed price; The quantity and type of goods sold on the invoice differs from the contract, the order and the actual delivery Sales transactions are recorded with wrong customers Cash received transactions are recorded incorrectly Academic advisor: Pham Hoai Huong, Ph.D by the Chief Accountant, compared to the price list and tour agreements Before issuing sales invoices, the accountants must check, compare with the contract, purchasing order, the delivery note on the quantity and type of goods sold Every adjustment to price list has to be an authorized agreement Accountants compare accounts receivable with the sales departments The accountants will compare accounts receivable with customers by mails at the end of month At the end of the year, The accountants will compare accounts receivable with customers Differences must be investigated and dealt Valuation Most of customers pay in advance, no longterm receivable In spite of that, Aging bucket is monthly supervised and checked Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D References Arens , ALVIN A.;Elder, RANDAL J. ; Beasley, M S B (2012) Auditing and Assurance Services Hales, J A (2005) Accounting and Financial Analysis in the Hospitality Industry Leung, Coram, Copper, Richardson (2011) Modern Auditing and Assurance Services Grant Gay and Roger Simnett (2010) Auditing and Assurance Services in Australia Chritine Jubb, Larry E Rittenberg, Karla M Johnstone, Audrey Grambling (2012) Auditing and Assurance: A business risk approach Student: Nguyen Nha Truc- 39K18-CLC Graduation thesis Academic advisor: Pham Hoai Huong, Ph.D Student: Nguyen Nha Truc- 39K18-CLC ... thesis Academic advisor: Pham Hoai Huong, Ph.D internationally recognised standards of PrimeGlobal Thus, AAC has the ability to offer customers quality related services Our company is expanding business... investment However, Vietnam's tax law remains complicated, and enforcement can often be unpredictable Thus, businesses and investors will need to stay closely in touch not only with tax law itself,... framework and economic institutions, Vietnamese accounting system still have many distinctive features Thus, it is not a simple job to stay abreast to changes in accounting field in Vietnam In some cases