Auditors, Auditing Organizations and Professional Associations

5.2.2. Conducting audits

It is the process of synchronously implementing the tasks specified in the audit plan and process to collect audit evidence to serve the auditor's conclusions. Therefore, in this step of work, the art of organization covers the entire process. However, the scientific nature of the organization still requires auditing practice to respect the basic principles:

- First: Auditors must strictly comply with established audit procedures. In each case, auditors must not arbitrarily change the procedures.

- Second : During the auditing process, auditors must regularly record findings and comments on transactions, numbers, events... in order to accumulate evidence and comments for audit conclusions and eliminate incorrect initial impressions and comments on transactions and events subject to the audit.

-Third : Periodically summarize the audit results (on summary tables) to identify the level of implementation compared to the total workload. Normally, the most common way to summarize is to use difference tables or verification tables (table 1 and table 2).

- Fourth : Any adjustments to the scope, audit procedures... must have the consensus of the person in charge of the audit work (subject) and the person signing the invitation letter and audit contract (client) - if any. The legal level of these adjustments must correspond to the legality in the audit order or audit contract.

Table 5.1. Difference list

Document

Interpretation	Amount			Note the level of violation
Interpretation	Number	Day	Book	Note the level of violation	Reality	Difference

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Table 5.2. Verification list

Document

Interpretation	Amount	Verification object		Note the level of violation
Interpretation	Amount	Number	Day	Note the level of violation	Direct	Indirect

If it is necessary to change the audit program, the auditor must obtain the agreement of both the subject and the audit object.

When detecting errors, auditors must assess the impact on the financial statements of the enterprise.

+If the error is material, the auditor must take corrective steps.

+If the error is not material, the auditor will consider it an error and prepare an audit report with a completely acceptable opinion (full acceptance). However, the auditor

Auditors must also report these errors to the business and advise them so that they can correct them in future years.

5.2.3. Audit completion

To conclude an audit, it is necessary to draw up an audit conclusion and prepare an audit report or audit minutes. The specific content and form of the audit conclusion or report vary depending on the objectives, scope, and type of audit.

1/ Concept: Audit conclusion is a summary of the results of performing audit functions in each specific audit. Therefore, audit conclusion must ensure requirements in both content and legality.

- Regarding content , the audit conclusion must be appropriate and complete. The appropriateness of the audit conclusion is the consistency between the conclusion and the audit objective (stated in the plan or contract or audit order).

The completeness of the conclusion and the coverage of the entire request, the identified and revised audit scope (if any); any different aspects of the content identified in the request and any parts of the audit scope stated in the audit plan or revised (if any) must be included in the audit conclusion.

- Regarding the legality of the conclusion, first of all, it requires evidence that is commensurate with the requirements of regulations, standards and laws. At the same time, this legality also requires the conclusions to be precise in terms of words and grammar. For example, the audit conclusion must not use the phrases " in general ...", " relatively ..."

2/Audit report or minutes

Audit reports or minutes are a form of expression of audit functions and expression of audit conclusions.

- Audit report.

Audit reports are often used in internal audits or in parts of financial statement audits (asset inspection reports, document or event verification reports, etc.).[6]

Audit reports usually have the following basic elements:

+Overview of reasons (audit objectives).

+Specify the structure and responsibilities of participants.

+Overview of the audit process especially any unusual developments.

+Summary of audit results.

+Audit conclusion (with audit evidence).

+ Make recommendations.

+Record the time of making the report.

+Name and signature of person in charge.

-Audit report.

An audit report is a document issued by an auditor to express his or her opinion on audited financial information.[6]

+The audit report plays a very important role, it is the final product of the audit work and plays a very important role:

*) For auditors, the audit report is a document presenting the final conclusions about the audited object, so it must crystallize all the work that the auditor has done. At the same time, the audit report is the final product that the auditor provides to society, so they must be responsible for their opinions.

*) For information users, audit reports are the basis for them to evaluate the information presented in the audit reports and make economic decisions. Therefore, audit reports must be easy to understand, clear and not misleading.

*) For audited units, audit reports are the basis for evaluating and improving the unit's operations in general, internal control or financial accounting work in particular.

+Requirements of audit report : To ensure the above roles, the audit report must disclose the following contents:

*) Place of sending.

*) Audit subject.

*) Accounting standards and principles used as evaluation criteria in an audit.

*)The work the auditor has done.

*)Auditing standards applied.

*) Limitations on the scope of the audit (if any).

*) Auditor's opinion on the audited entity.

*) Comments and improvement measures for internal control (if necessary).

+ Types of audit reports (for financial audits).

*) Report accepted in full:

The auditor issues an unqualified opinion when the auditor is satisfied that the financial statements apply accounting principles reasonably and there are no limitations on the scope of the audit. The International Standards on Auditing outline the key aspects for expressing an unqualified opinion, which are:

**)The financial information is prepared using acceptable accounting policies and these policies are applied consistently.

**)Financial information in accordance with current regulations and legal requirements

**)The overall picture of the enterprise's financial information is consistent with the auditor's understanding of the enterprise's business characteristics.

**)The information clearly shows all material matters and is presented reasonably.

*)Partial acceptance report

This report is issued when the auditor is satisfied that, except for certain deficiencies in the financial statements or limitations on the scope of the audit, the financial statements are presented fairly. A qualified report limits the auditor's responsibility for fair presentation to certain parts of the financial statements. The auditor is usually required to provide explanations in a qualified report.

When encountering one of the following cases, the auditor often gives a partial acceptance opinion:

**) Disagreement with the unit manager about the accounting principles applied at the unit to form the financial statements.

**) Limitation on audit scope: This is when the auditor is unable to perform the audit procedures that they consider necessary.

**)There are unclear situations affecting the financial statements that have not yet been accurately concluded at the end of the audit.

*) Disapproval report (opposite opinion type)

This is the opposite of an unqualified report. An unqualified audit report concludes that the entity's financial statements do not present fairly the entity's financial position and results of operations in accordance with applicable accounting standards.

The auditor issues an adverse report when the financial statements as a whole are so materially misstated that they do not fairly reflect the financial position or results of operations of the entity. In this case, because of the seriousness of the matter, a qualified opinion cannot be applied. The auditor typically issues an adverse report when there is a serious disagreement with the entity's management about the accounting methods or principles applied by the entity.

When giving an adverse opinion, the auditor must collect sufficient evidence to support his opinion. In this report, the auditor must explain the reasons for the non-acceptance and state its impact on the financial situation and business results of the enterprise.

*)Report of rejection of comments (dismissal of opinion)

The auditor issues a disclaimer of opinion when there are serious limitations on the scope of the audit, or when there are unclear circumstances that have a material impact on the financial statements.

To summarize and describe the conditions for auditors to choose the type of audit report, we can use the following table:

Table 5.3. Conditions for selecting audit reports

Conditions for choosing the type

audit report

Level of importance

Inessential

Important but not to the point of total distortion

Report set

So important that it warrants consideration of reasonableness

of the report

Limitations on the scope of the audit by the entity or entity

scene

Report accepted in full

Report

partial acceptance

Report

decline comment

Disagreement with unit manager

on policies

accountant

Report accepted in full

Report

partial acceptance

Report not accepted

Unknown circumstances affecting the report

finance

Report accepted in full

Report

partial acceptance

Report

decline comment

Attached to the audit report may be a " Management Letter" sent to the manager to state the auditor's recommendations on management work.

5.3. Organization of the audit apparatus

5.3.1. Principles of organizing the audit apparatus

The audit apparatus includes both people and means containing audit elements to perform the audit function. The audit apparatus can be organized in an online-advisory or functional manner and can choose a centralized or decentralized form depending on the scale and area of operation, depending on the ability and means of operation...

Due to the differences in conditions and due to the different levels of awareness and auditing experience and the level of auditing equipment in each place and at each time, the auditing apparatus cannot be organized according to a mechanical model. Moreover, when talking about the human factor, we are talking about social relations and specific cultural traditions. Therefore, organizing the auditing apparatus is not only scientific but also artistic.

In this case, the scientific nature of the organization requires the creation of relationships between elements, subsystems and the system, between the audit system itself and other elements and the operating environment of these systems. Meanwhile, the artistic nature of the organization requires the transformation of these relationships to be flexible in order to maintain the highest level of organizational amplitude, adapting to each specific condition of staff, equipment and specific environment.

From all the above requirements, the science of organizing the audit apparatus must first determine the basic principles of organizing the audit apparatus, on that basis determine the organizational models in a series of relationships inside and outside the system, at the same time analyze the conditions and determine the goals and steps in organizing the audit apparatus in Vietnam.

Regardless of the type of audit organization, it must ensure compliance with the following three basic principles:

Principle 1: Must build a team of auditors sufficient in quantity and ensure quality requirements for each audit apparatus.

Indeed, auditors are the basic elements that make up the auditing apparatus, the existence as well as the quality of the audit apparatus's operations are determined primarily by the quantity and quality of the auditors. That is also the general principle for the organization of all systems. Moreover, auditing activities have special functions, so they require higher levels of both expertise and ethics from auditors. Therefore, anywhere - whether nationally or internationally - and at any time - whether newly established or in the development process - the building of a team of auditors is important.

In addition, building an audit team also requires adaptation to each type of audit, each audit apparatus and specific equipment serving audit activities.

Principle 2: The audit apparatus must ensure that it thoroughly follows the general principles of all organizational systems: Centralization, democracy, and adaptation to each audit department .

The principle of democratic centralism must be developed and applied in the relationship between object-subject-audit environment. In each audit subsystem in each period.

The development of the subject-object relationship has different points but is organized and operates in each specific State with a specific organizational principle: the State of the people, by the people and for the people.

Principle 3: The audit apparatus must ensure that there are different internal and external relationships in accordance with the general principles of organizational theory and the laws of dialectics on relationships.

Indeed, the goal of an organization is to create relationships in a certain order. In auditing, this order is determined differently due to the relationship between different audit objectives and different audit objects. Each object, each subject has many other relationships outside of auditing. In dealing with this series of complex relationships, it is necessary to have a dialectical methodology between things and phenomena, between the general and the particular, between the new and the old...

From the meaning and principles of the organization of the audit apparatus, it can be seen that the basic task of the organization of the audit apparatus is to build an organizational model of the apparatus, determine the type of relationship in each model about the relationship between the basic elements constituting the system of the audit apparatus - auditors. To solve this basic task, it is necessary to study the following specific issues in turn:

-Auditors and auditor associations.

-Organize internal audit department.

-Organize an independent audit apparatus.

-Organize the State audit apparatus.

5.3.2. Auditors, auditing organizations and professional associations

5.3.2.1. Auditor

- Concept : Auditors are people who do specific auditing work and have professional qualifications commensurate with that work.

In the narrow sense, the word auditor is often associated with the title of Certified Public Accountant (CPA). However, in both theory and practice, the concept of auditor also includes Government Auditor and Internal Auditor.

However, in different countries, the name of auditors is also different. For example: In the US, Canada, China, it is called Certified Public Accountant (CPA); in England, Scotland, it is called Chartered Accountant (CA); in France, it is called Expert Comptable.

But regardless of the country, auditors are required to have professional qualifications and certain ethical qualities. At the same time, if they want to practice auditing, candidates must meet the following standards:

+ Trained in accounting at a certain level

+ Have practical experience in auditing

+ Pass a national exam on accounting, auditing and business law knowledge.

- Internal auditors: are usually non-professional auditors . They can be good accountants, experienced managers, technicians with knowledge of audit-related fields, especially types of technology, technical processes, standards...

However, these people also need to have appropriate qualifications and skills, and can be trained through schools (such as the American Internal Auditor Training School - IIA for example). Furthermore, in many cases, internal auditors can also be professional auditors such as auditors in the auditing system in Western Europe, professional controllers in state-owned enterprises and public units (large scale), or experts used by boards of directors in audit committees.

In Vietnam, according to Decision 832 TC/QD/CDKT dated October 28, 1997 of the Ministry of Finance promulgating the Regulation on internal audit in state-owned enterprises. The standard requirements of internal auditors are as follows:

+ Internal auditors must be honest and objective, have no criminal record, and have not been disciplined at the warning level or higher for violations in economic, financial, and accounting management.

+ Graduated from university majoring in economics, finance, accounting or business administration.

+ Have worked in the field of financial management and accounting for 5 years or more, of which at least 3 years have worked at an enterprise where the auditor is assigned.

+ Trained in auditing and internal auditing according to the unified program of the Ministry of Finance and certified.

Internal auditors are directly appointed and dismissed by the General Director or Director. Internal auditors who have been dismissed due to disciplinary violations may not be reappointed. Auditors are absolutely not allowed to undertake operational or business management tasks in the enterprise.

- Independent auditors: are professional auditors. To practice, they must meet the following conditions:

+ Regarding professional skills: Must have a certified public accountant (CPA) degree (certificate).

+ About morality: No criminal record.