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Cement Finance Company's Financial Plan (Excerpt)


Table 2.9. Internal Audit Plan of Cement Finance Company (Excerpt)


CEMENT FINANCE COMPANY SOCIALIST REPUBLIC OF VIETNAM

...... Independence - Freedom - Happiness

--------------- *********

Number: Hanoi January 22, 2010

DECISION


Re: Approval of internal audit plan for 2010

.........................


STT

Content

Time

1

Review of documents and records for the 4th quarter of 2009 of the Capital Resources Department

January-February

2

Internal audit of financial statements 2009

March

3

Audit of short-term lending activities of enterprises in the first quarter of 2010

April-May

4

Audit of securities trading activities in 2009 and first quarter of 2010

May-June

5

Audit of medium and long-term lending activities in the first 6 months of 2010 (including interest rate support loans)

July-August

6

Auditing of capital contribution and investment activities in other enterprises

August-September

7

Controlling the activities of the Capital Department in September 2010

Audit of capital business activities in the first 9 months of 2010

September-October

8

Audit of foreign exchange business activities in the first 9 months of 2010

November

9

- Write a summary report of internal audit results in 2010

- Write a report evaluating the internal control system related to the areas audited internally in 2010 according to Decision No. 36/2006/QD-NHNN

- Internal audit plan for 2011

December

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Cement Finance Companys Financial Plan (Excerpt)


(Source: Cement Finance Company, 2010)


The internal audit process of companies is usually carried out through the following steps:


Responsibility Implementation Process References


Audit Request

BKS


Audit planning

Head of Internal Audit


KTVNB

Head of Supervisory Board Head of Internal Audit


-

Approve, make decisions

+

Audit Plan Notice

Internal Audit Team, Related Departments


Conduct audits

Make a record

Internal Audit Team, Related Departments


Head of audit team, Members of internal audit team

Head of the BKS Internal Audit Team


Head of Internal Audit


Report generation

-


Approve

Notice of recommendation after inspection

+


Internal Audit, Audit Department, Internal Audit


Head of Internal Audit, Internal Audit; Audit, Internal Audit


Follow up on implementation of post-audit recommendations


Report on the implementation of recommendations


Figure 2.1. Internal audit process template


(Source: Petroleum Finance Joint Stock Corporation, 2009)


Table 2.10. Sample audit plan


FINANCE CORPORATION OF PETROLEUM JOINT STOCK COMPANY SOCIALIST REPUBLIC OF VIETNAM

Internal Audit Independence - Freedom - Happiness

--------------- *********

Number: Hanoi, date ... month ... year ...


To: Board of Supervisors

INTERNAL AUDIT PLAN

I. Audit objectives:

................................................................ ................................................................ ..............................

................................................................ ................................................................ ..............................

..

II. Subject and scope of audit

................................................................ ................................................................ ..............................

................................................................ ................................................................ ..............................

..

III. Audit content

................................................................ ................................................................ ..............................

................................................................ ................................................................ ............

IV. Expected personnel for the audit team

1. Mr./Ms. ..........................................Title..............- Head of delegation

2. Mr./Ms. ..........................................Title..............- Member

3. Mr./Ms. ..........................................Title..............- Member

4. Mr./Ms. ..........................................Title..............- Member

V. Audit time

VI. Audit statute of limitations

CHIEF INTERNAL AUDITOR


(Source: Petroleum Finance Joint Stock Corporation, 2009)


Step 1: Plan the audit


The plan for each audit indicates the direction for the audit team when conducting audits for each department and business of the company. The plan for each audit is made on the basis of the annual audit plan, which clearly states the time, scope of implementation, and auditors participating in the audit. At financial companies, the audit plan for each


Audits are usually quite simple, with the nature of administrative notices to the audited units. When planning the audit for each audit, the Internal Audit Department often conducts surveys and collects information about the audited unit to determine the important contents that need to be focused on auditing. Information about the operational aspects of the selected audited unit will be collected from the company's departments. According to the survey results, out of 8 audit companies, 7 audit companies plan for each audit.

About the audit program


The audit program describes the scope of work to be performed for the audit contents to ensure that the audit work is performed according to requirements. The audit program plans the procedures to be performed during the audit. In practice, at financial companies, the audit program is often established in the form of pre-built inspection instructions for each business process, or is established when inspecting a business for the first time. The audit program template is illustrated in Tables 2.11, 2.12, 2.13 and Appendices 2.5, 2.6.

Step 2: Conduct the audit


This is the stage where internal audit officers carry out the work in the audit plan and program and, through the use of selected audit methods, collect and evaluate audit evidence as the basis for comments and assessments on the audit subject.

The audit contents performed by KTNB during this period include:


Compliance audit combined with financial statement audit


At Vietnamese financial companies, the main audit content is compliance audit combined with financial statement audit. The audit process is carried out based on the audit instructions of the operations or previous work experience of the auditors combined with the information that the auditors obtain from the previous year's audit records and the information collected initially.

According to the survey results on the most frequently audited contents, of the 8 financial companies, all 8 companies conduct compliance audits regularly, 4 companies conduct financial statement audits, 2 companies conduct management accounting report audits, 3


Auditing companies evaluate the effectiveness of operations. Thus, compliance auditing is the most common type of auditing performed at companies. This stems from the fact that the operations of financial companies are relatively tightly controlled with many legal regulations and internal regulations of the companies.

Table 2.11. Sample financial statement audit program (Excerpt)


1. Check the comparative figures of the financial statements to be audited (beginning period figures).

- Are the comparative figures consistent with the previous period's financial statements? If not, it is necessary to analyze, check, and adjust the differences to ensure consistency between the previous period's report and the report to be audited.

- Consider whether the comparative figures ensure comparability with the figures of the report to be audited.

2. Check the presentation of financial statements:

- Check the arithmetic calculations on the financial statements to be audited.

- Check whether the presentation of financial statements has complete information in accordance with the regulations of the State Bank, current accounting standards and regimes.

- Check changes in accounting policies related to the preparation and presentation of financial statements. If there are changes in policies, it is necessary to consider adjustments and comparative figures in accordance with Vietnamese Accounting Standard No. 21.

- Are events occurring after the end of the fiscal year, before the date of issuance of the financial statements, fully and honestly reflected?

- Check and compare the accuracy of each indicator on the financial statements with the data source.

to prepare financial statements.

- Compare the opening balance and closing balance on the Balance Sheet, analyze and explain major fluctuations.

……

(Source: Cement Finance Company, 2010)


For financial statement audits: Internal Audit performs reconciliation of general balances on financial statements, reconciliation of data between accounting books, analysis of fluctuations in balances, detailed examination of related documents, detailed examination of operations such as provisioning. Internal Audit can witness inventories, send confirmation letters in some cases.


In case it is deemed necessary... In general, the content of financial statement audit is relatively appropriate. It is reasonable that internal audit at financial companies does not focus too much on financial statement audit, because financial companies all have their financial statements audited by auditing companies every year.

For auditing management accounting reports, KTVNB assesses the suitability of management accounting reports submitted to the State Bank, the system of analytical indicators, for example indicators on liquidity, foreign exchange status, etc. The overall assessment of the situation of assets and capital sources is mainly based on the balance sheet. Some of the analysis contents include the scale of asset structure, the scale of capital structure, the correlation between asset structure and capital structure to assess the general liquidity risk and interest rate risk. In general, auditing management accounting reports has not been widely implemented because the management accounting reporting system of financial companies has not been developed in detail, the preparation of business plans is not specific, and is estimated.

For compliance audit: For the operations of credit institutions, the number of systems of documents regulating and guiding operations is very large. Each financial institution itself also issues many documents guiding and directing the operations of its functional departments. Functional departments are required to comply with regulations, processes, and statutes, which not only ensure compliance with the law, create consistency in the company's operations, but also bring high efficiency, as well as prevent and limit risks in the operations of the departments. To check compliance, internal auditors review documents, reports, and working papers at the units' departments to assess compliance with regulations, processes, and statutes at the audited unit. Internal auditors focus on assessing compliance with regulations on authorization, approval, operation and implementation of business activities, personnel work, information reporting work, etc. and regulations specific to each specific business area. Internal auditors also evaluate documents and regulations issued and implemented by the audited unit by reviewing and examining the content of important documents and regulations. These documents will be considered in terms of their conformity with higher legal documents and their suitability and effectiveness with the unit's operations.

Among the 8 CTTCs, one company has developed a questionnaire on internal control for key business processes, as a basis for assessing the adequacy of control procedures.


control. The results of the control questionnaire are the basis for the internal auditor to conduct control tests and determine basic tests when auditing financial statements. The implementation method is similar to the financial statement audit process at some auditing companies. By building a questionnaire on internal control, the internal auditor has paid attention to the adequacy of control procedures. However, the starting point here is not really the objectives and risks of the unit, the auditor has not clearly identified the possible risks and assessed the level of risk control that the unit has implemented.

Table 2.12. Internal control system assessment questionnaire (Excerpt)


Reference:

Accounting year:

Performed by:

Date of implementation:

Credit activities

Questions to learn about HTKSNB

Have

Are not

Not applicable

1. Is there a written policy on credit activities?




2. Have credit regulations, rules and procedures been fully issued for key credit operations?




3. Are there regulations for periodic credit quality assessment? If so, how often is it done?




4. Are credit activities regularly reported to competent state agencies as prescribed?




5. Were there any major violations discovered during the year's inspections and audits at the company?




6. Are loans and guarantees planned in advance and approved by the competent authorities as prescribed by the unit?




......





In companies with specialized internal audit and control departments, internal audit officers are responsible for evaluating the performance of the internal audit and control department. The internal audit and control department conducts post-inspection in the form of organizing inspections of the implementation of regulations and business processes at the units. In some companies, the internal audit and control department directly participates in controlling daily transactions. The internal audit and control department has the function of detecting violations that have occurred, thereby supporting the company's Board of Directors in detecting and preventing violations. Internal audit officers evaluate the organization and performance of the internal audit and control department based on the internal audit and control regulations of credit institutions issued by the State Bank and the internal audit and control regulations of the company itself. This evaluation focuses on the following contents: reviewing documents defining the functions and tasks of the department; annual planning program; periodic inspection reports; assign tasks to each officer in the department... In addition, the internal audit officer also evaluates the organization, implementation method, scope and content of the inspection work, reviews and evaluates the inspection results of the internal audit and control department, thereby evaluating the quality of this department in detecting and preventing violations. This is consistent with the scope of responsibility of the internal audit, but also leads to overlap in the implementation of tasks between the internal audit and internal audit and control, for example, a professional department may have to work with both the internal audit and internal audit, causing loss of time and disruption to business operations.

After making a general assessment of the control system of the audited unit, the Internal Auditor conducts an audit of each specific business area such as credit activities, investment activities, capital mobilization activities, fixed asset and equipment procurement activities, etc. The Internal Audit of business processes mainly focuses on assessing compliance in the implementation of the processes. The audit contents of business processes are as follows:

- Evaluate the results and quality of business operations within the audit period;


- Evaluation of internal control system applied to business operations such as: reviewing the organizational model, functions and tasks of departments performing business operations, changes in business operations;

- Auditing the implementation of procedures and regulations: checking, comparing and contrasting the implementation of operations with issued regulations.

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