Concept, Objectives and Role of Financial Statement Audit Quality Control

220 - Controlling the quality of audit activities: “The quality of audit activities is the level of satisfaction of the subjects using the audit results regarding the objectivity and reliability of the auditor's audit opinion; at the same time, satisfying the audited unit's desire for the auditor's contributions to improve business performance, within a predetermined time at a reasonable cost”.

So the quality of audit activities can be considered from three perspectives:

First, the level of information users' satisfaction with the objectivity and reliability of audit results;

The objectivity and independence of the auditor are the first conditions to ensure the meaning and value of the independent audit service. The audit opinion does not increase the amount of information for the users of the audit results but only ensures these subjects about the truthfulness and reasonableness of the financial statements they are provided with. This assurance is accepted and valuable because: (i) the audit opinion is given by an auditor with sufficient capacity and professional qualifications; (ii) the independence and objectivity of the audit opinion. The users of the audit results are only truly satisfied and satisfied when they believe that the audit opinion is based on those bases. To evaluate this indicator, people consider the compliance with professional standards of the auditor and the auditing company, which is clearly demonstrated through the professionalism of the auditor in the process of performing the audit work.

Second, the level of satisfaction of the audited unit with the contribution of opinions aimed at improving business performance;

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The main objective of financial statement auditing is to give an independent opinion on the truth and fairness of the financial statements. Therefore, the first criterion is to demonstrate the satisfaction of the users of the audit results with the objectivity, independence and trust in the audit opinion, while this criterion is the satisfaction of the audited unit with the added value that the auditor can provide to the unit. For the managers of the audited unit, the detection and prevention of errors in financial management and accounting are not always perfect and fully controlled. Therefore, the financial statements prepared by the unit may still have material errors due to limitations in the control system of the unit. The responsibility of the auditors is to ensure that the financial statements do not have material errors, and if there are any

The auditor needs to point out those errors so that the unit can correct and adjust them or it is the basis for not giving an unqualified opinion. That is the basis for the unit's managers to trust and hope in the findings and recommendations of the auditor, thereby being able to amend and ensure that their financial statements are honest and reasonable. Moreover, through the findings and recommendations of the auditor, the unit's managers can perfect their control system and improve the effectiveness of the unit's financial and accounting management.

The level of satisfaction of unit managers with the audit's contributions cannot be specified in quantity because there may or may not be findings and recommendations to improve the unit's control system, but can only be assessed by the satisfaction and appreciation of business managers for the professionalism and responsibility of the auditor during the audit process.

Third, the audit report is prepared and issued within the time specified in the audit contract and the audit service cost is at a reasonable level.

One of the requirements of financial information is timeliness, information that is not provided on time will become worthless, and can cause many difficulties in making management decisions or miss business opportunities. Although auditing is not a separate information channel, it is an appraisal step in the information provision system. Financial information is prepared by the unit and is checked by auditors and auditing companies and opinions are given on the truthfulness and reasonableness of this information before being transferred to users. Therefore, any delay in the auditing process due to ineffective organization, supervision and management of the audit or any other reason from the auditing company leading to delays not following the plan set out in the audit contract/or Audit Appointment Letter will affect the reputation and value of the auditing company's services.

Regarding audit fees, this is also an important indicator to evaluate audit quality. The first and second indicators indicate the technical nature of the service, it evaluates the level of satisfaction of the users of the results of the audit service regarding the assurance of the honesty and reasonableness of the financial reports they are provided with as well as the amount of consulting opinions to perfect the internal control system of the audited unit. In a market economy, especially auditing activities

independence, the concern for the interests of the audited unit is extremely important, which is the socio-economic factor of the service. This factor requires the auditing company not only to ensure the need for an independent opinion of the auditor on the truthfulness of the financial statements but also to satisfy the price of the need. Auditing service fees are determined on the basis of the time required for the auditors to perform the audit and the unit price of the auditor's working hours. Except for the effects of the unit price of the auditor's working hours and the cooperation of the audited unit with the auditors during the audit process, determining and minimizing the audit time while ensuring the collection of sufficient appropriate audit evidence will be the condition to minimize the service price for the client. That is the manifestation and one of the criteria for assessing the quality of the audit.

1.2.2. Concept, objectives and role of quality control in financial statement audit

There are many concepts of control, according to authors Schoderbek, Cosier and Aplin (1988), control is the activity of evaluating and correcting deviations from standards. Control therefore includes activities: setting standards, evaluating reality by comparing reality with standards, and correcting deviations from reality compared to established standards...

Authors Jones and George (2003) believe that control is the process by which managers monitor and regulate the effectiveness and efficiency of an organization and its members in performing activities to achieve the organization's goals...

According to the Vietnamese dictionary (1996), control is the consideration to detect and prevent anything that is against regulations.

From the above concepts, we can come to a general definition of control: It is the process of measuring, evaluating and influencing the control object to ensure that the organization's goals and plans are implemented effectively. This method is generally applied to all control systems, which can be quality control, behavior control, schedule control, defective product control, inventory control, etc. Financial statement audit quality control is a process in which the auditing company

Auditing performs many procedures such as guiding, assigning work, supervising, checking the work performed by auditors and checking the comments and conclusions of the audit team before issuing the audit report.

For auditing activities, audit quality control can be understood as a system of policies and measures to grasp and operate auditing activities to meet common standards. That system of policies and measures includes: control viewpoints, auditing and control regulations, organizational structure of the control apparatus, personnel policies, inspection, review, information collection, confirmation activities...

Audit quality control is performed before, during and after the audit process, by many levels of control, with many different control methods.

The general objective of financial statement audit quality control is to ensure that auditors comply with professional standards and quality standards as prescribed, in order to create audit products that meet quality standards and meet the requirements of users of audit results. The specific objectives are as follows:

Firstly, the audit is performed in accordance with auditing standards, auditing procedures, professional auditing methods and other regulations and rules in auditing activities;

Second, the members of the audit team clearly understand and are consistent about the audit plan, the organization of the audit implementation, and the preparation of the audit results report;

Third, audit opinions, confirmations, conclusions and recommendations have sufficient appropriate audit evidence, in accordance with the prescribed standards. All errors, shortcomings and unusual problems must be identified, recorded in writing and properly resolved or reported to higher authorities for consideration and handling;

Fourth, achieve the set audit objectives; the audit report must include full audit opinions, confirmations, conclusions and recommendations related to the audit;

Fifth, draw on experiences to improve future audit performance. These experiences need to be identified, recorded, and incorporated into future audit plans and staff development activities.

Thus, audit quality control has been recognized as a function of audit management, a legal responsibility, a professional responsibility.

Auditing is a professional discipline of every auditing organization, and is one of the important auditing standards in auditing activities. Therefore, establishing and maintaining an audit quality control system is one of the indispensable tasks of auditing organizations.

Establishing and maintaining a strict and effective audit quality control mechanism will help audit organizations assure the public that audit results have been controlled before reaching the public, audit quality is guaranteed, thereby strengthening public trust in audit quality and professional ethics of auditors. On the contrary, if audit quality is not controlled, or the control is not effective, public trust in audit quality and professional ethics of auditors will inevitably be shaken.

To achieve the above objectives, the quality of auditing activities must be strictly controlled. Control is not only carried out by auditing companies themselves but also by professional associations, the Ministry of Finance or relevant authorities and, above all, by those who are interested in the audited subjects.

Understanding that, auditors and auditing companies need to be aware of the main factors affecting the quality of financial statement audits such as: (i) the independence of auditors; (ii) Organizational structure and decentralization and assignment mechanism in the auditing company;

(iii) Personnel, training and salary policies; (iv) Regulations on expertise and profession; (v) Professional qualifications, expertise and professional ethics; (vi) inspection and control;

The role of quality control in financial statement auditing

Auditing activities, in addition to meeting the trust and expectations of those interested in the financial information of the audited unit, also have many other important meanings such as perfecting the internal control system and audited activities, improving capacity and efficiency in operations and performance in management... Therefore, auditing quality control is affirmed to be an objective necessity and a mandatory requirement for auditing activities.

Quality control is understood as the establishment and implementation of measures to direct audit activities towards quality and efficiency. Thus, quality control of audit activities means that auditing companies must implement policies and procedures.

quality control procedures to ensure that all audits are conducted in accordance with Vietnamese Auditing Standards or international auditing standards accepted by Vietnam to continuously improve the quality of audits.

Audit quality control, first of all, aims to ensure that audit results meet quality criteria and meet the reliability requirements of users of audited information. In addition, audit quality control also brings many other benefits such as:

Firstly, providing information for auditing firms to develop policies and procedures for audit quality control; organizing and operating audit activities.

Second , evaluate the qualifications, capacity and ethics of auditors as a basis for training, fostering and assigning appropriate tasks, recruitment and promotion.

Third, assess the adequacy and effectiveness of quality control policies and measures to promptly revise, adjust and supplement necessary contents in professional and technical regulations in accordance with auditing practices.

Fourth, through audit quality control to promptly handle errors and take measures to prevent and stop those errors from recurring in the future.

In short, audit quality control helps auditors and audit firms see the current state of audit quality; thereby taking measures to adjust and overcome unreasonable situations, perfect management policies and working methods, enhance training, and improve auditors' qualifications with the aim of continuously improving the quality of services they provide.

1.2.3. Types of quality control in financial statement auditing

Levels of audit quality control in financial statement audit

The important objective of an audit is for the auditor to give an opinion on the truthfulness and reasonableness of the financial performance of the audited entity. To do that, the audit activity requires a high degree of independence. At the same time, the audit process is accompanied by a quality control process at different levels. Therefore, audit quality control must be fully implemented at all levels. Audit quality control work is carried out at the following levels:

Firstly , control from the main auditor (audit team leader), the main auditor is responsible for controlling all the work of the auditors and audit assistants in the audit team he is in charge of. The main auditor can assign other auditors in the audit team to review part or all of the working papers of the audit assistants. In general, this control work is carried out right at the client and is carried out regularly during the audit period. Control in this stage mainly focuses on evaluating whether the work of the person being controlled has been performed in accordance with the established audit program, the audit evidence collected is appropriate and sufficient for the data bases of each audit section, the audit results of each section or each audit cycle before the end of the audit.

Second, control from the audit manager, the audit manager conducts control over the work performed by the main auditor including reviewing the audit plan, reviewing the audit sections performed by the main auditor, reviewing the work performed during the audit completion and reporting stages such as: assessing the continuity of the client's operations, events after the closing date, summarizing audit results, audit reports and management letters; checking whether the preparation of audit reports complies with current professional standards... Depending on the level of risk and materiality of each audit, the audit manager can review the working papers of other auditors and audit assistants.

Third, control by experts (if any), if necessary, some audits require control by experts in specific fields other than auditing. For example: tax, law, asset valuation... when the financial statements contain information related to the above fields and that information is material, complex, and has high audit risk.

Fourth, the control of the members of the board of directors to control the audit quality (if any), for large-scale audits, large-scale audits, multi-year audits, audits assessed as high-risk, audits for listed companies or companies operating in specific fields such as aviation, banking, insurance, etc., the audit documents must be reviewed by a member of the board of directors to control the audit quality. This is a member of the board of directors who is completely independent of the audit team and reviews the audit documents. Board of Directors member

Audit quality control does not require reviewing and checking the entire audit file, but only needs to review the parts that are assessed as having high risk and material impact on the financial statements, review the completeness and appropriateness of audit evidence, and the consistency of audit conclusions with the audit plan.

Fifth, control by the client management member, all audits must be led by a client management member and that member is one of the two people who sign the audit report. Therefore, the client management member is responsible for controlling all audits under his/her responsibility. Specifically, the audit plan must be reviewed and approved by the management member before conducting the audit at the client, the audit report must be reviewed and approved by the management member before being issued. Depending on each specific audit, the level of control at this level may vary.

Types of audit quality control in financial statement audit

Depending on each classification criterion, there are different types of audit quality control. Usually, there are the following classification criteria for audit quality control:

According to the control subject, audit quality control has internal control (internal control) and external control (external control).

For internal audit quality control, it is the audit quality control of the audit companies themselves. Audit quality control is a mandatory task of these companies to ensure the quality of audit activities in accordance with the regulations, standards and audit procedures set forth.

For external audit quality control, it is the external audit quality control performed by another unit. The other unit here can be understood as the control of competent authorities such as the Ministry of Finance or professional organizations such as the Vietnam Association of Accountants and Auditors or the inspection of international auditing corporations for member companies...

According to the time of control, there are two types of audit quality control: control during the implementation process and control after the audit implementation process.

For audit quality control during implementation, this control is usually carried out according to the audit quality control process of the

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