Limitations and Future Research Directions

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Audit quality control should clearly define: Principles, forms, contents, and procedures for audit quality control; responsibilities of control entities. Strengthen audit quality control at all stages of the audit process and the responsibilities of each level of internal and external control for each Audit Team. Audit quality inspection and review must first be carried out by the auditors, audit team leaders, audit team leaders, and chief auditors themselves to enhance the responsibility of those who conduct audits, prepare audit reports, and prepare audit records. For large-scale audits with complex content, involving many units or audits with signs of law violations by members of the Audit Team, in addition to internal audit quality inspection and review, it is necessary to have external audit quality control by functional departments of the State Audit (Legal Department, Department of Audit Regime and Quality Control, State Audit Inspectorate) to ensure independence and objectivity; promptly prevent, detect and handle violations of the law and professional ethics of auditors and members of the Audit Team.

 Issue a Government Decree on administrative sanctions for violations in the field of state audit:

The survey results show that 20% of neutral opinions believe that the audit quality control work is always carefully and objectively reviewed, and 6% of opinions believe that this work is not objective, which shows that in auditing activities there are always intentional or unintentional acts of the audited unit, of organizations and individuals involved in violating the State's regulations on state audit activities. The survey results also show that 16% of opinions disagree that the work of synthesizing and analyzing audit results always ensures objectivity, and that violations discovered during the audit process are always fully reflected. These are acts of violating the law on state audit. However, the majority of acts of violating the law on state audit are not crimes but administrative violations and must be handled according to the provisions of the law on handling administrative violations. The reality of auditing activities in recent years has shown many cases of law violations by audited units and related organizations and individuals such as: Failure to provide complete and timely information and documents; failure to fully and promptly implement conclusions and recommendations.

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audit recommendations..., but those violations have not been handled, reducing the effectiveness of auditing activities in particular and the strictness of the law in general. One of the basic reasons for the above situation is that the State has not yet had regulations on administrative sanctions in this field. Therefore, it is very necessary to soon issue a Decree on administrative sanctions in the field of state audit. The development of the Government's Decree on administrative sanctions in the field of state audit needs to focus on the following 3 groups of violations:

Firstly, the conduct of the audited unit and related organizations and individuals violates the prohibitions and legal obligations prescribed by the State Audit Law during the audit process;

Second, in implementing the conclusions and recommendations of the State Audit, administrative violations in the field of State Audit;

Third, in publicizing audit results, administrative violations in the field of State Audit.

3.2.2. Micro solutions

3.2.2.1. Business solution group

Improve coordination in auditing activities: Internal coordination between Audit Teams within the same audit team; between internal units under the State Audit to ensure the best results for auditing activities; External coordination includes strengthening coordination and exchange between the Audit Team; Audit Team with the audited unit throughout the audit process at the unit; Strengthening audits of state-owned banks focusing on audit quality: It can be said that from the current state of auditing of state-owned banks and the results of the expert survey (24% disagree with the basic inspection work ensuring the essential aspects), it shows that cases of violations with large amounts of money are often in the audit of credit records, specifically in the following main contents:

 Pre-loan Check

+ Legal documents: Not fully storing design drawings, detailed estimates; documents approving investment policies from competent authorities; lacking operating regulations; There are cases where customers' financial statements have discrepancies but credit officers have not checked and clearly determined the cause.

+ Secured asset records: Secured assets (TSDB) subject to notarization and secured transaction registration but not yet implemented; Secured assets subject to property insurance purchase but not yet fully implemented; Not yet re-evaluated the value of the TSDB when re-signing the credit contract;

+ When determining the new loan limit, additional collateral is required but the customer has not yet done so; The minutes of appraisal of the value of the mortgaged property do not fully state the current status of the property, and do not have sufficient basis for the market reference value at the time of valuation.

+ Economic profile: Information presented on the financial statements of some customers is inconsistent, illogical but not explained; Financial statements have negative net working capital for many years but customers have no commitment to rebalance the resources.

Regarding project appraisal and loan plan: Calculating working capital needs for loans according to the limit, not deducting the loan limit of other credit institutions; Appraising debt repayment plans that are unclear and inaccurate; Appraising the equity capital involved in the plan that is not sufficiently based; Appraising and lending to repay investment capital but not proving the purpose of using the loan; Appraising business projects, determining the working capital loan term that is not suitable for the working capital turnover; Appraising the loan term that is not suitable for the actual loan needs of customers;

The assessment of the financial situation of customers at some branches is still formal, the business plans of some customers are not close to reality, the financial statements of some customers are not suitable. The loan plan is not reasonable, leading to customers not being able to repay the debt as with short-term loans; The business plan of the customer is prepared according to a sketchy form, not enough information needed for the bank to assess capital needs such as planned revenue, average working capital turnover, working capital plan

 Check while lending

Common errors in loan disbursement not according to the approved plan ratio; Checking disbursement documents is not strict; Disbursing before having a construction permit; Signing contract appendixes that are not in accordance with contract conditions; Disbursing loans to customers who have incurred overdue debts and do not repay debts as committed

Contract; Evidence has not been collected to prove that the customer used the loan, or is not sufficient to prove that it was used for the right purpose.

 Post-loan inspection

In this step, state-owned commercial banks often have a situation where post-loan inspection is still a formality; Inspection records are sketchy, general, and do not provide full details; Inspection records do not assess the customer's debt recovery ability; Post-loan inspection is not performed regularly; Post-loan inspection is not performed on customers; Branches disburse in cash or transfer money to customers' accounts at other banks for some customers, making it difficult to inspect and monitor loans.

 Debt classification and provisioning

The scoring mechanism for debt classification of state-owned commercial banks currently applied still has some shortcomings such as: Financial scoring is based on the previous year's financial statements, so the annual financial scoring of an enterprise does not change. This greatly affects the credit rating of borrowing customers.

Scoring is still inadequate in cases where newly established units do not have financial statements for the previous year, and the scoring is largely based on the subjectivity of the scoring process. Scoring on specific credit files is still flawed, leading to incorrect debt classification.

Incorrect provisioning: Not fully calculating the value of customer's collateral for deduction such as under-calculating collateral; Calculating collateral as "0" not in accordance with regulations; Incorrect credit classification leading to incorrect provisioning; General provisioning for expired commitments; Adjusting the deduction rate/assessing the decrease in collateral value not in accordance with regulations.

Debt settlement: The risk settlement dossier is incomplete; Partial settlement of debt (corresponding to the value of provisioned DPRR) is not in accordance with the regulations on subjects of group 5 debt settlement (according to Decision 493/2005/QD-NHNN); The settlement dossier has not been proven that the unit has made efforts and used all measures to recover the debt but has not been able to recover it (according to the regulations of Decision 493/2005/QD-NHNN).

Therefore, the author has the following recommendations to delve into this professional part:

+ Regarding the assessment and comments on loan documents: Commercial banks must review legal documents, regarding: (i) Completeness and must compare with the list of existing documents of the specific credit file compared with regulations, from there detect missing digital documents. (ii) Analyze cases of legal documents: State auditors need to carefully review and compare the following contents: State auditors need to consider whether the establishment level is within their authority, and should refer to the Enterprise Law. Business registration State auditors consider whether the business line is suitable for the purpose of borrowing capital or not? Enterprise charter, regulations on appointing directors, chief accountants, etc. Capital increase decisions (see capital increase documents, refer to the unit's financial statements, are they fully reflected?). (iii) For long-term loan projects (see whether there is a decision approving the project, budget, total budget, project implementation capital reference with the loan level to see if it is suitable for the capital source?...) . Consider the contradiction between the project decision on capital, on the project implementation objectives... (iv) In case the loan application has conditions on the subject, the application must have additional supporting documents (if errors are found in this item, the loan amount will be adjusted). For example: Loan in foreign currency is a conditional loan (export contract, set of export documents...).

+ Regarding loan documents (i) Loan plan: The State auditor needs to pay attention to whether the loan amount in the plan is suitable for the project for long-term loans? The sources of debt repayment and evidence of equity capital participating in the project. For short-term loans, the State auditor needs to check whether the data included in the plan is reasonable and logical. Number of loan cycles; Evidence of equity capital and other capital participating in the plan; Is the formula for determining the loan limit reasonable? (ii) Financial statements of the borrowing enterprise: The State auditor needs to check the completeness of the report such as: no financial statements, or missing some reports during the loan period. Analyze some cases of data in the financial statements of the borrowing customer with the loan proposal and the loan appraisal plan for specific logic:

Dishonest financial statements: Review the data on the report for logic and balance by reviewing reports from different periods, requesting additional tax declarations of the enterprise for comparison. If the data between periods is inconsistent or the tax declaration does not match the report. This risks the enterprise's report being inaccurate.

If the revenue is less than the loan amount (figures taken from the balance sheet arise). This can be risky in lending to repay debt.

Balance between long-term capital and long-term assets to consider specific businesses: If total long-term assets > long-term capital. This means that working capital flow is negative, the risk is mostly that the unit is unable to pay as well as the risk that the unit has borrowed short-term capital to invest in long-term assets...

Review the equity on the balance sheet to compare with the capital increase decision, especially with the loan agreement as well as in the appraisal report, for the purpose of demonstrating feasibility).

Consider whether the loan is presented (shown) in the company's report, with the aim of proving the truthfulness of the report.

Based on the data reported before lending, capital turnover and revenue can be considered. Compare with the data in the appraisal plan on revenue as well as capital turnover to request the enterprise to clarify, the purpose of determining the loan limit is determined. Review inventory data, if the inventory is large...; Review the value of loan capital formation on the report (including unfinished price) for long-term loan projects to see if it is suitable for the value of both capital and equity; Review the internal debt of the enterprise. Loan appraisal minutes: The auditor needs to recalculate and check the loan limit according to the formula: Loan limit = {Total cost - (part of equity + other capital)} / capital turnover. Note to check the total cost determined by the loan plan: To analyze, it is necessary to rely on the norms of the jobs as well as the prices of the items.

Input materials calculated into total cost.

Redefine revenue in the loan plan: Consider output product price and product volume. For long-term investment, base on IRR and NPV to determine; Capital turnover.

Check the calculation and compare the loan period: For long-term loans: Based on the formula of total loan amount/total resources used to repay the debt. For short-term loans, compare with capital turnover.

Clarify the relevant customer group (purpose of using loan capital?

Loans for debt restructuring…).

+ Loan contract: Accountants need to pay attention to check and review the signed terms to see if they are appropriate.

consistent with the loan appraisal minutes on loan term, loan amount, applicable interest rate, etc. Review the notes when signing the contract stated in the appraisal minutes and documents from superiors. Signing a contract appendix that is not consistent with the contract terms;

+ Loan collateral: The auditor needs to check the notarized documents and registration of secured transactions (for assets that are required to register secured transactions). The information that the auditor needs to note is: Minutes of valuation of secured assets, incorrect (incorrect value, type, incomplete price, ...). Pay special attention to assets that have not purchased insurance for secured assets, or have not purchased fully (for types that require insurance). Collateral has not been added to the file that requires additional collateral such as: increasing the loan limit or cases where the collateral is re-evaluated and the value decreases and needs to be added... The auditor needs to note that most of the credit files have not been fully implemented, especially credit files with overdue collateral.

+ Documents during lending: During this stage, the accountant needs to check documents such as: Loan application, money transfer or cash withdrawal documents and documents proving the use of capital such as: purchase invoice contracts... Notes for accountants in the following cases:

The loan term on the promissory note is not consistent with the contract, especially not consistent with the capital turnover in the appraisal report.

Incomplete or invalid disbursement documents (no invoice, salary disbursement without contract, etc.). Consider the application of interest rates that are not in accordance with regulations of competent authorities.

Disbursement of medium and long-term loans without controlling the equity capital participating in the project as committed. Disbursement of loans not in accordance with the approved plan ratio; Checking of disbursement documents is not strict; Disbursement before obtaining a construction permit; Disbursement of loans to customers who have incurred overdue debts and do not repay debts as committed in the contract;

+ Post-loan inspection records: In this audit stage, auditors should pay attention because post-loan inspections of commercial banks are often formal; Inspection records are sketchy, general, and do not provide full details. It is necessary to check the records.

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The audit did not assess the customer's ability to recover the debt, and post-loan audits were not conducted regularly. Note that branches disbursed cash or transferred money to customer accounts at other banks for some customers, making it difficult to check and monitor loans.

3.2.2.2. Support solution group

Promote international cooperation on auditing activities related to the field of central bank auditing of countries around the world. With the strong development of international organizations on accounting and auditing such as IFAC, INTOSAI, ASOSAI... of which the State Audit of Vietnam is the chairman of ASOSAI, the exchange of experience and professional skills on a global scale is very favorable. This is also an important condition to help State Auditors exchange professional skills, access new professional methods and auditing techniques and develop more and more strongly. Each subsystem with its own characteristics will have ways of international exchange and cooperation with different channels, but all aim to develop the auditing activities of the State Audit of Vietnam to reach regional and world levels.

Strengthening management and quality control of audit activities. Audit results have a great impact on the economy, so the State needs to strengthen management of audit activities; There should be effective measures to control audit quality and limit negative competition in audit activities.

3.3. LIMITATIONS AND FURTHER RESEARCH DIRECTIONS

Firstly, the topic only conducts research on the State Audit activities at the Central Bank of three state-owned commercial banks, namely NHNo, NHCT, NHNT and NHCSXH, which can be said to be banks with great influence and influence on other banks in the financial system. However, the audited data are secondary data. In addition, the audit work of the Central Bank and state-owned banks must always comply with the Laws, Decrees and Circulars, but in reality, the synchronization in these documents is not high, leading to the conclusions of the State Audit not being really satisfactory.

Second, the research topic is only conducted at the State Bank and state-owned banks such as NHNo, NHCT, NHNT and NHCSXH, while other state-owned banks have difficulty in accessing information and data, which is also a limitation in terms of

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