System of Legal Documents Related to Cn, Dtkh

TS), + ROA (Profit after tax/total assets) + Risks related to the ability to maintain
maintain customer competitiveness
Potential violation of the contract Listed customers	Chow and (2006)	partner
Financial Risk:	Landsman and Associates
+ Return on assets (ROA)	(2009)
+ Customers suffer losses
+ Financial leverage
+ Cash ratio to total assets
Financial Risk:	Schroeder	& Hogan
+ Return on assets (ROA)	(2013)
+ Customers suffer losses
+ Financial leverage (debt to total assets ratio)
TS)
+ Cash ratio to total assets
+ Bankruptcy risk
Financial performance,	Western	and Ayadi
Customer uptime,	(2012)
Audited customer locations
in its field,
Investment policy and strategy selection
comb
The industry is well regulated.
forced, industry developed
strong, the industry is in
crisis, industry
industries with rapid technological change,
stable industry
Financial Risk: + Zscore coefficient	Hsieh and Lin (2016)

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Financial Risk: +Return on Assets (ROA) + Customers suffer losses + Financial leverage + Cash ratio to total assets + Bankruptcy risk	Conley (2019)
3. RRKD of	The extent to which users rely on	Huss and Jacobs (1991);
CTKT is	Audited financial statements for decision making
measure	determine
through the factors such as:	Ability of the audit firm to perform the audit (personnel, independence)
	Potential litigation costs
	Opportunities for management consulting services	Asare and Knechel (1995)
	The possibility that the audit firm may be sued in the future, arising from the audit contract Profit from the contract	Johnstone (2000)
	CTKT Expert The possibility of an audited company's stock going public for the first time (IPO) The Opportunity of Non-Audit Services (NAS) End of fiscal year (busy season) Competitor pricing strategy painting	Johnstone (2001)
	Customer is a company	Johnstone & Bedard (2003), Johnstone and Bedard (2004)
	Integrity of NQL	Asare and associates (2005)

The possibility of an audited company going public for the first time Competition from other CTKTs The possibility of CTKT being sued when failing the audit	Chow et al. (2006)
Customer growth The client's industry is high risk Unusual audit fees Market price of equity	Schroeder and Hogan (2013)
Independence of KTV The capacity and experience of the auditor to ensure the quality of the audit and the ability to complete the task, The possibility of CTKT being sued when failing the audit Customer has listing.	Ouertani and Ayadi (2012)
Market price of equity The client's industry is high risk	Conley (2019)
4. Characteristics of the Customer's Board of Directors	Independence, financial expertise, experience, size and frequency of meetings of the Board of Directors and Audit Committee.	Lee et al. (2004); Sharma et al. (2008); El Sayed Ebaid (2011); Cassell et al. (2012).
5. CTKT professional level	Plan to assign highly experienced staff, using experts in audit	Johnstone and Bedard (2003).
	Level of expertise of the CTKT	Hertz (2006); Cenker and Nagy (2008); Hsieh and Lin (2016).
	Degree of specialization of the subject share.	Hsieh and Lin (2016).
6. Fees	Ratio of total planned cost to total hours	Johnstone and Bedard

plan.

(2003); Johnstone and

Bedard (2004).

Appendix 6: System of legal documents related to CN, DTKH

Status

Document

relevant laws

Related regulations on DTKH

“Law No. 67/2011/Q

H12 issued on March 29, 2011”

Article 29, Clauses 13&14, Law on Auditing stipulates that:

+ “Refuse to audit when independence and professional competence cannot be guaranteed”.

…

Article 30 stipulates the following cases in which independent Vietnamese accounting organizations are not allowed to audit:

+ “Currently or have performed accounting work, prepared financial statements, and performed internal audits for customers”;

+ “Auditing members are shareholders, buy shares, contribute capital to customers”;

+ “The CTKT's manager has a father, mother, wife, husband, child, brother, sister who is a shareholder, buys shares, contributes capital and has significant influence on the customer or the management, board of supervisors, chief accountant of the customer”;

+ “The client's management, board of supervisors, and chief accountant contribute capital and have significant influence on the accounting program”;

…

“Circular

214/2012/TTBTC,

Paragraph 26, VSQC1 requires:

“CTKT shall establish policies and procedures on CN, DTKH to ensure that CTKT will only CN, DTKH if CTKT:

December 6, 2012	+ Have the capacity & ability to perform, including time & resources
”.	force required;
	+ Comply with ethical standards & regulations;
	+ Customer integrity considered”.
	Section 27, VSQC1 prescribes policies & procedures for
	DTKH must request:
	+ “CTKT collects information in each situation when conducting customer research”;
	+ “Conflict of interest review”;
	Section A18, VSQC1 provides guidance for considering capacity and capability.
	capacity, CTKT must consider the requirements of the contract & capacity
	force of the Board of Directors member in charge of the contract & other related members
	mandarin:
	+ "CTKT understands the industry and field of operation well
	Are not";
	+ “CTKT has experience in legal regulations and reporting requirements.
	or not".
	+ "Does the CTKT have qualified personnel?"
	+ “CTKT is capable of completing the contract within the time limit or
	Are not".
	Section A19, VSQC1 provides guidance on issues of accuracy.
	Customer service needs to consider:
	+ “Identity of owner, key customer members”;
	+ “Signs of limitation of scope of work of CTKT”;
	+ “Signs showing that the customer is involved in money laundering,
	other illegal activities”;
	+ “Reasons for selecting the Chief Accountant and not reappointing the former Chief Accountant

duty";

+ “Identity of the related party”.

Paragraph A21, VSQC1 instructs: “when DTKH, CTKT needs to consider important issues arising during the current or previous audit”.

Paragraphs 12 and 13 of VSA 220 require: “The engagement partner must ensure that appropriate procedures have been followed for accepting and maintaining client relationships and audit engagements, and must demonstrate that the conclusions reached in this regard are appropriate.”

Section A8, VSA No. 220 instructs that when deciding on a DTKH, the CTKT must collect the following necessary information:

+ “Integrity of major owners, key members”;

+ “The professional competence and ability of the audit team in performing the audit (including time, resources...)”;

+ “The ability of the audit firm and the audit team to comply with relevant professional ethics standards and regulations”;

+ “Significant issues arising in the current or previous year’s audit and their impact on the maintenance of client relationships”.

Paragraph 06, a, VSA No. 300 reminds auditors to pay attention to the following procedures:

Initial CNKH procedures through: “KTV performs procedures for accepting and maintaining customer relationships for each contract

	specific audit".
	“Circular 70/2015/TTBTC, May 8, 2015” .	Sections 210.1, 210.3, 210.4 provide guidance: + “Before accepting a new client, the auditor must determine whether or not it will affect ethical principles.” + “The auditor must assess the severity of the risks and apply necessary protective measures to eliminate or reduce the risks to an acceptable level”. + “Where it is not possible to reduce the risk to a manageable level, unacceptable, KTV must refuse customer".
3	Chapter	DTKH review is carried out according to 2 forms: (1)
	check	Schedule A110/A120 and (2) Schedule A270.
	sample math	Form A110 “New Technology & Contract Risk Assessment”, guidance
	Annual financial statements	Here are the basic information you need to know:
	2019	+ “Business type: Business type according to the form
	(Decision)	legal form, level of impact on public interest, type
	number	"corporate form of business according to capital contribution";
	496	+ “Business lines of the enterprise”;
	2019/QĐ VACPA)	+ “Board of Directors”; + “Affiliate units”;
		+ “Subsidiaries”;
		+ “Stakeholders”;
		...
		Form A110, Business Information Guide.
		Form A110, guidance on accounting issues:
		Form A110, Audit Information Guide:
		Form A110, Guidance on Matters Relating to Cash KTV

Responsibilities to consider:

Form A120, information guide to learn about changes from last year.

According to the guidance on sample financial statements in 2016 and 2019, accounting firms must develop a risk assessment policy... A contract is high risk when the customer has the following characteristics:

+ Listing;

+ Mass;

+ Preparing documents for listing;

+ There are signs of violating the law;

+ There are lawsuits and disputes...

Related regulations on RRKT

Paragraph 13 (c), VSA 200: “RRKT: Is the risk that the auditor makes an inappropriate YKKT when the audited financial statements still contain material misstatements. RRKT is a consequence of the risk of material misstatements and the risk of detection”.

VSA 240 – Section 02c:

“Mistake in financial statements can arise from fraud or error”.

VSA 240 – Section 11:

“Fraud: an intentional act by one or more people in the management, employees or third parties through deceitful acts to gain unjust or illegal profit”.

“Fraud risk factors: Are events or

conditions that reflect an incentive or pressure to commit fraud or create an opportunity to commit fraud”.

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