Chapter 4

The elements of FSs are aware of:

• In the case of the statement of financial position (or Balance sheet): assets, liabilities and ownership interest

• In the case of the profit and loss account and any other statement of financial performance- gains and losses.

• Contributions from owners and distributions to owners.

• All of the above answers.

Management of the company is responsible for preparing the financial statements, which give a true and fair view of the financial position of the company and of its results and

cash flows for the year in accordance with GAAP standards, accounting regime for enterprises and legal regulations relating to financial reporting

• True

• False

In preparing these FSs, the company is required to:

• Select suitable accounting policies and then apply them consistently

• Make judgments and estimates that are reasonable and prudent

• State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the FSs

• Design and implement an effective internal control system for the

  purpose of properly preparing and presenting the FSs to minimize errors and fraud.

• Prepare the FSs on a going concern basis.

Assertions are the implicit or explicit claims and representations made by the management responsible for the preparation of financial statements regarding the appropriateness of the various elements of financial statements and disclosures.

• True

• False

Financial statement assertions

• Existence (sự hiện hữu)

  Rights & Obligations (quyền và nghĩa vụ)

• Occurrence (sự phát sinh)

  Completeness (tính đầy đủ)

• Valuation (tính toán)

  Measurements (đánh giá)

• Presentation & disclosure (trình bày và thuyết minh)

Transactions and Events (nghiệp vụ):

• Occurrence (sự phát sinh): Recorded transactions exist

• Completeness (tính đầy đủ): Existing transactions are recorded

• Accuracy (tính chính xác): Recorded transactions are stated at the correct amounts

• Classification (phân loại): Transactions are properly classified.

• Cut-off: Transactions are recorded in the proper period

Account balance (số dư):

• Existence (sự hiện hữu): Amounts included exist

• Completeness (tính đầy đủ): Existing amounts are included

• Valuation and allocation (đánh giá và phân bổ) : Amounts have been valued appropriately

• Rights and obligations (quyền và nghĩa vụ): Assets must be owned; Liabilities represent the obligations of the entity

Steps for audit procedures:

• B1: Designing the audit procedures or tests

• B2: Carrying out the audit procedures or tests to collect audit evidence

• B3: Analyzing evidence and drawing conclusions

• B4: Making decisions about whether additional information is required be obtained or whether sufficient appropriate evidence exists

The auditor can obtain audit evidence through the following procedures :

• 1) Inspection (kiểm tra)

• 2) Observation (quan sát) (ko mang lại strong evidence)

  3) Inquiry= Enquiry (điều tra) (không mang lại strong evidence)

• 4) External confirmation (liên quan đến phải thu phải trả cần xác nhận của bên thứ 3)

• 5) Recalculation (tính toán lại)

  6) Re-performance (thực hiện lại 1 quy trình, 1 thủ tục)

• 7) Analytical procedures (thủ tục phân tích)

Audit objectives:

• Overall audit objective

• Specific audit objective: (transactions and events (OCACC), account balance (COVER))

• Both of these two answer