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Thông tư 214/2012/TT-BTC hệ thống chuẩn mực kiểm toán Việt Nam

Số hiệu: 214/2012/TT-BTC Loại văn bản: Thông tư
Nơi ban hành: Bộ Tài chính Người ký: Trần Xuân Hà
Ngày ban hành: 06/12/2012 Ngày hiệu lực: Đã biết
Ngày công báo: Đã biết Số công báo: Đã biết
Tình trạng: Đã biết

37 chuẩn mực kiểm toán mới

Bộ Tài chính vừa công bố 37 chuẩn mực kiểm toán mới trong Thông tư 214/2012/TT-BTC, các chuẩn mực này sẽ được áp dụng từ ngày 01/01/2014.

Một số chuẩn mực kiểm toán có thể kể ra như: Chuẩn mực số 210 - Hợp đồng kiểm toán; Chuẩn mực số 230 - Tài liệu, hồ sơ kiểm toán; Chuẩn mực số 300 - Lập kế hoạch kiểm toán báo cáo tài chính; Chuẩn mực số 500 - Bằng chứng kiểm toán; Chuẩn mực số 520 - Thủ tục phân tích; Chuẩn mực số 570 - Hoạt động liên tục…

Hội Kiểm toán viên hành nghề Việt Nam có trách nhiệm phổ biến, triển khai và hướng dẫn việc thực hiển các chuẩn mực kiểm toán trên.

Từ ngày Thông tư này có hiệu lực, trừ chuẩn mực kiểm toán số 1000, 930 ban hành theo Quyết định 03/2005/QĐ-BTC và chuẩn mực kiểm toán 910, 920 ban hành theo Quyết định 195/2003/QĐ-BTC thì các chuẩn mực kiểm toán ban hành theo Quyết định 120/1999/QĐ-BTC, 219/2000/QĐ-BTC, 143/2001/QĐ-BTC, 28/2003/QĐ-BTC, 195/2003/QĐ-BTC, 03/2005/QĐ-BTC, 101/2005/QĐ-BTC sẽ hết hiệu lực.

BỘ TÀI CHÍNH
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CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM
Độc lập - Tự do - Hạnh phúc
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Số: 214/2012/TT-BTC

Hà Nội, ngày 06 tháng 12 năm 2012

 

THÔNG TƯ

BAN HÀNH HỆ THỐNG CHUẨN MỰC KIỂM TOÁN VIỆT NAM

Căn cứ Luật kiểm toán độc lập số 67/2011/QH12 ngày 29 tháng 3 năm 2011;

Căn cứ Nghị định số 17/2012/NĐ-CP ngày 13/3/2012 của Chính phủ Quy định chi tiết và hướng dẫn thi hành một số điều của Luật kiểm toán độc lập;

Căn cứ Nghị định số 118/2008/NĐ-CP ngày 27/11/2008 của Chính phủ Quy định chức năng, nhiệm vụ, quyền hạn và cơ cấu tổ chức của Bộ Tài chính;

Xét đề nghị của Chủ tịch Hội Kiểm toán viên hành nghề Việt Nam (VACPA) và Vụ trưởng Vụ Chế độ kế toán và kiểm toán;

Bộ trưởng Bộ Tài chính ban hành Thông tư ban hành hệ thống chuẩn mực kiểm toán Việt Nam.

Điều 1. Ban hành kèm theo Thông tư này ba mươi bảy (37) chuẩn mực kiểm toán Việt Nam có số hiệu và tên gọi như sau:

1. Chuẩn mực kiểm soát chất lượng số 1- Kiểm soát chất lượng doanh nghiệp thực hiện kiểm toán, soát xét báo cáo tài chính, dịch vụ đảm bảo và các dịch vụ liên quan khác (VSQC1).

2. Chuẩn mực số 200 - Mục tiêu tổng thể của kiểm toán viên và doanh nghiệp kiểm toán khi thực hiện kiểm toán theo chuẩn mực kiểm toán Việt Nam.

3. Chuẩn mực số 210- Hợp đồng kiểm toán.

4. Chuẩn mực số 220- Kiểm soát chất lượng hoạt động kiểm toán báo cáo tài chính.

5. Chuẩn mực số 230- Tài liệu, hồ sơ kiểm toán.

6. Chuẩn mực số 240- Trách nhiệm của kiểm toán viên liên quan đến gian lận trong quá trình kiểm toán báo cáo tài chính.

7. Chuẩn mực số 250- Xem xét tính tuân thủ pháp luật và các quy định trong kiểm toán báo cáo tài chính.

8. Chuẩn mực số 260- Trao đổi các vấn đề với Ban quản trị đơn vị được kiểm toán.

9. Chuẩn mực số 265- Trao đổi về những khiếm khuyết trong kiểm soát nội bộ với Ban quản trị và Ban Giám đốc đơn vị được kiểm toán.

10. Chuẩn mực số 300- Lập kế hoạch kiểm toán báo cáo tài chính.

11. Chuẩn mực số 315- Xác định và đánh giá rủi ro có sai sót trọng yếu thông qua hiểu biết về đơn vị được kiểm toán và môi trường của đơn vị.

12. Chuẩn mực số 320- Mức trọng yếu trong lập kế hoạch và thực hiện kiểm toán.

13. Chuẩn mực số 330- Biện pháp xử lý của kiểm toán viên đối với rủi ro đã đánh giá.

14. Chuẩn mực số 402- Các yếu tố cần xem xét khi kiểm toán đơn vị có sử dụng dịch vụ bên ngoài.

15. Chuẩn mực số 450- Đánh giá các sai sót phát hiện trong quá trình kiểm toán.

16. Chuẩn mực số 500- Bằng chứng kiểm toán.

17. Chuẩn mực số 501- Bằng chứng kiểm toán đối với các khoản mục và sự kiện đặc biệt.

18. Chuẩn mực số 505- Thông tin xác nhận từ bên ngoài.

19. Chuẩn mực số 510- Kiểm toán năm đầu tiên – Số dư đầu kỳ.

20. Chuẩn mực số 520- Thủ tục phân tích

21. Chuẩn mực số 530- Lấy mẫu kiểm toán.

22. Chuẩn mực số 540- Kiểm toán các ước tính kế toán (bao gồm ước tính kế toán về giá trị hợp lý và các thuyết minh liên quan).

23. Chuẩn mực số 550- Các bên liên quan.

24. Chuẩn mực số 560- Các sự kiện phát sinh sau ngày kết thúc kỳ kế toán.

25. Chuẩn mực số 570- Hoạt động liên tục.

26. Chuẩn mực số 580- Giải trình bằng văn bản.

27. Chuẩn mực số 600- Lưu ý khi kiểm toán báo cáo tài chính tập đoàn (kể cả công việc của kiểm toán viên đơn vị thành viên).

28. Chuẩn mực số 610- Sử dụng công việc của kiểm toán viên nội bộ.

29. Chuẩn mực số 620- Sử dụng công việc của chuyên gia.

30. Chuẩn mực số 700- Hình thành ý kiến kiểm toán và báo cáo kiểm toán về báo cáo tài chính.

31. Chuẩn mực số 705- Ý kiến kiểm toán không phải là ý kiến chấp nhận toàn phần.

32. Chuẩn mực số 706- Đoạn “Vấn đề cần nhấn mạnh” và “Vấn đề khác” trong báo cáo kiểm toán về báo cáo tài chính.

33. Chuẩn mực số 710- Thông tin so sánh - Dữ liệu tương ứng và báo cáo tài chính so sánh.

34. Chuẩn mực số 720- Các thông tin khác trong tài liệu có báo cáo tài chính đã được kiểm toán.

35. Chuẩn mực số 800- Lưu ý khi kiểm toán báo cáo tài chính được lập theo khuôn khổ về lập và trình bày báo cáo tài chính cho mục đích đặc biệt.

36. Chuẩn mực số 805- Lưu ý khi kiểm toán báo cáo tài chính riêng lẻ và khi kiểm toán các yếu tố, tài khoản hoặc khoản mục cụ thể của báo cáo tài chính.

37. Chuẩn mực số 810- Dịch vụ báo cáo về báo cáo tài chính tóm tắt.

Điều 2. Phạm vi và đối tượng áp dụng

Thông tư này ban hành hệ thống chuẩn mực kiểm toán Việt Nam áp dụng đối với doanh nghiệp kiểm toán, chi nhánh doanh nghiệp kiểm toán nước ngoài tại Việt Nam, kiểm toán viên hành nghề và các tổ chức, cá nhân có liên quan trong quá trình cung cấp dịch vụ kiểm toán độc lập.

Điều 3. Hiệu lực thi hành và điều khoản chuyển tiếp

1. Thông tư này có hiệu lực thi hành kể từ ngày 01/01/2014.

2. Đối với các cuộc kiểm toán báo cáo tài chính và các công việc kiểm toán khác được thực hiện trước ngày 01/01/2014 mà đến ngày 01/01/2014 trở đi mới phát hành báo cáo kiểm toán thì phải áp dụng hệ thống chuẩn mực kiểm toán Việt Nam ban hành theo Thông tư này.

3. Hệ thống chuẩn mực kiểm toán Việt Nam ban hành theo các Quyết định số 120/1999/QĐ-BTC ngày 27/9/1999, Quyết định số 219/2000/QĐ-BTC ngày 29/12/2000, Quyết định số 143/2001/QĐ-BTC ngày 21/12/2001, Quyết định số 28/2003/QĐ-BTC ngày 14/3/2003, Quyết định số 195/2003/QĐ-BTC ngày 28/11/2003, Quyết định số 03/2005/QĐ-BTC ngày 18/01/2005, Quyết định số 101/2005/QĐ-BTC ngày 29/12/2005 của Bộ trưởng Bộ Tài chính hết hiệu lực kể từ ngày 01/01/2014, trừ các chuẩn mực quy định tại khoản 4 Điều này.

4. Các chuẩn mực kiểm toán số 1000 “Kiểm toán báo cáo quyết toán vốn đầu tư hoàn thành”, Chuẩn mực kiểm toán số 930 “Dịch vụ tổng hợp thông tin tài chính” ban hành theo Quyết định số 03/2005/QĐ-BTC ngày 18/01/2005 của Bộ trưởng Bộ Tài chính, Chuẩn mực kiểm toán số 910 “Công tác soát xét báo cáo tài chính”, Chuẩn mực kiểm toán số 920 “Kiểm tra thông tin tài chính trên cơ sở các thủ tục thoả thuận trước” ban hành theo Quyết định số 195/2003/QĐ-BTC ngày 28/11/2003 của Bộ trưởng Bộ Tài chính tiếp tục có hiệu lực thi hành cho đến khi có chuẩn mực mới thay thế.

Điều 4. Tổ chức thực hiện

1. Hội Kiểm toán viên hành nghề Việt Nam chịu trách nhiệm phổ biến, triển khai và hướng dẫn thực hiện hệ thống chuẩn mực kiểm toán Việt Nam ban hành tại Thông tư này.

2. Vụ trưởng Vụ Chế độ kế toán và kiểm toán, Chánh Văn phòng Bộ và Thủ trưởng các đơn vị có liên quan chịu trách nhiệm hướng dẫn, kiểm tra và thi hành Thông tư này.

 

 

Nơi nhận:
- Văn phòng Tổng Bí thư;
- Văn phòng Quốc hội;
- Văn phòng Chủ tịch nước;
- Văn phòng TW và các Ban của Đảng;
- Văn phòng Chính phủ;
- Viện Kiểm sát NDTC, Toà án NDTC;
- Kiểm toán Nhà nước;
- Các Bộ, cơ quan ngang Bộ, cơ quan thuộc CP;
- UBND tỉnh, TP trực thuộc TW;
- Cục kiểm tra văn bản - Bộ Tư pháp
;
- Các đơn vị thuộc và trực thuộc Bộ Tài chính;
- Hội Kế toán và kiểm toán Việt Nam (VAA);
- Hội Kiểm toán viên hành nghề Việt Nam (VACPA);
- Các doanh nghiệp kiểm toán;
- Công báo; VP Ban chỉ đạo TW về PC tham nhũng;
- Website Chính phủ và Website Bộ Tài chính;
- Lưu: VT, Vụ CĐKT.

KT. BỘ TRƯỞNG
THỨ TRƯỞNG




Trần Xuân Hà

 

 

 

THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 214/2012/TT-BTC

Hanoi, December 06, 2012

 

CIRCULAR

PROMULGATING THE SYSTEM OF VIETNAM AUDIT STANDARDS

Pursuant to the Law on Independent Audit No. 67/2011/QH12 of March 29, 2011;

Pursuant to the Government’s Decree No. 17/2012/ND-CP of March 13, 2012 detailing and guiding the implementation of a number of articles of the Law on Independent Audit;

Pursuant to the Government’s Decree No. 118/2008/ND-CP, of November 27, 2008 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of Chairman of Vietnam Association of Certified Public Accountants(VACPA) and Director of the Accounting and Auditing Regulation Department;

The Minister of Finance promulgates the Circular on the system of Vietnam audit standards.

Article 1. To promulgate together with this Circular thirty seven (37) audit standards of Vietnam with the code numbers and names as follows:

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2. The Vietnamese standard No. 200 – The overall objective of auditors and audit enterprises upon conducting audit according to the Vietnam audit standards.

3. The Vietnamese standard No. 210 – Audit contract.

4. The Vietnamese standard No. 220 – Quality control of financial statement audit activities.

5. The Vietnamese standard No. 230 – Audit documents and records.

6. The Vietnamese standard No. 240 – Responsibilities of auditors involving fraudulent acts in the course of auditing the financial statements.

7. The Vietnamese standard No. 250 – To consider the compliance with law and regulations in auditing the financial statements.

8. The Vietnamese standard No. 260 – To discuss matters with the management board of units subject to audit.

9. The Vietnamese standard No. 265 – To discuss shortcomings in internal audit with the management board and the Board of directors of units subject to audit.

10. The Vietnamese standard No. 300 – To make plan on auditing the financial statements.

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12. The Vietnamese standard No. 320 – The key in making plan and auditing.

13. The Vietnamese standard No. 330 - Handling measures of auditors for the assessed risks.

14. The Vietnamese standard No. 402 – Elements should be considered when auditing units using external services.

15. The Vietnamese standard No. 480 - To assess mistakes detected in the course of audit.

16. The Vietnamese standard No. 500 – Audit evidences.

17. The Vietnamese standard No. 501 – Audit evidences for items and special events.

18. The Vietnamese standard No. 505 - Information confirmed from the outside.

19. The Vietnamese standard No. 510 – Audit in the first year – The balance at beginning of period.

20. The Vietnamese standard No. 520 – Procedures for analysis

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22. The Vietnamese standard No. 540 – To audit the accounting estimates (including the accounting estimates of reasonable values and relevant illustrations).

23. The Vietnamese standard No. 550 – Relevant parties

24. The Vietnamese standard No. 560 – Events arising after the day ending the accounting period.

25. The Vietnamese standard No. 570 - Continuous operation.

26. The Vietnamese standard No. 580 – To provide explanations in writing.

27. The Vietnamese standard No. 600 – Notes when auditing the incorporation financial statement (including affairs of auditors of member units).

28. The Vietnamese standard No. 610 – To use affairs of internal auditors.

29. The Vietnamese standard No. 620 – To use affairs of experts.

30. The Vietnamese standard No. 700 – To form the audit opinions and audit reports about financial statements.

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32. The Vietnamese standard No. 706 – Paragraph of “matters should be emphasized” and "Other matters" in audit reports about financial statements.

33. The Vietnamese standard No. 710 - Comparison information – Corresponding data and comparison financial statement.

34. The Vietnamese standard No. 720 – Other information in documents with the audited financial statements.

35. The Vietnamese standard No. 800 – Note when auditing, financial statements are made according to the framework on making and presenting Financial statement for special purpose.

36. The Vietnamese standard No. 805 – Note when auditing the separate financial statements and when auditing the elements, accounts or specific indexes of financial statement.

37. The Vietnamese standard No. 810 – The report service regarding the summary financial statement.

Article 2. Scope and subjects of application

This Circular promulgates the system of Vietnamese audit standards applied to audit enterprises, branches of foreign audit enterprises in Vietnam, the auditors practicing and the concerned organizations and individuals in the course of supplying the independent audit service.

Article 3. Effect and transitional provisions

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2. For audits of financial statements and other audit affairs which have been performed before January 01, 2014 but from and after the January 01, 2014, audit reports are issued, the system of Vietnamese audit standards promulgated together with this Circular must be applied.

3. The system of Vietnamese audit standards promulgated together with the Decision No. 120/1999/QD-BTC dated 27/9/1999, Decision No. 219/2000/QD-BTC dated 29/12/2000, Decision No. 143/2001/QD-BTC dated 21/12/2001, Decision No. 28/2003/QD-BTC dated 14/3/2003, Decision No. 195/2003/QD-BTC dated 28/11/2003, Decision No. 03/2005/QD-BTC dated 18/01/2005 and Decision No. 101/2005/QD-BTC dated 29/12/2005 of the Minister of Finance shall cease to be effective on January 01, 2014, except standards specified in clause 4 of this Article.

4. The Vietnamese audit standards No. 1000 “Audit of finalization statement of finished investment capital”, Vietnamese audit standards No. 930 “Service of summing up financial information” promulgated together with the Decision No. 03/2005/QD-BTC dated 18/01/2005 of the Minister of Finance, Vietnamese audit standards No. 910 “Control and review of Financial statement”, Vietnamese audit standards No. 920 “To check financial information on the basis of procedures having been agreed before” promulgated together with the Decision No. 195/2003/QD-BTC dated 28/11/2003 of the Minister of Finance shall continue taking effect until there are new Vietnamese standards replacing them.

Article 4. Implementation organization

1. VACPA shall popularize, carry out and guide implementation of the Vietnamese audit standards promulgated at this Circular.

2. Director of the Accounting and Auditing Regulation Department, The Chief of Ministerial office and heads of relevant units shall guide, examine and execute this Circular.

 

 

FOR THE MINISTER OF FINANCE
DEPUTY MINISTER





Tran Xuan Ha

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VIETNAM SYSTEM OF STANDARDS ON AUDITING

Standard on auditing 210: Audit engagements

(Issued together with the Circular No. 214/2012/TT-BTC of the Ministry of Finance dated December 6, 2012)

I/ GENERAL PROVISIONS

Scope of application

01. This auditing standard deals with and provides guidance on responsibilities of auditors and auditing enterprises (hereinafter referred to as “auditor”) in agreeing the terms of the audit engagement with the Board of Directors and the Management Board of the entity (where appropriate).  This includes mandatory requirements and provides explanatory guidance on certain preconditions for an audit, responsibility of the auditor, and responsibility for which rests with the Board of Directors and the Management Board of the entity, in relation to the audit engagement.  The Vietnam standard on auditing 220 additionally deals with and provides guidance on certain aspects pertaining to responsibilities of the auditor with respect to engagement acceptance that are within the control of the auditor (refer to Paragraph A1 included in this Standard).

02. The auditor must comply with provisions and instructions set forth in this Standard in agreeing on, effecting and carrying out the audit engagement.

The entity (client) must, to certain extent, gain awareness of provisions and instructions laid down in this Standard to be able to collaborate in performing engagement activities and dealing with relations to the process of agreeing on, effecting and carrying out the audit engagement.

Objective

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(a) Establishing whether the preconditions for an audit are present;

(b) Confirming that the auditor and the Board of Directors or Management Board (where appropriate) have already agreed terms of the audit engagement.

Definitions

04. For purposes of the Vietnam Standards on Auditing, the following term shall be construed as follows:

Preconditions for an audit refers to the use, by the Board of Directors of the entity, of an acceptable financial reporting framework in the preparation of the financial statements and the agreement of the Board of Directors or the Management Board of the entity (where appropriate) to the premise on which an audit is conducted (refer to Paragraph 13 included in the Vietnam Standard on Auditing 200).

05. For the purposes of this auditing standard, references to “Board of Directors” should be read hereafter as “the Board of Directors and the Management Board of the entity (where appropriate)”.

II/ CONTENTS OF THIS AUDITING STANDARD

Requirements

Preconditions for an audit

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(a) Determine whether the financial reporting framework to be applied in the preparation of the financial statements is acceptable (refer to instructions laid down in the paragraph A2–A10 included in this Standard);

(b) Obtain the agreement of the Board of Directors of the entity that it acknowledges and understands its responsibility (refer to the paragraph A11–A14 and A20 included in this Standard):

For the preparation of the financial statements in accordance with the applicable financial reporting framework, including where relevant their fair presentation (refer to the paragraph A15 included in this Standard);

(ii) For such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error (refer to the paragraph A16–A19 included in this Standard);

(iii) To provide the auditor with:

a. Access to all materials or information of which the Board of Directors is aware that is relevant to the preparation and presentation of the financial statements such as accounting records, documentation and other matters;

b. Additional materials and information that the auditor may request the Board of Directors to provide or clarify for the purpose of the audit;

c. Unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence.

Limitation on the scope of the audit engagement prior to acceptance thereof

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Other factors affecting audit engagement acceptance

08. If the preconditions for an audit are not present, the auditor shall discuss the matter with the Board of Directors of the entity. Unless required by law or regulation to do so, the auditor shall not accept the proposed audit engagement:

(a) If the auditor has determined that the financial reporting framework to be applied in the preparation and presentation of the financial statements is unacceptable, except as provided in paragraph 19 included in this Standard; or

(b) If the agreement between the auditor and the Board of Directors, as referred to in paragraph 06(b) hereof, has not been obtained.

Agreement on audit engagement terms

09. The auditor shall agree the terms of the audit engagement with the Board of Directors or the Management Board of the entity (where appropriate) (refer to the paragraph A21 included in this Standard).

10. Subject to paragraph 11 in this Standard, the agreed terms of the audit engagement shall be recorded in an audit engagement letter or other suitable form of written agreement (for instance, the letter of appointment for audit) and shall include (refer to the paragraph A22–A25 included in this Standard):

(a) The objective and scope of the audit of the financial statements;

(b) The responsibilities of the auditor;

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(d) Identification of the applicable financial reporting framework for the preparation and presentation of the financial statements;

(e) The expected form and content of any reports to be issued by the auditor.

11. If law or regulation prescribes in sufficient detail the terms of the audit engagement, including those referred to in paragraph 10 hereof, the auditor need not record them in a written agreement, except for the fact that such law or regulation applies and that Board of Directors acknowledges and understands its responsibilities as set out in the paragraph 06(b) in this Standard (refer to the paragraph A22 and A26–A27 included in this Standard).

12. If law or regulation prescribes responsibilities of the Board of Directors similar to those described in paragraph 6(b), the auditor may determine that the law or regulation includes responsibilities that, in the auditor’s judgment, are equivalent in effect to those set out in that paragraph. For such responsibilities that are equivalent, the auditor may use the wording of the law or regulation to describe them in the audit engagement. For those responsibilities that are not prescribed by law or regulation such that their effect is equivalent, the written agreement shall use the description in paragraph 06(b). (refer to the paragraph A26 included in this Standard).

Recurring audits

13. The auditing enterprise and the entity can enter into a written agreement that repeats in multiple successive financial years.  On recurring audits, the auditor shall, on an annual basis, assess whether circumstances require the terms of the audit engagement to be revised and whether there is a need to remind the entity of the existing terms of the audit engagement. Any terms that need to be revised (if any) must be documented and attached as an appendix to the signed written agreement (refer to the paragraph A28 included in this Standard).

Acceptance of a change in the terms of the audit engagement

14. The auditor shall not agree to a change in the terms of the audit engagement where there is no reasonable justification for doing so. (refer to the paragraph A29–A31).

15. If, prior to completing an audit, the auditor is requested to change the audit engagement to an engagement that conveys a lower level of assurance, the auditor shall determine whether there is reasonable justification for doing so. (refer to the paragraph A32–A33).

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17. If the auditor is unable to agree to a change of the terms of the audit engagement and is not permitted by the Board of Directors to continue the original audit engagement, the auditor shall:

(a) Withdraw from the audit and terminate the audit engagement where possible under applicable law or regulation;

(b) Determine whether there is any obligation, either contractual or otherwise, to report the circumstances to other parties, such as the Management Board, owners or regulators.

Additional considerations in audit engagement acceptance

Standards for preparation and presentation of financial statements supplemented by law or regulation

18. If standards for preparation and presentation of financial statements established by an authorized or recognized standards setting organization are supplemented by law or regulation, the auditor shall determine whether there are any conflicts between these standards and the additional requirements. If such conflicts exist, the auditor shall discuss with the Board of Directors of the entity the nature of the additional requirements and shall agree whether:

(a) The additional requirements can be met through additional disclosures to the financial statements; or

(b) The description of the applicable financial reporting framework in the financial statements can be amended accordingly.

If neither of the above actions is possible, the auditor shall determine whether it will be necessary to modify the auditor’s opinion in accordance with the Vietnam Standard on Auditing 705 (refer to the paragraph A34).

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19. If the auditor has determined that the financial reporting framework prescribed by law or regulation would be unacceptable and the entity is bound to apply it  for the fact that it is prescribed by law or regulation, the auditor shall accept the audit engagement only if the following conditions are present (refer to the paragraph A35):

(a) The Board of Directors agrees to provide additional disclosures in the financial statements required to avoid the financial statements being misleading;

(b) It is explicitly recognized in the terms of the audit engagement that:

(i) The auditor’s report on the financial statements will incorporate an “emphasis of matter” paragraph, drawing users’ attention to the additional disclosures, in accordance with the Vietnam Standard on Auditing 706;

(ii) Unless the auditor is required by law or regulation to express the auditor’s opinion on the financial statements by using the written statement “financial statements have given a true and fair view, in all material respects, in accordance with the applicable financial reporting framework”, the auditor’s opinion on the financial statements will not include such written statement.

20. If the conditions outlined in paragraph 19 in this Standard are not present and the auditor is required by law or regulation to undertake the audit engagement, the auditor shall:

(a) Evaluate the effect of the misleading nature of the financial statements on the auditor’s report;

(b) Include appropriate reference to this matter in the terms of the audit engagement.

Auditor’s report prescribed by law or regulation

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(a) Whether users might misunderstand the level of assurance obtained from the audit of the financial statements;

(b) Whether additional explanation in the auditor’s report given in accordance with the Vietnam Standards on Auditing 706 can mitigate possible misunderstanding.

If the auditor concludes that additional explanation in the auditor’s report cannot mitigate possible misunderstanding, the auditor shall not accept the audit engagement, unless required by law or regulation to do so. An audit conducted in accordance with such law or regulation does not comply with the Vietnam Standards on Auditing. Accordingly, subject to the paragraph 43 in the Vietnam Standard on Auditing 700, the auditor shall not include any reference within the auditor’s report to the audit having been conducted in accordance with the Vietnam Standard on Auditing (refer to the paragraph A36–A37).

III/ GUIDE TO APPLICATION

When applying this Standard, it is necessary to consult the Vietnam Standard on Auditing 200

Scope of application (refer to the paragraph 01 in this Standard)

A1. Assurance engagements, which include audit engagements, may be accepted only when the practitioner considers that relevant ethical standards and requirements such as independence and professional competence will be satisfied, and when the engagement meets other certain requirements (refer to the paragraph 17 “Framework for assurance engagements”) (*). The auditor’s responsibilities in respect of ethical standards and requirements in the context of the acceptance of an audit engagement and in so far as they are within the control of the auditor are dealt with in the paragraph 09 – 11 of the Vietnam Standard on Auditing 220. This Vietnam Standard on Auditing deals with those matters (or preconditions) that are within the responsibilities and control of the entity and upon which it is necessary for the auditor and the entity’s Board of Directors to agree. ((*): Refer to the footnote of this Standard).

Preconditions for an audit

The financial reporting framework (refer to the paragraph 06(a))

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A3. In the absence of an acceptable financial reporting framework, the entity’s Board of Directors does not have an appropriate basis for the preparation and presentation of the financial statements and the auditor does not have suitable criteria for auditing the financial statements.   In certain cases the auditor may presume that the applicable financial reporting framework is acceptable, as described in paragraphs A8–A9 of this Standard.

Determining the acceptability of the financial reporting framework

A4. Factors that are relevant to the auditor’s determination of the acceptability of the financial reporting framework to be applied in the preparation and presentation of the financial statements include:

(1) The nature of the entity (for example, whether it is a state enterprise, limited liability company, a public company or a not-for-profit organization);

(2) The purpose of the financial statements (for example, whether they are prepared to meet the common financial information needs of a wide range of users or the financial information needs of specific users);

(3) The nature of the financial statements (for example, whether the financial statements are a complete set of financial statements or a single financial statement);

(4) Whether law or regulation prescribes the applicable financial reporting framework.

A5. Many users of financial statements are not in a position to demand financial statements tailored to meet their specific information needs.  While all the information needs of specific users cannot be met, there are financial information needs that are common to a wide range of users.  Financial statements prepared in accordance with a financial reporting framework designed to meet the common financial information needs of a wide range of users are referred to as general purpose financial statements.

A6. The financial statements prepared in accordance with a financial reporting framework designed to meet the financial information needs of specific users are referred to as special purpose financial statements. The financial information needs of the intended users will determine the applicable financial reporting framework in these circumstances. The paragraph 08 in the Vietnam Standard on Auditing 800 discusses the acceptability of financial reporting frameworks designed to meet the financial information needs of specific users.

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General purpose financial reporting frameworks

A8. At present, there is no objective and authoritative basis that has been generally recognized for judging the acceptability of general purpose financial reporting frameworks. Financial reporting standards established by organizations that are authorized or recognized to promulgate standards to be used by certain types of entities are presumed to be acceptable for general purpose financial statements prepared by such entities, provided the organizations follow an established and transparent process involving deliberation and consideration of the views of a wide range of users. Examples of such financial reporting standards include:

(1) International Financial Reporting Standards (IFRSs) promulgated by the International Accounting Standards Board (IASB);

(2) International Public Sector Accounting Standards (IPSAS) promulgated by the International Public Sector Accounting Standards Board (IPSASB);

(3) National accounting principles promulgated by an authorized or recognized standards setting organization in a particular jurisdiction, provided the organization follows an established and transparent process involving deliberation and consideration of the views of a wide range of users. In Vietnam, the Ministry of Finance shall be the body setting the Vietnam Standards on Auditing (VAS) by adopting and modifying the International Standards on Auditing (IAS) and International Financial Reporting Standards (IFRS) where relevant in the context of Vietnam which are considered the framework for preparation and presentation of general purpose financial statements.

These financial reporting standards are often identified as the applicable financial reporting framework in law or regulation governing the preparation and presentation of general purpose financial statements.

Financial reporting frameworks prescribed by law or regulation

A9. In accordance with paragraph 06(a), the auditor is required to determine whether the financial reporting framework, which has been applied in the preparation and presentation of the financial statements by the entity, is acceptable.    Law or regulation may prescribe the financial reporting framework to be used in the preparation and presentation of general purpose financial statements for certain types of entities. In the absence of indications to the contrary, such a financial reporting framework is presumed to be acceptable for general purpose financial statements prepared by such entities. In the event that the framework is not considered to be acceptable, paragraphs 19–20 apply.

Jurisdictions that do not have accounting standards setting organizations or prescribed financial reporting frameworks.

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Agreement of the responsibilities of the Board of Directors (refer to the paragraph 06(b))

A11. An audit in accordance with the Vietnam Standard on Auditing is conducted on the premise that the Board of Directors has acknowledged and understands that it has the responsibilities set out in paragraph 06(b) (refer to the paragraph A2 in the Vietnam Standard on Auditing 200). Such responsibilities may be specified in other relevant laws or regulations. The Vietnam Standards on Auditing do not override relevant laws or regulations concerning responsibilities of the entity’s Board of Directors.   However, the concept of an independent audit requires that the auditor’s role does not involve taking responsibility for the preparation and presentation of the financial statements or for the entity’s related internal control, and that the auditor has a reasonable expectation of collecting the materials and information necessary for the audit in so far as the entity’s Board of Directors is able to provide or procure it. To avoid misunderstanding, agreement between the auditor and the Board of Directors is reached that the Board acknowledges and understands that it has such responsibilities as part of agreeing and recording the terms of the audit engagement in paragraphs 9–12.

A12. The way in which the responsibilities for preparing and presenting the financial statements are divided between the Board of Directors and the Management Board will vary according to the resources and structure of the entity and any relevant law or regulation, and the respective roles of the Board of Directors and the Management Board within the entity. In most cases, the Board of Directors is responsible for execution while the Management Board have oversight of such execution. In some cases, the Management Board will have, or will assume, responsibility for approving the financial statements or monitoring the entity’s internal control related to preparation and presentation of the financial statements. In larger or public entities, a subgroup of the Management Board, such as an audit committee/internal audit committee, may be charged with certain oversight responsibilities.

A13. Paragraphs 10 – 11 of the Vietnam Standard on Auditing 580 require the auditor to request the entity’s Board of Directors to provide written representations that it has fulfilled certain of its responsibilities. It may therefore be appropriate for the auditor to make the Board of Directors aware in the audit engagement that it is obliged to give its written representations required by the auditor, together with written representations concerning the Board of Directors or issues required by other auditing standards, or written representations to support other audit evidence relevant to the financial statements or one or more specific assertions in the financial statements.

A14. Subject to the paragraph A26 in the Vietnam Standard on Auditing 580, where the Board of Directors, will not acknowledge its responsibilities, or agree to provide the written representations, the auditor will be unable to obtain sufficient appropriate audit evidence. In such circumstances, it would not be appropriate for the auditor to accept the audit engagement, unless law or regulation requires the auditor to do so. In cases where the auditor is required to accept the audit engagement, the auditor may need to explain to the Board of Directors the importance of these matters, and the implications for the auditor’s report.

Preparation and presentation of the financial statements (refer to the paragraph 06(b)(i))

A15. Most financial reporting frameworks include requirements relating to the preparation and presentation of the financial statements. In the case of a fair presentation framework the importance of the reporting objective of fair presentation is such that the premise agreed with the Board of Directors includes specific reference to fair presentation, or to the responsibility to ensure that the financial statements will “give a true and fair view” in accordance with the financial reporting framework.

Internal Control (refer to the paragraph 06(b)(ii))

A16. The entity’s Board of Directors must maintain such internal control as it determines is necessary to enable the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. Subject to the paragraph A46 in the Vietnam Standard on Auditing 315, internal control, no matter how effective, can provide an entity with only reasonable assurance about achieving the entity’s financial reporting objectives due to the inherent limitations of internal control.

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A18. It is for the Board of Directors to determine what internal control is necessary to enable the preparation and presentation of the financial statements. Subject to the paragraph A51 and the Appendix 01 in the Vietnam Standard on Auditing 315, the term “internal control” encompasses a wide range of activities within 5 components that may be described as (1) the control environment; (2) the entity’s risk assessment process; (3) the information system, including the related business processes relevant to financial reporting, and communication; (4) control activities; and (5) monitoring of controls. This division, however, does not necessarily reflect how a particular entity may design, implement and maintain its internal control, or how it may classify any particular component. An entity’s internal control (in particular, its accounting books and records, or accounting policies) will reflect the needs of the Board of Directors, the complexity of the business, the nature of the risks to which the entity is subject, and relevant laws or regulations.

A19. In the context of Vietnam, law or regulation may refer to the responsibility of the Board of Directors for the adequacy of accounting books and records, or accounting policies. In some cases, general practice may assume a distinction between accounting books and records or accounting policies on the one hand, and internal controls on the other hand. As accounting books and records, or accounting policies, are an integral part of internal control as referred to in paragraph A18, no specific reference is made to them in paragraph 06(b)(ii) for the description of the responsibility of the Board of Directors for the adequacy of accounting records, books or accounting policies. To avoid misunderstanding, it may be appropriate for the auditor to explain to the Board of Directors the scope of this responsibility.

Considerations relevant to smaller entities (referring to the paragraph 06(b))

A20. One of the purposes of agreeing the terms of the audit engagement is to avoid misunderstanding about the respective responsibilities of the Board of Directors and the auditor. For example, when a third party has assisted with the preparation and presentation of the financial statements, it may be useful to remind the entity’s Board of Directors that the preparation and presentation of the financial statements in accordance with the applicable financial reporting framework remains its responsibility.

Agreement on audit engagement terms

Agreeing the terms of the audit engagement (refer to the paragraph 09)

A21. The roles of the Board of Directors or the Management Board in agreeing the terms of the audit engagement for the entity depend on the governance structure of the entity and relevant law or regulation.

Audit Engagement Letter or Other Form of Written Agreement (hereinafter referred to as audit engagement letter) (refer to the paragraph 10–11)

A22. It is in the interests of both the entity and the auditor that the auditor sends an audit engagement letter before the commencement of the audit to help avoid misunderstandings with respect to the audit. The objective and scope of an audit and the responsibilities of management and of the auditor may be sufficiently established by law, that is, they prescribe the matters described in paragraph 10. Although in these circumstances paragraph 11 permits the auditor to include in the engagement letter only reference to the fact that relevant law or regulation applies and that the Board of Director acknowledges and understands its responsibilities as set out in paragraph 06(b), the auditor may nevertheless consider it appropriate to include the matters described in paragraph 10 in an engagement letter for the information of the Board of Directors.

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A23. The form and content of the audit engagement letter may vary for each entity. Information included in the audit engagement letter on the auditor’s responsibilities may be based on requirements set out in paragraphs 03 – 09 in the Vietnam Standard on Auditing 200; Paragraphs 06(b) and 12 of this Standard deal with the description of the responsibilities of the Board of Directors. In addition to including the matters required by paragraph 10, an audit engagement letter may make reference to the followings:

(1) Elaboration of the scope of the audit, including reference to applicable legislation, regulations, auditing standards, and ethical and other pronouncements of professional bodies to which the auditor adheres;

(2) The form of any other communication of results of the audit engagement;

(3) The fact that because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with the Vietnam Standards on Auditing;

(4) Arrangements regarding the planning and performance of the audit, including the composition of the audit team;

(5) The expectation that the Board of Directors will provide written representations (see also paragraph A13);

(6) The agreement of the Board of Directors to make available to the auditor financial statements and any relevant materials in time to allow the auditor to complete the audit in accordance with the proposed timetable;

(7) The agreement of the Board of Directors to inform the auditor of facts that may affect the financial statements, of which the Board of Directors may become aware during the period from the date of the auditor’s report to the date the financial statements are issued;

(8) The basis on which fees are computed and any billing arrangements;

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A24. In addition to the contents referred to in the paragraph A23, the following points could also be made in the audit engagement letter:

(1) Arrangements concerning the involvement of other auditors and experts in some aspects of the audit;

(2) Arrangements concerning the involvement of internal auditors and other staff of the entity;

(3) Arrangements to be made with the predecessor auditor, if any, in the case of an initial audit;

(4) Any restriction of the auditor’s liability when such possibility exists;

(5) A reference to any further agreements between the auditor and the entity;

(6) Any obligations to provide audit working papers to other parties.

An example of an audit engagement letter is set out in Appendix 01.

Audits of components

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(1) Who appoints the component auditor;

(2) Whether a separate auditor’s report is to be issued on the component;

(3) Legal requirements in relation to audit appointments;

(4) Degree of ownership by parent;

(5) Degree of independence of the component’s Board of Directors from the parent entity.

Responsibilities of the Board of Directors prescribed by law or regulation (refer to paragraphs 11–12)

A26. If, in the circumstances described in paragraphs A22 and A27, the auditor concludes that it is not necessary to record certain terms of the audit engagement in an audit engagement letter, the auditor is still required by paragraph 11 to seek the written agreement from the entity's Board of Directors that it acknowledges and understands that it has the responsibilities set out in paragraph 06(b). In accordance with paragraph 12, such written agreement may use the wording of the law or regulation if such law or regulation establishes responsibilities for the Board of Directors that are equivalent in effect to those described in paragraph 06(b).

Considerations specific to public sector entities

A27. Law or regulation governing the operations of public sector audits generally mandate the appointment of a public sector auditor and commonly set out the public sector auditor’s responsibilities and powers, including the power to access an entity’s accounting records, books and other information. When law or regulation prescribes in sufficient detail the terms of the audit engagement, the public sector auditor may nonetheless consider that there are benefits in issuing a fuller audit engagement letter than permitted by paragraph 11.

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A28. Where an audit engagement letter is signed to be valid in multiple periods, the auditor may decide not to send a new audit engagement letter or other written agreement each period.  However, the auditor may need to either revise terms of the audit engagement or establish appendices for the current year when the following events occur:

(1) Any indication that the entity misunderstands the objective and scope of the audit;

(2) Any revised or special terms of the audit engagement;

(3) Any change of the Board of Directors or the Management Board of the entity;

(4) A significant change in the owner’s equity of the entity;

(5) A significant change in nature or size of the entity’s business;

(6) A change in legal or regulatory requirements;

(7) A change in the financial reporting framework adopted in the preparation of the financial statements;

(8) A change in requirements regarding the financial statements or the auditor’s reports.

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Request to change the terms of the audit engagement (refer to the paragraph 14)

A29. A request from the entity for the auditing enterprise to change the terms of the audit engagement may result from a change in circumstances affecting the need for the audit service, a misunderstanding as to the nature of an audit as originally requested by the entity, or a restriction on the scope of the audit engagement. The auditing enterprise, as required by paragraph 14, thoroughly considers the justification given for the request, particularly the implications of a restriction on the scope of the audit engagement.

A30. A change in circumstances that affects the entity’s requirements concerning the audit service or a misunderstanding concerning the nature of the service originally requested may be considered a reasonable basis for requesting a change in the terms of the audit engagement.

A31. In contrast, a change may not be considered reasonable if it appears that the change relates to information that is incorrect, incomplete or otherwise unsatisfactory. An example might be where the auditor is unable to obtain sufficient appropriate audit evidence regarding receivables and the entity asks for the audit engagement to be changed to a review engagement to avoid a qualified opinion or a disclaimer of opinion.

Request to change from an audit service to a review or a related service (refer to the paragraph 15)

A32. Before agreeing to change an audit engagement to a review or a related service, an auditor shall be engaged to conform to requirements set out in paragraphs A29 - A31 in this Standard and assess any legal or contractual implications of the change.

A33. If the auditor concludes that there is reasonable justification to change the audit engagement to a review or a related service, the audit work performed to the date of change may be relevant to the changed engagement; however, the work required to be performed and the report to be issued would be those appropriate to the revised engagement. In order to avoid confusing the users, the report on the related service would not include reference to:

(a) The original audit engagement; or

(b) Any procedures that may have been performed in the original audit engagement, except where the audit engagement is changed to an engagement to undertake agreed-upon procedures and thus reference to the procedures performed is a normal part of the report.

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Financial reporting standards supplemented by law or regulation (refer to the paragraph 18)

A34. Together with accounting standards and policies prescribed by the Ministry of Finance, law or regulation may supplement the financial reporting standards with additional requirements relating to the preparation of financial statements. In such case, the applicable financial reporting framework for the purposes of applying the Vietnam Standards on Auditing encompasses both the identified financial reporting framework and such additional requirements provided they do not conflict with the identified financial reporting framework. This may, for example, be the case when law or regulation prescribes disclosures in addition to those required by the financial reporting standards or when they narrow the range of acceptable choices that can be made within the financial reporting standards. The Vietnam Standard on Auditing 700, paragraph 15, includes a requirement regarding the evaluation of whether the financial statements adequately refer to or describe the applicable financial reporting framework.

Financial reporting framework prescribed by law or regulation - Other matters affecting acceptance (refer to the paragraph 19)

A35. Law or regulation may prescribe that the wording of the auditor’s opinion use the mandatory phrases “present fairly, in all material respects” or “give a true and fair view” in a case where the auditor concludes that the applicable financial reporting framework prescribed by law or regulation would otherwise have been unacceptable. In this case, the terms of the prescribed wording of the auditor’s report are significantly different from the requirements of the Vietnam Standards on Auditing (see paragraph 21).

Auditor’s report prescribed by law or regulation (refer to the paragraph 21)

A36. The Vietnam Standard on Auditing 200, paragraph 20, requires that the auditor shall not represent compliance with the Vietnam Standard on Auditing unless the auditor has complied with all of the Standards relevant to the audit. When law or regulation prescribes the layout or wording of the auditor’s report in a form or in terms that are significantly different from the requirements of the Vietnam Standards on Auditing and the auditor concludes that additional explanation in the auditor’s report cannot mitigate possible misunderstanding, the auditor may consider including a statement in the auditor’s report that the audit is not conducted in accordance with the Vietnam Standards on Auditing. The auditor is, however, encouraged to apply the Vietnam Standards on Auditing, including the Vietnam Standards on Auditing that address the auditor’s report, to the extent practicable, notwithstanding that the auditor is not permitted to refer to the audit being conducted in accordance with the Vietnam Standards on Auditing.

Considerations specific to public sector entities

A37. In the public sector, specific requirements may exist within the legislation governing the audit mandate; for example, the auditor may be required to report directly to a minister, the legislature or the public if the entity attempts to limit the scope of the audit.

 

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Appendix 01

(refer to paragraphs  A23 - A24)

EXAMPLE OF AN AUDIT ENGAGEMENT LETTER

The following is an example of an audit engagement letter for an audit of general purpose financial statements prepared in accordance with Vietnam (corporate) accounting standards and policies.  This letter will need to be varied according to individual requirements of an audit. It is drafted to refer to the audit of financial statements for a single reporting period and would require adaptation if intended or expected to apply to recurring audits (see the paragraph 13). The auditing enterprise may need to seek legal advice when drafting the audit engagements.

 

THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

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No.         / HDKT

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of ……………)

Pursuant to the Civil Code No. 33/2005/QH11 dated June 14, 2005;

Pursuant to the Law on Commerce No. 36/2005/QH11 dated June 14, 2005;

Pursuant to the Law on Independent Audit No. 67/2011/QH12 dated March 29, 2011;

Pursuant to the Government’s Decree No. 17/2012/ND – CP dated March 13, 2012 on specifying and providing guidance on implementation of certain articles of the Law on Independent Audit;

Pursuant to the Vietnam Standards on Auditing 210 regarding audit engagements;

This engagement is made by and between the following parties:

PARTY A: …………………………………..

Represented by:……………………………..

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(According to the Letter of Authorization No. ……………..dated………..) (applicable to Deputy Director)

Address:……………………………

Email:…………………..; Tel:....................…...; Fax:………………………

Tax identification number:………………………………………

Account No.:……………………………………..

Opened at the bank:……………………………

PARTY B: ABC AUDITING COMPANY

Represented by: ……………………………………….

Title:………………………………………..

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Address:…………………………………….

Email : …………………; Tel ………………; Fax: …………

Tax identification number: ……………………………………….

Account No.: ……………………………………….

Opened at the bank: ……………………………………….

ARTICLE 1: ENGAGEMENT CONTENTS

Party B shall agree to provide Party A with an audit of its financial statements made in the financial year ending on............, including the balance sheet prepared on.............., income statement, statement of changes in equity (if any), cash flow statement and disclosure of the financial statement prepared in the financial year ending in the same day. The audit undertaken by Party B is aimed at giving the auditor’s opinions on the financial statements of Party A.

ARTICLE 2: RESPONSIBILITIES OF CONTRACTING PARTIES

Responsibilities of Party A:

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(a) For preparation and fair presentation of the financial statements in accordance with Vietnam (corporate) accounting standards and policies, and other applicable regulations and laws on preparation and presentation of financial statements;

(b) For such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;

(c) in a timely manner, to provide Party B with:

(i) access to all materials and information that the Board of Directors is aware that is relevant to the preparation and presentation of the financial statements such as accounting records, books, documentation and other matters;

(ii) additional information that the auditor may request the Board of Directors to provide or clarify for the purpose of the audit;

(iii) unrestricted access to persons within Party A from whom the auditor determines it necessary to obtain audit evidence. Party A must assign its staff to work with Party B during the engagement.

As part of the audit process, Party A’s Board of Directors and Management Board, where appropriate, shall be required to provide and give written confirmation concerning representations made in connection with the audit in the representation letter of the Board of Directors and Management Board, considered one of the requirements set out in Vietnam standards on Auditing, which explicitly determines responsibilities of Party A's Board of Directors for preparation and presentation of financial statements, and states that the effects of any uncorrected misstatements,  both individually or in the aggregate, discovered and aggregated by Party B during the current engagement and pertaining to the latest period presented are immature to the financial misstatements taken as a whole.

To facilitate audit work undertaken by Party B’s persons at Party A's office.

To pay all audit and other fees (if any) to Party B as prescribed in Article 4 of this audit engagement letter.

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Party B shall perform audit work in accordance with Vietnam Standards on Auditing, and other relevant laws and regulations. These auditing standards prescribe that Party B has to comply with ethical standards and requirements, outline the plan and perform the audit to obtain reasonable assurance about whether the financial statements, taken as a whole, are free of material misstatements.  In an audit, Party B shall apply auditing procedures specifically designed to obtain audit evidence about the amounts and disclosures in the financial statements.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the financial statements.

Party B is required to inform Party A of arrangements regarding the planning and performance of the audit, and designate an individual with suitable skill, knowledge or experience to perform the audit.

Party B must conduct the audit according to the independence, objectivity and confidentiality principles. This means that Party B is not authorized to provide information to any third party without Party A’s written consent, except as required by relevant legislation and regulation to do so, or except when the said information has been widely disseminated by regulatory authorities or publicly disclosed by Party A.

Party B is responsible for requiring Party A to give its confirmation on representations provided to Party B during the audit.

Subject to the Vietnam Standards on Auditing, compliance with this requirement and the representation letter issued by the Board of Directors and the Management Board of Party A concerning relevant issues are one of the bases on which Party B gives its opinions on the financial statements of Party A.

Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with the Vietnam Standards on Auditing.

In making its risk assessments, Party B considers internal control relevant to Party A's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Party A’s internal control. However, we will communicate to you in writing concerning any significant deficiencies in internal control relevant to the audit of the financial statements that Party B have identified during the audit.

ARTICLE 3: AUDIT REPORT

After an audit is completed, Party B shall provide Party A with...copies of audit report along with attached financial statements already audited which is made in Vietnamese language, ... copy thereof written in a specified language (English, for instance); ...copy of the management letter written in Vietnamese (if any) and ....copy of the management letter written in a specified language (English, where possible), which addresses deficiencies to be remedied and the auditor's recommendations that help improve the accounting and internal control system of Party A.

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Where Party A intends to release the audit report of Party B in any written form, or a set of materials containing information about the audited financial statements, Party A’s Board of Directors agrees that it will provide Party B one copy of this set of materials and make it known to the public only after receiving Party B’s written consent.

ARTICLE 4: AUDIT SERVICE FEE AND PAYMENT METHOD

Audit service fee

Total audit service fee for this engagement referred to in Article 1 is VND ...... (in words:.......).

This fee must include (or exclude) travel, meal, accommodation expenses and other surcharges, and is exclusive of VAT at the rate of 10%.

Payment terms (as agreed):

Audit fee shall be directly transferred to Party B’s account.

Party B shall issue a VAT invoice to Party A upon completed provision of audit service in accordance with applicable tax laws.

ARTICLE 5: COMMITMENTS

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Proposed time limit for completion of an audit is.....days from the date of this audit engagement in effect (or the date of commencement of the audit).

Any dispute, claim or difference arising out of or in connection with this engagement letter shall be resolved through negotiations or subject to the Civil Code of the Socialist Republic of Vietnam and submitted to the economic tribunal selected by agreement of both parties.

ARTICLE 6: EFFECT, LANGUAGE AND TERM OF THE AUDIT ENGAGEMENT

This engagement letter is made into .....copies (including....Vietnamese copy and ....copy written in other language (English, for instance)). Each party keeps ...Vietnamese copy and...copy written in other language (English, for instance) with similar legal value and takes effect from the date when all required signatures or stamps of both parties are provided.

This engagement letter shall automatically be terminated if all agreed responsibilities of Party A and Party B are fulfilled.

 

On behalf of Party A

On behalf of Party B

COMPANY…………

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Director

Director

(Sign, write full name and stamp)

(Sign, write full name and stamp)

 

Appendix 02

(refer to the paragraph  A10)

DETERMINING THE ACCEPTABILITY OF FRAMEWORKS FOR PREPARATION AND PRESENTATION OF GENERAL PURPOSE FINANCIAL STATEMENTS

Jurisdictions that do not have authorized or recognized accounting standards setting organizations or financial reporting frameworks prescribed by law or regulation

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2. Alternatively, there may be established accounting conventions in a particular jurisdiction that are generally recognized as the financial reporting framework for general purpose financial statements prepared by certain specified entities operating in that jurisdiction. When such a financial reporting framework is adopted, the auditor is required by paragraph 06(a) of this Standard to determine whether the accounting conventions collectively can be considered to constitute an acceptable financial reporting framework for general purpose financial statements. When the accounting conventions are widely used in a particular jurisdiction, the accounting profession in that jurisdiction may have considered the acceptability of the financial reporting framework on behalf of the auditors. Alternatively, the auditor may make this determination by considering whether the accounting conventions exhibit attributes normally exhibited by acceptable financial reporting frameworks (see paragraph 3 below), or by comparing the accounting conventions to the requirements of an existing financial reporting framework considered to be acceptable (see paragraph 4 below).

3. Acceptable financial reporting frameworks normally exhibit the following attributes that result in information provided in financial statements that is useful to the intended users:

(a) Relevance, in that the information provided in the financial statements is relevant to the nature of the entity and the purpose of the financial statements. For example, in the case of a business enterprise that prepares general purpose financial statements, relevance is assessed in terms of the information necessary to meet the common financial information needs of a wide range of users in making economic decisions. These needs are ordinarily met by presenting the financial position, financial performance and cash flows of the business enterprise.

(b) Completeness, in that transactions and events, account balances and disclosures that could affect conclusions based on the financial statements are not omitted.

(c) Reliability, in that the information provided in the financial statements:

(i) Where applicable, reflects the economic substance of events and transactions and not merely their legal form; and

(ii) Results in reasonably consistent evaluation, measurement, presentation and disclosure, when used in similar circumstances.

(d) Objectivity, in that it contributes to information in the financial statements that is free from bias.

(e) Understandability, in that the information in the financial statements is clear and comprehensive and not subject to significantly different interpretation.

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5. A conglomeration of accounting conventions devised to suit individual preferences is not an acceptable financial reporting framework for general purpose financial statements. Similarly, a compliance framework will not be an acceptable financial reporting framework, unless it is generally accepted in the particular jurisdictions by preparers and users./.

 

VIETNAM’S AUDITING STANDARD

Section 320: Materiality in Planning and Performing an Audit

(Issued together with Circular No. 214/2012/TT-BTC dated December 6, 2012 of the Ministry of Finance)

Scope

01. This section addresses the auditor’s and audit firm’s responsibility (hereinafter referred to as “auditor") to apply the concept of “materiality” in planning and performing an audit of financial statements. Section 450 explains how materiality is applied in evaluating the effect of identified misstatements on the audit and the effect of uncorrected misstatements, if any, on the financial statements.

Materiality in the Context of any Audit

02. Financial reporting frameworks often discuss the concept of materiality in the context of the preparation and fair presentation of financial statements. Although financial reporting frameworks may discuss materiality in different terms, they generally explain that:

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- judgments about materiality are made in light of surrounding circumstances and are affected by the size or nature of a misstatement, or a combination of both;

- judgments about matters that are material to users of financial statements are based on a consideration of the common financial information needs of users as a group, such as investors, banks, creditors, etc. the possible effect of misstatements on specific individual users, whose needs may vary widely, is not considered.

03. Such a discussion about materiality provides a frame of reference to the auditor in determining materiality for the audit. If the applicable financial reporting framework does not include a discussion of the concept of materiality, the characteristics referred to in paragraph 02 provides the auditor with such a frame of reference.

04. The auditor's determination of materiality is a matter of professional judgment and is affected by the auditor’s perception of the financial information needs of users of the financial statements. In this context, it is reasonable for the auditor to assume that users:

(a) have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information in the financial statements with reasonable diligence;

(b) understand that financial statements are prepared, presented, and audited to levels of materiality;

(c) recognize the uncertainties inherent in the measurement of amounts based on the use of estimates, judgment, and the consideration of future events; and

(d) make reasonable economic decisions on the basis of the information in the financial statements.

05. The concept of materiality is applied by the auditor both in planning and performing an audit; evaluating the effect of identified misstatements on the audit and the effect of uncorrected misstatements, if any, on the financial statements; and in forming the opinion in the auditor’s report. (Ref: paragraph A1).

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(a) determining the nature, timing and extent of risk assessment procedures;

(b) Identifying and assessing the risks of material misstatement; and

(c) determining the nature, timing, and extent of further audit procedures.

The materiality determined when planning the audit does not necessarily establish an amount below which uncorrected misstatements, individually or in the aggregate, will always be evaluated as immaterial. The circumstance related to some misstatements may cause the auditor to evaluate them as material even if they are below materiality. Although it is not practicable to design audit procedures to detect misstatements that could be material solely because of their nature (that is, qualitative considerations), the auditor considers not only the size but also the nature of uncorrected misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements (Ref: paragraph A16 of Section 450).

07. Auditors are required to comply with this Section in the course of financial audit.

Entities (clients) must have proper understanding of this Section for coordination and dealing relationships with regard to determining materiality of audited information.

Objectives

08. The objective of the auditor is to apply the concept of materiality appropriately in planning and performing the audit.

09. For the purposes of Vietnam’s Audit Standard, the following term has the meaning attributed as follows:

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(b) Materiality: refers to an amount that the auditor determines depending on the size and nature of the item or error, judged in particular circumstances of its misstatement. Materiality provides a threshold or cut-off point rather than being a primary qualitative characteristic which the information must have. Materiality shall be taken into account both in qualitative and quantitative aspects;

(c) Performance materiality: The amount or amounts set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriate low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole. If applicable, “performance materiality” also refers to the amount or amounts set by the auditor at less than the materiality level or levels for particular classes of transactions, account balances or disclosures.

Determining Materiality and Performance Materiality When Planning the Audit

10. When establishing the overall audit strategy, the auditor should determine materiality for the financial statements as a whole. If, in the specific circumstances of the entity, one or more particular classes of transactions, account balances, or disclosures exist for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users, then, taken on the basis of the financial statements; the auditor also should determine the materiality level or levels to be applied to those particular classes of transactions, account balances, or disclosures. (Ref: paragraph A2 – A11).

11. The auditor should determine performance materiality for purposes of assessing the risks of material misstatements and determining the nature, timing, and extent of further audit procedures. (Ref: paragraph A12).

12. The auditor should revise is materiality for the financial statements as a whole (and, if applicable, materiality level or levels for particular classes of transactions, account balances, or disclosure) in the event of becoming aware of information during the audit that would have caused the auditor to have determined a different amount (or amounts) initially. (Ref: paragraph A13).

13. If the auditor concludes that a lower materiality that that initially determined for the financial statements as a whole (and, if applicable, materiality level or levels for particular classes of transactions, account balances, or disclosures) is appropriate, the auditor determine whether it is necessary to revise performance materiality and whether the nature, timing, and extent of the further audit procedures remain appropriate.

14. The auditor should include in the audit documentation the following amounts and the factors considered in their determination (Ref: paragraph 08-11 and paragraph A6 of Section 230):

(a) Materiality for financial statements as a whole (see paragraph 10);

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(c) Performance materiality (see paragraph 11);

(d) Any revision of (a) – (c) as the audit progressed (see paragraphs 12 – 13).

III/ APPLICATION

Reference: Section 200.

A1. In conducting an audit of financial statements, the overall objectives of the auditor are to (1) obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to expressing the opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework and (2) report on financial statements and communicate, as required by auditing standard, in accordance with auditor’s findings (see paragraph 11 of Section 200). The auditor obtains reasonable assurance by obtaining sufficient appropriate audit evidence to reduce audit risk to an acceptably low level (see paragraph 17 of Section 200). Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. Audit risk is a function of the risks of material misstatement and detection risk (see paragraph 13(c) of Section 200). Materiality and audit risk are considered throughout the audit, in particular, when:

(a) identifying and assessing the risks of material misstatement (see Section 315);

(b) determining the nature, timing, and extent of further audit procedures (see Section 330); and

(c) evaluating the effect of uncorrected misstatements, if any, on the financial statements (see Section 450) and in forming the opinion in the auditor’s report (see Section 700).

A2. In the case of a government entity, legislators and regulators are often the primary users of its financial statements. Furthermore, the financial statements may be used to make decisions other than economic decisions. The determination of materiality for financial statements as a whole (and, if applicable, materiality level or levels for particular classes of transactions, account balances and disclosures) in an audit of financial statements of a government entity, therefore, may be influenced by law or regulation.

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(1) The elements of the financial statements (for example, assets, liabilities, equity, revenue, or expenses);

(2) Whether items exist on which the attention of the users of the particular entity’s financial statements tends to be focused (for example, for the purpose of evaluating financial performance, users may tend to focus on profit, revenue, or net assets);

(3) The nature of the entity, and the industry and economic environment in which the entity operates;

(4) The entity’s ownership structure and the way it is financed (for example, if an entity is financed solely by debt rather than equity, users may put more emphasis on assets, and claims on them, than on the entity’s earnings);

(5) The relative volatility of the benchmark.

A4. Examples of benchmarks that may be appropriate, depending on the circumstances of the entity, include categories of reported income, such as profit before tax, total revenue, gross profit, and total expenses, total equity and net asset value. Profit before tax from continuing operations is often used for profit-oriented entities. When profit before tax from continuing operations is volatile, other benchmarks may be more appropriate, such as gross profit or total revenues.

A5. With regard to the chosen benchmark, relevant financial data ordinarily includes prior periods’ financial results and financial positions; the period-to-date financial results and financial position, budgets, or forecasts for the current period, adjusted or significant changes in the circumstances of the entity (for example, a significant business acquisition); and relevant changes of conditions in the industry or economic environment in which the entity operates. For example, when, as a starting point, materiality for the financial statements as a whole is determined for a particular entity based on a percentage of profit before tax from continuing operations. Circumstances that give rise to an exceptional decrease or increase in such profit may lead the auditor to conclude the materiality for the financial statements as whole in more appropriately determined using a normalized profit before tax from continuing operations figure based on past results.

A6. Materiality relates to the financial statement that is being audited. When the financial statements are prepared for a financial reporting period of more or less than 12 months, such as may be the case for a new entity or a change in the financial reporting period, materiality relates to the financial statements prepared for that financial reporting period.

A7. Determining a percentage to be applied to a chosen benchmark involves the exercise of professional judgment. A relationship exists between the percentage and the chosen benchmark, such that a percentage applied to profit before tax from continuing operations will normally be higher than a percentage applied to total revenue. For example, the auditor may consider a percentage of profit before tax from continuing operations to be appropriate for a profit-oriented entity in a manufacturing industry. However, higher or lower percentage could be deemed appropriate depending on a case-by-case basis.

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A9. In an audit of a governmental entity, total cost or net cost (expenses less revenues) may be appropriate benchmarks for program activities. When a governmental entity has custody of public assets, assets may be an appropriate benchmark.

A10. Factors that may indicate to existence of one or more particular classes of transactions, account balances, or disclosures for which misstatements of lesser amounts that materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements include the following:

(1) Whether law, regulation, or the applicable financial reporting framework affect users’ expectations regarding the measurement or disclosures of certain items (for example, related party transactions and the remuneration of management and those charged with governance);

(2) The key disclosures with regard to the industry in which the entity operates (for example, research and development costs for a pharmaceutical company);

(3) Whether attention is focused on a particular aspect of the entity’s business that is separately disclosed in the financial statements (for example, a newly acquired business).

A11. In considering whether, in the specific circumstances of the entity, such classes of transactions, account balances, or disclosures exist, the auditor may find it useful to obtain an understanding of the views and expectations of those charged with governance and management.

A12. Planning the audit solely to detect individual material misstatements overlooks the fact that the aggregate of individually immaterial misstatements may cause the financial statements to be materially misstated and leaves no margin for possible undetected misstatements. Performance materiality (which, as defined, is one or more amounts) is set to reduce to an appropriate low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole. Similarly, performance materiality relating to a materiality level determined for a particular class of transactions, account balances or disclosures is set to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in that particular classes of transactions, account balances, or disclosures exceeds the materiality level for that particular classes of transactions, account balances, or disclosures. The determination of performance materiality is not a simple mechanical calculation and involves the exercise of professional judgment. It is affected by the auditor’s understanding of the entity, updated during the performance of risk assessment procedures, and the nature and extent of misstatements identified in previous audits and, thereby, the auditor's expectations regarding misstatements in the current period.

A13. Materiality for the financial statements as a whole (and, if applicable, the materiality level or levels for particular classes of transactions, account balances, or disclosures) may need to be revised as a result of a change in circumstances that occurred during the audit (for example, a decision to dispose of a major part of the entity’s business), new information, or a change in the auditor’s understanding of the entity and its operations as a result of performing further audit procedures. For example, if, during the audit, it appears as though actual financial results are likely to be substantially different from the anticipated period-end financial results that were used initially to determine materiality for the financial statements as a whole, the auditor may be required, in accordance with paragraph 12, to revise materiality./.

 

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Thông tư 214/2012/TT-BTC ngày 06/12/2012 về hệ thống chuẩn mực kiểm toán Việt Nam do Bộ trưởng Bộ Tài chính ban hành

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