The year-end financial audit is a crucial time for businesses to review their entire financial situation, ensuring transparency and compliance with accounting, tax, and legal standards. However, to ensure the audit runs smoothly and effectively, businesses must prepare for many important issues in advance. Below are 10 questions businesses need to answer before the financial audit, especially in areas such as fixed assets, liabilities, taxes, and risk provisions.
1. Has the business reviewed and ensured the accuracy of its accounting records?
One of the most important steps before a financial audit is to thoroughly review all accounting records. The business must ensure that all financial transactions, from income to expenses, are accurately recorded and fully comply with accounting standards. The figures on the balance sheet, income statement, and cash flow statement must align precisely without any discrepancies. This not only helps the business avoid audit violations but also enhances its credibility and transparency in the eyes of investors.
2. How are the business's fixed assets managed?
Fixed assets are a crucial part of a business's balance sheet. Before the audit, the business needs to review all fixed assets, including land, buildings, transportation vehicles, equipment, and production tools. These assets must be accurately recorded at their book value, and the business must confirm that any depreciation of fixed assets has been calculated or adjusted correctly. This will help the business determine the true value of its assets and avoid risks associated with inaccurate asset valuation during the audit.
3. Has the business ensured proper accounts receivable and payable management?
Accounts receivable and payable are critical components of a business's financial operations. Before the audit, the business must review both receivables and payables to ensure that all amounts are fully and accurately recorded in the accounting books. Additionally, the business should assess whether receivables are collectible and if payables are reasonable, with no issues of bad debts or overdue liabilities. This process helps the business minimize financial risks and ensures the accuracy of its financial reporting.
4. Has the business reviewed its financial contracts and agreements?
Financial contracts, including loan agreements, lease contracts, and other financial arrangements, should be thoroughly reviewed before the audit. This not only helps the business accurately identify its financial obligations but also allows them to assess whether any terms in the contracts impact the financial statements. Loans and financial obligations must be recorded accurately, and the business should also evaluate its ability to meet future repayment obligations to mitigate financial risks.
5. Has the business complied with current tax and legal regulations?
Taxation is always one of the key factors in the audit process. Before the audit, the business must review all tax obligations, including value-added tax (VAT), corporate income tax (CIT), and other taxes the business is required to pay. This includes checking invoices, receipts, tax reports filed, and ensuring that all taxes have been declared in accordance with regulations. Additionally, the business should ensure compliance with legal requirements related to its business operations.
6. Has the business made adequate provisions for financial risks?
Provisions for financial risks are an essential part of the business's financial planning. The business needs to identify the types of financial risks it may face, such as risks from interest rate fluctuations, exchange rate changes, or risks from bad debts. Making provisions for these risks helps the business mitigate future losses and ensure financial stability. Auditors will review these risk provisions to assess their reasonableness and adequacy in the financial statements.
7. Has the business reviewed its legal and potential provisions related to ongoing or potential lawsuits?
The business needs to assess its legal provisions for ongoing or potential lawsuits. These provisions are often not directly recorded in the financial statements but are crucial for evaluating the business's financial position. If there are any potential legal cases or disputes, the business should prepare relevant documents and materials so that the auditors can accurately assess the potential impact of these issues on the financial situation.
8. Has the business reviewed unreasonable expenses?
The business needs to evaluate its expenses, particularly any unreasonable or unnecessary costs. These may include expenses that are poorly controlled or do not provide real value to the business. Reviewing expenses helps the business save costs and improve operational efficiency. Auditors will examine these expenses to ensure they are properly recorded in the financial statements.
9. Has the business identified potential financial issues in the future?
The business needs to take a long-term view of its financial situation and identify potential financial issues that may arise in the future. These issues could include changes in the business environment, market fluctuations, or macroeconomic factors. The business should prepare contingency plans to ensure it can maintain financial stability and achieve sustainable growth.
10. Is the business ready for the audit process?
Finally, the business must prepare for the audit process in terms of documentation and procedural steps. This includes organizing records in a systematic and easily accessible manner, preparing all necessary documents and financial statements, and working closely with the auditors to ensure that the audit runs smoothly and efficiently.
Financial Statement Audit Services by RSM Vietnam
Financial statement audit services are one of the core services provided by RSM Vietnam. With a team of independent auditors who are highly skilled and experienced, RSM Vietnam is confident in supporting businesses to collect and assess evidence in order to examine and report on the fairness, accuracy, and reasonableness of financial statements in compliance with applicable standards and legal requirements.
RSM Vietnam is a member of RSM Global, a network ranked 6th globally for audit, tax, and consulting services. At RSM, we take pride in our well-trained workforce, both domestically and internationally, with extensive industry experience, ensuring that we deliver reputable, detailed, and high-quality audit services to our clients.
Content of RSM Vietnam's Financial Statement Audit Services
Examination and review of the company’s accounting records and books.
Examination and review of the financial statements.
Sending confirmation letters for bank accounts, investments, receivables, and payables.
Physical observation of the company’s major fixed assets and checking their reflection in the Balance Sheet as of the year-end date.
Assessing the accuracy of the company's internal control system in managing cash, inventory, and fixed assets to confirm the existence, ownership, and value of cash, fixed assets, and inventory as of the fiscal year-end.
Evaluating the company’s internal control system for finance leases.
Issuing the audit report.
Issuing a management letter (if necessary) addressing any weaknesses in the accounting and internal control systems and providing the auditor's recommendations for improving these systems.
Other Services Provided by RSM Vietnam
In addition to financial statement audit services, we also offer other assurance services tailored to the specific reporting needs of clients, including:
Review services based on agreed-upon procedures.
SOX and JSOX compliance review services.
NGO project audit services.
Forensic audit services.
Inventory and fixed asset audit services.
Contact us now for the leading professional audit services:
Hotline: 0988 139 090
Address: 25th Floor, Tower A, Discovery Complex Building, 302 Cau Giay Street, Dich Vong, Cau Giay, Hanoi
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