Optimize the audit procedure for fixed assets in financial statement auditing when applying IFRS

Abstract

In response to the global shift toward International Financial Reporting Standards (IFRS), Vietnam has implemented its own transition from Vietnamese Accounting Standards (VAS). During the initial year of auditing fixed assets in Vietnam under the IFRS, this thesis investigates the obstacles encountered by independent auditors. Fixed assets (FA) are frequently significant to financial statements and are closely associated with other accounts, including impairment, reclassification, and depreciation expenses, as Vietnam transitions from VAS to IFRS. This transition presents significant challenges for auditors, especially in terms of fair value measurement, component depreciation, impairment testing, and financial lease accounting. This research applies a case study at EY Vietnam, approach by observing and analyzing audit procedures at EY Vietnam during the author’s internship. The study utilizes secondary data analysis, theoretical generalization, and comperlative methods to highlight the differences between VAS and IFRS, and how these differences impact audit planning and execution. It also evaluates practical issues encountered in real audit engagements and delineates the influence of cultural and infrastructural factors on the transition process. The results indicate that audit procedures, particularly analytical procedures, control testing, and data management, have the potential to be enhanced. A tailored roadmap is proposed for auditors in the first year of IFRS adoption, supported by solutions including staff training, use of audit technology, expert valuation support, and improved planning steps.