BANKING ACADEMY

ADVANCED PROGRAM

AUDIT & ASSURANCE ASSIGNMENT

KIDO CORPORATION
RISK ASSESSMENT & AUDIT PLANNING

Lecturer: Dr. Lê Thị Thu Hà

Students: Nguyễn Phương Anh -22A4020355

Nguyễn Minh Đức – 22A4020499

Nguyễn Công Hiếu – 22A4020248

Nguyễn Quang Huy – 22A4020279

Class: K22CLCG - ACCA

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 Table of content
1. Business overview.................................................................................................................3
1.1 General information..........................................................................................................3
1.2. Basic of financial statement’s preparation.......................................................................3
1.3. Main operating activities.................................................................................................3
2. Operating environment........................................................................................................3
2.1. Vietnam’s fast-moving consumer goods category (FMCG) industry in the first half of
2022........................................................................................................................................3
2.2. Operating environment and business informations on KIDO Group’s operations in
2022........................................................................................................................................4
3. Audit plan for the financial statement (from 1/1/2022 to 30/6/2022)...............................7
3.1. Risk from the company’s business..................................................................................7
3.1.1. Inherent risk for Inventory........................................................................................7
3.1.2. Inherent risk for receivable.......................................................................................8
3.1.3. Inherent risk for revenue...........................................................................................9
3.2. Calculation of financial ratios..........................................................................................9
3.3. Calculating materiality for the whole financial statement.............................................13
3.3.1. Deciding the benchmark.........................................................................................13
3.3.2. Calculating performance Materiality......................................................................13
3.3.3. Threshold error that Auditor can ignore ( we choose 1%).....................................13
3.4. Audit procedure.............................................................................................................13
3.4.1. Audit procedure for prepaid expenses....................................................................13
3.4.2. Audit procedure for inventory................................................................................14
3.4.3. Audit procedure for revenue...................................................................................15
3.4.4. Audit procedure for receivable...............................................................................15

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1. Business overview
1.1 General information
Vietnamese name: CÔNG TY CỔ PHẦN TẬP ĐOÀN KIDO
English name: KIDO GROUP CORPORATION
Authorized capital: 2,797,413,560,000 VND
1.2. Basic of financial statement’s preparation
The consolidated financial statements of the Group, expressed in Vietnam Dong
(“VND”), are prepared in accordance with Vietnamese Enterprise Accounting System
and Vietnamese Accounting Standards issued by the Ministry of Finance.
- Applied accounting documentation system: General Journal system.
- Fiscal year: The Group’s fiscal year applicable for the preparation of its
consolidated financial statements starts on 1 January and ends on 31 December.
- Accounting currency: The consolidated financial statements are prepared in VND
which is also the Group’s accounting currency.
1.3. Main operating activities
a, Frozen products: Ice cream (Merino, Celano), Yogurt, Beverage, Frozen food
b, Cooking oil products
KIDO Group contributes to create Vietnamese meals which are not only delicious
but also nutritious with cooking oil under brand: Tuong An (Soya Oil, …), Vocarimex
(Voca Deli,…), Dai Gia Dinh (Gia Vien Nanh,…)
c, Other sectors
- Fresh bakery product under the KIDO’s Bakery brand
- Cooperating with Vietnam Dairy Products Company (Vinamilk) to establish
Vibev Beverage Joint Venture and officially launched 2 fresh beverage products of Oh
Fresh is fresh corn milk and fresh bean milk.
- Snacks, fresh cakes, gifts,…

2. Operating environment
2.1. Vietnam’s fast-moving consumer goods category (FMCG) industry in the first
half of 2022
The growth rate of FMCG industry in Vietnam has been around 10 – 12% over the
past decade. During the pandemic in last years, it was about 6%. However, with a
growth rate of 19% in the first 6 months of 2022, this industry has recovered strongly.

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 Kantar reports that the FMCG industry is experiencing substantial inflation (almost
7%), which has an impact on both consumers and businesses. The shopping habits of
consumers are shifting as a result of inflationary pressures. The consumer demand for
FMCG products remained weak in the first quarter of 2022. This industry is expanding
mostly as a result of rising product prices.
In four major cities, milk and packaged foods are now experiencing a decline in
consumption volume in the second quarter of 2022 once everything has returned to
normal. Previously, these industries benefited from individuals purchasing
commodities in bulk for storage during social distancing. Contrarily, milk is a
commodity that is growing quickly in rural areas.
The second quarter of 2022 saw a solid comeback for drinking products, despite
some challenges brought on by Covid-19. The goods with the highest consumption
during the last three years have been juice in bottles, tea, and energy drinks.
In four major cities as of the second quarter of 2022, consumption growth rates for
small shops and internet retailers were 24% and 21%, respectively, while they were
minus 3% for supermarkets and big-box retailers. Large stores and supermarkets,
meanwhile, saw an exceptional 49% growth in rural areas. Retailers and brands alike
need to keep this in mind.
From above scenario, key trends in consumer shopping behaviour in 2022 are
given:
Consumers are still trying to save costs
Most consumers only buy essential items and save money wisely. They also
increase spending on online shopping channels and minimarts.
Increasingly digital life
Customers usually find e-commerce site or online mart to buy essential products.
Brands need to focus on improving service quality and find new ways for consumers
to interact with brands.
Convenient retail
Free shipping is crucial to luring clients. Up to 85% of customers, it was found in a
survey, prefer free shipping to quick shipping. An hefty shipping fee will result in a
high rate of abandonment. As a result, e-commerce companies are continuously forced
to introduce Freeship promotions or ship subsidies.

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2.2. Operating environment and business informations on KIDO Group’s operations in
2022
Using SWOT analysis to looks at internal and external factors that can affect
business. In that, internal factors are KIDO strengths and weaknesses. External factors
are threats and oppotunities.
2.2.1. Strengths
Large market share: KIDO Company leads the domestic confectionery market with
28% market share
Solid brand: More than 200 strong distributors, a chain of 30 Kinh Do Bakery
stores, nearly 120,000 points of sale, 30,000 points of sale of ice cream and dairy
products, ... throughout the territory of Vietnam with the service of more than 1,300
employees.
Large and diverse distribution channels: online, stores, supermarkets...
Kido's brand value has been developed over the past 10 years, so most consumers
know it diversified and quality products, good management system, research and
development ability.
Wide distribution network: Has 4 subsidiaries and a nationwide distribution system
including 15 transit warehouses, 300 distributors, 450 thousand dry selling stores, 120
thousand cold selling stores. In addition, have close relationships with foreign partners
will also help KIDO not suffer from a shortage of supply, get raw materials at the right
price, thereby increasing competitive advantage in the market
2.2.2. Weaknesses
Have not built a synchronous brand of products.
Big company but family management style.
Not taking full advantage of channels to reach young customers such as social
networking sites, the internet,...
2.2.3. Oppotunities
People's demand for confectionery products is always available. The potential of
the domestic confectionery market is large.
Kido expands ChukChuk (FnB) and signed a cooperation agreement with Kim Son
chain to bring ChukChuk product to GS25 store and expand to Korea and Thailand
market
Star Pacifica Company (Singapore) becomes a major shareholder of KIDO. Star
Pacifica is a logistics company. And it will bring new distribution systems and

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customers: businesses have the opportunity to access a new customer system from the
relationships and networks of new shareholders.
Restructuring the cooking oil segment, delisting Tuong An. Tuong An will focus
on production activities. Kido will handle the distribution, promotion, market
expansion and scale. Kido is currently ranked 2nd in this category in Vietnam. The
above work aims to increase production and expand markets (especially Cambodia and
Laos).
Context of a widespread vaccination rate and a new normal state has been
activated.
This is a favourable condition for Board of Director to be confident in
implementing the plans and setting out directions.
Due to the protection of the domestic cane sugar industry and KIDO became the
official sugar distributor of Thanh Thanh Cong Investment Joint Stock Company
(TTC) - a big brand in the field of sugar cane supply and production, in 2017. This
helps KIDO cut raw material costs.
Launch KIDO's Bakery Mooncake brand in 2022, marking the return of the once
"king of confectionery"
2.2.4. Threats
a, Macro environment analysis
Macroeconomic, socio-political and pandemic risks: The war between Russia and
Ukraine affects the global economy, leading to complication in economic
developments, specially increasing gasoline prices and gold prices. This is the reason
cause expenses (especially shipping fee) rise dramatically.
In addition, Covid-19 had a big impact on people's consumption power.
Currency risks: This is a direct outcome of receiving foreign currency payments
from consumers abroad without receiving the matching foreign currency inflows. To
combat this, KIDO avoids borrowing in foreign currencies and makes sure that, in the
event that they do, hedges are in place to fix the interest rate and foreign exchange rate
for repayment.
Changes in the international and regional financial markets may have an impact on
interest rates in the presence of COVID-19. KIDO has been working to reduce this risk
by keeping a close eye on the market and the approaching debt settlement date,
making sure that cash flows and cash levels are sufficient.

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 Reputation and ethics risks: Many types of fake and fake packaging are sold at low
prices. This has confused consumers, reduced sales, and caused business reputation
loss.
b, Micro environment analysis
Consumer demand and usage habits: Brands in the same field are widely appearing
in the market, and several consumers prefer imported products.
Supplier risk/ Volatility of raw material price: The price of raw materials increased
sharply (specifically 'sugar') due to the protection of the domestic cane sugar industry;
However, KIDO still have to sell products at competitive prices compared to
confectionery businesses in the region, which can use raw sugar at a lower price.
Operational risk: Without employees, no business can function properly, especially
in industries with enormous workforces. Therefore, the business must exercise caution
when implementing its labor management policy and prevent at all costs any
disruptions caused by labor unions, strikes, work stoppages,...
Supply chains may be more vulnerable to fraud as a result of e-commerce as a new
distribution channel (such as counterfeiting).
Increasing reliance on outside parties for crucial corporate operations like
production, sales, and R&D increases the risk of outsourcing.

3. Audit plan for the financial statement (from 1/1/2022 to 30/6/2022)

3.1. Risk from the company’s business
3.1.1. Inherent risk for Inventory
Inventories are generally expected to have a high level of inherent risk in the
financial statements of manufacturing and trading companies because of their complex
and error-prone characteristics. They quickly lead to various management problems,
especially in accounting and financial management. In particular, management can
change inventories for the benefit of the whole company, which can distort the
information on the financial statements.
Kido's 2022 interim consolidated financial statements show that total inventory as
of June 30, 2022, has decreased by 891,354,003,039, or 36%, compared to the
beginning of the period. When looking at each item, we find that there is a
considerable fluctuation, typically the item is in circulation, the ending balance is
22,916,338,443, and the opening balance is 526,166,856,674, the difference is
503,250,518,231 or 96%. Large spreads easily cause potential risks, although the

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nature of this business is production and trade, so the number of goods and materials to
be used and purchased is very large.
Valuable damaged inventory must be adjusted to reflect its actual value to the
company (Valuation issue). It is easy for goods to be damaged or lost during storage.
Because most of KIDO's products are high in fat and fresh ingredients, like
mooncakes, they often have a short shelf life. As a result, cakes are damaged or
expired due to improper storage but are not adjusted on the financial statements.
Miscounted inventory: Overcounted inventory artificially raises reported earnings,
while undercounted artificially lowers them. Common causes could include incorrect
recording, supplier errors, organization problems, theft, etc. Most reasons for
miscounted inventory:
The missing inventory has been misplaced or mistaken for a similar item.
Recount the stock: Even senior managers with extensive expertise might make
mistakes during physical stock counts, especially if the company doesn’t have a well-
defined inventory system.
Errors in delivering and receiving goods can lead to an incorrect end-of-year cut of
the total in inventory records. The wrong stock may not directly affect picking, but it
can affect missed or delivered late deliveries.
End-of-year liabilities might not be recorded correctly or at all due to unpaid
vendor invoices or a strategic choice made by the company to reduce its reported
obligations.
3.1.2. Inherent risk for receivable
The risk associated with accounts receivable is substantial. To further understand
the underlying risk of accounts receivable, we must also conduct a test of control for
those items. Accounts receivable's vulnerability to misrepresentation is essentially an
inherent risk.
The provision allowances receivable had a balance at the beginning of the period of
2,039,058,965, according to the financial accounts. Still, at the end of the period, it had
decreased to 839,058,965, a difference of 1,200,000,000, or 59%. With a significant
difference, potential risks may exist due to the enterprise's identification and wrong
collection of documents proving bad receivables.
The business has no balance at Receivables for short-term loans at the beginning of
the period, but by the end of the time, it has a balance of 229,200,000,000. With such a
significant difference occurring in just six months, numerous potential hazards exist.

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 There is a discrepancy of 41,329,678,729, or 79%, between the opening balance of
52,407,974,378 and the closing balance of 11,078,295,649 for other long-term
receivables. The auditor must review and recalculate in case of inaccuracies or
overstatements to enhance revenue because there are several potential dangers
associated with such a vast discrepancy that could damage revenue.
Some scenarios that involve inherent risks and requirements for accounts
receivables:
Receivables are not under the auditee's control. An illustration would be the notes
on accounts receivable that are offered as security for bank loans made to financial
institutions under factoring agreements.
Aging analysis is incorrect and does not signify an accurate picture of the certainty
of receivables.
3.1.3. Inherent risk for revenue
Revenue account is susceptible to fraud. The company's revenue transactions
directly impact the inherent risk for revenue to improve the appearance of a company's
financial statements.
After the covid 19 epidemic, the world economy was supposed to recover by mid-
year 2022, but the ongoing conflict between Russia and Ukraine has given it new
challenges. The financial statement states that as of June 30, 2022, revenue from
selling goods and delivering services was 6,485,587,270,127, up 30% over the same
period last year. Gross profit also climbed by 53% during the same period. We must be
on the lookout for potential hazards affecting revenue due to significant expansion.
Reasons lead to the inherent risk of revenue:
Management may inflate revenue to satisfy a particular objective as a result of an
incentive or pressure
Income could be exaggerated if after-sale services or other sales obligations are not
considered.
3.2. Calculation of financial ratios
Kido Other
company Risk
30/6/2022 30/6/2021
(Bibica)
ROCE (%) 5,0% 3,5% 3% The ROCE index increased in
the same period compared to
2021 and is larger than that of
other companies in the same
industry. This can see that Kido

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 is increasing long-term assets
and decreasing short-term assets
at the same time. Besides, the
company's pre-tax accounting
profit increased significantly due
to the revenue from another
income and other expenses of the
business also increased by nearly
3.5 times compared to last year.
The used capital may be reduced
because the enterprise is
misreporting from short-term
liabilities to long-term assets or
vice versa.
This state increased from 0.51 to
0.75 and is larger than that of
other companies in the same
industry. An increase in this ratio
Net assets means that the company is using
turnover 0,75 0,51 0,53 its assets optimally to generate
(times) revenue. Long-term expenses
may be misidentified and
included in short-term expenses.
As a result, profits are
overstated.
Gross profit 22,7% 19,3% 29% The index increased from 19.3%
margin (%) to 22.7% and much lower than
other enterprises in the same
industry, showing that
enterprises have increased their
gross profit through policies to
save production costs and
corporate management. This is a
significant increase in revenue
and, along with the increase in
gross margin, may be related to
the increased credit period and
price promise promotion or
could be due to an overstatement
of revenue. Kido's gross profit
index of 22.70% compared to
industry average is larger than
the industry average of 14.50%.
However, according to the notes

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 to the consolidated financial
statements, compared to 2021,
the enterprise has accounting for
expenses such as selling
expenses, production costs and
administrative expenses, which
are higher than those of the
previous year. before. It is
possible that production costs
have been covered including
operating costs, debt payments
and other costs.
Current ratio decreased from
1.70 to 1.30 and less than 1/2
compared to other enterprises in
the same industry. This reflects
that the company is borrowing
more and more short-term
liabilities and less and less short-
term assets. The liquidity of the
business is decreasing relatively
quickly. This change is due to
the fact that there are two more
items in the category of short-
Current
1,30 1,70 3,20 term payables in 2022, namely
ratio
"Trade discounts" and "Sales
support expenses", which do not
have in the same period in 2021.
And in the "On-the-go" items of
inventory, there was a sharp
increase compared to last year.
The auditor may omit these
items of detail.
There is a risk that the loan with
the term over 1 year is classified
as current liability in the balance
sheets or vice versa
Closing 3,05 2,86 3,13 Inventory turnover increased
inventory from 2.86 to 3.05 and lower than
turnover other enterprises in the same
(times) industry, indicating that
inventory is moving faster than
last year. Since Kido trades in
many products, it does not

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 update the market value of
goods, which may cause the cost
of goods to be overstated.
Because the inventories are hold
in many different locations, it is
difficult to confirm the existence
and completeness of inventory.
This index increased from 7.48
to 10.86 and is much higher than
other companies in the same
industry. Kido seems to be
implementing an increasingly
effective return policy and the
capital is less and less occupied.
However, it is necessary to
determine that Kido's credit sales
have been correctly recorded and
confirmed by the buyer to avoid
Trade overwriting.
receivables One of the main customer,
10,86 7,48 6,55
turnover currently, experience the
(times) difficult period. This could result
in an increase in irrecoverable
debts and receivables of this
customer being overvalued.
Receivable days have increased
from 7,48 day to 10,86 day,
management has significantly
extended the credit terms given
to customers. This leads to an
increased risk of recoverability
of receivables as they may be
overvalued.
Trade 9,10 7,31 3,99 The company's turnover of
payable payments to suppliers increased
turnover by 1.79 compared to the same
(times) period last year and nearly 3
times higher than Bibica
(companies in the same
industry). Thanks to the
relatively large amount of
revenue, businesses can pay
suppliers quickly. This is an
indication that the company may

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 experience reduced cash flow,
which could lead to difficulties
or uncertainties in going
concern. These uncertainties
may not be fully represented in
the financial statements.
Kido's financial leverage has
decreased from 18.5% to 18.2%
much higher than the business of
the same day, showing that long-
term debt in total long-term
capital of the company is
Gearing (%) 18,2% 18,5% 2%
gradually decreasing. Enterprises
are consolidating capital
autonomy and financial
autonomy. Kido's debts may be
undervalued and total assets may
be overvalued.
3.3. Calculating materiality for the whole financial statement
The level percentage we chose because KIDO is big corporation and produces a
variety of different products, so this figure is suitable for the size and type of company.
BALANCE SHEET
 Benchmark Level Percentage 30/06/2022 31/12/2021
Total assets 0.50% 13,273,275,201,407 14,072,705,557,933
Total revenue 0.50% 6,342,091,452,275 4,887,734,536,447
Profit before
5% 425,277,710,051
taxes 336,672,810,970
Owners' equity 1% 6,910,544,479,056 6,894,642,652,941
3.3.1. Deciding the benchmark
Overall Materiality = Benchmark x Rate
Benchmark Rate Overall Materiality
Profit before tax 5% 21,263,885,503
The reason for selection of Overall Materiality : KIDO is listed companies so
investors care about Profit ratio. We choose percentage at 5% to ensure prudence.
3.3.2. Calculating performance Materiality
Performance Materiality = Percentage determining performance materiality x
Overall Materially

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 Because audit risk is High rate, we choose the percentage to determine the
performance materiality is 50%.
Therefore, calculating Performance Materiality = 50% x Overall Materiality =
10,631,942,751
3.3.3. Threshold error that Auditor can ignore ( we choose 1%)
Performance Materiality 10,631,942,751
Threshold error can ignore 106,319,428
3.4. Audit procedure
3.4.1. Audit procedure for prepaid expenses
Review the company's system policy to see if the company correctly allocate
prepaid expenses to expense items or misreports non-recurring expenses to
prepayments or not
Reconcile expenses allocated in the business's spreadsheet with the data recorded
by the customer on the ledger to confirm accuracy and completeness.
Check on the customer's balance sheet and prepaid expense tracking sheet that the
short-term/long-term classification is correct based on the amortized period. If any
discrepancies are detected, need to find out the cause of these differences. At the same
time, check whether the allocation time of these prepaid expenses is consistent with
the provisions of Circular 200/2014/TT-BTC.
Perform a check on prepaid expenses recognized by recalculating this allocation.
Make sure the spreadsheet your customer sends you is correct by checking the
Information provided by entity (IPE) by selecting a sample of the prepayments
recorded in this year's tracking sheet against the tracking sheet prepayment of the
customer last year to see if there is any change in the original value, monthly
amortization value, amortization start date, total number of amortization periods, or
reconciliation with documents (new amounts arising in years). If any changes are
detected, the cause should be investigated.
Once the customer's tracking sheet is guaranteed to be accurate, recalculate the
amortization value of the prepayments and compare it with the customer's spreadsheet
to see if there is a significant difference (beyond materiality) or not; if so, it is
necessary to find out the cause and make an adjustment entry if necessary
Check a customer's full prepayment recognition by asking expense members if they
have discovered expenses that need to be amortized over multiple periods that have

14
been recorded in their entirety in one period or not to issue an appropriate adjustment
entry
3.4.2. Audit procedure for inventory
Reperforment the inventory count or observe an inventory count process of the
business. Besides, it is necessary to check the order number of the input and output
slips before and immediately after the tally to ensure continuity.
Reconcile the actual amount of inventory with the amount recorded on the books of
accounts to ensure that the inventory is fully recorded.
In case of some inventory is on the way from one warehouse to another during the
inventory process, review the transfer documents to ensure that the goods are in a state
of transfer.
Check the purchase price of inventory and compare it with accompanying
documents, including supplier invoices and quotes, to ensure completeness and
accuracy.
Review all types of expenses including material costs, labour costs, and
manufacturing overhead costs by reviewing all relevant documents such as material
release notes, timesheets, timesheets, employee payroll, purchase documents, and
purchase costs to check for any unusual expense losses.
In particular, consider the costing method and the consistency of the valuation
method between financial years. Perform cost recalculation of inventory samples to
ensure that the correct costing method is applied.
3.4.3. Audit procedure for revenue
Review the accounting policies to see if accounting policies applied consistently
with the ones in the previous year and by the applied financial reporting framework.
Understand credit policy and the classification of accounts receivable.
Consider whether the types of revenue are appropriately accounted for and
classified according to the economic content of the transactions: Internal sales revenue,
revenue from related parties, and instalment sales,...
Performing the vouching on the selected sample transactions to the customer orders
and the dispatch document to see if such sales transactions occurred.
Check quotes, orders, invoices, and delivery notes.
Check the adequacy of revenue recognition on financial statements
Assess whether prepaid deposit revenue is properly recognized or not.

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 Perform closing checks to ensure sales transactions are accounted for in the correct
accounting period. There is a possibility that sales revenue is recorded in the wrong
accounting period due to the complicated sales process. Choose an invoice template,
check the invoice date and track the date with the release note, and follow the date on
the sales invoice to ensure the correct accounting period.
Select several invoices at the end of the year and at the beginning of the following
year and consider whether the revenue is recognized in the correct period.
Perform a check of the revenue journal to check
From the selected invoices, check and compare with the invoiced price list to
ensure that the price is by the approved price list.
Check the correctness and sufficient tax calculation.
3.4.4. Audit procedure for receivable
Check and review the receivables (or the balance according to the age of the
receivables), the company's accounting policies for accounts receivable, particular
policies for specific customers, and allowances for doubtful debts.
Reconcile the opening and closing balances on the trial balance with data from the
general ledger of accounts. Compare the balance on the arising balance sheet with the
balance on the detailed book according to the subject of each account to ensure that the
information provided is accurate and complete.
Select a template and submit the information that guarantees existence, rights and
obligations. Review the nature and analysis of the data: credit policy assessment/sales
policy in the period; focus on abnormal fluctuations, strong up/down trends,
outstanding long-term loans, large outstanding loans, new outstanding loans... to
ensure completeness.
For liabilities denominated in foreign currencies: whether the revaluation of the
ending exchange rate is consistent with current and regulated prices.
Review provisions to ensure accuracy and assessment.
Based on the Account Receivable (or the balance of the account receivable),
consider the reasonableness of the classification of items of the company to avoid
misstating in recording account.

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