I)

INTRODUCTION:

Mobile World Investment Corporation is a Vietnamese company operating in the retail business
of mobile devices and electronics / home appliances through their two chains: thegioididong.com
( which means mobile world ) and dienmay.com ( which means consumer electronics ). In this
paper, I will focus only on thegioididong.com.
Thegioididong is now the leading mobile device retailer ( distributing mobile phones, tablets,
laptops and accessories) in all 63 cities and provinces of Vietnam through a network of more
than 290 stores. Thegioididong opened its first store in 2004, the first kind of a modern mobile
phone store in Vietnam where customers could go to experience the products and get superior
customer service, which was quite different from other thousands mom-and-pop mobile phone
stores back then. Since the first store, Thegioididong has expanded quickly nationwide. As of
May 2014, Thegioididong represents around 28% market-share in smart-phones and 30%
market-share in tablets sold legally in Vietnam.
Thegioididong was also the pioneer in launching the website thegioididong.com, the first mobile
phone e-commerce website in Vietnam where customers could go to find detailed mobile
products information, check prices and compare products before making any purchase decisions.
Thegioididong.com is now one of the most visited websites in Vietnam with more than 10
million visits / month, ranked among the top 5 e-commerce websites in Vietnam.
Thanks to its success and customer service quality, Mobile world has been awarded with several
international prizes by prestigious organizations, including The Global Growth Enterprise by the
World Economic Forum, the Top 5 Fastest Growth Retailer in Asia Pacific 2010 by
Euromonitor International, and the Top 500 Retailers in Asia-Pacific by Retail Asia magazine for
4 consecutive years (2010-2013). The company also received numerous local awards, including
The Most Trusted Retailer, The Best Mobile Phone Retailer, The Mobile Phone Providing the
Best Customer Care Services and Supports
On 14 July 2014, the companys shares were listed on the Ho Chi Minh City Stock Exchange
under the ticker symbol MWG.

II)
PROBLEMS: Several potential issues and problems could be occurred in the
financial statements and during the reporting process. Possible reason for those
problems could be endlessranging from unintentional errors to intentional
deception or fraudresulting financial statements sometimes contain errors or
omissions that can mislead investors, creditors, and other users. Financial
statement problems that might happen to the company, in general, are classified
into three categories

1.
Error: This category result when unintentional mistakes are made in recording
transactions, posting transactions, summarizing accounts, and so forth. Errors are
not intentional and when detected should be immediately corrected. Errors can
result from sloppy accounting, bad assumptions, misinformation, miscalculations,
and other factors. The following problems may occur to the company:
Error in Transactions and Journal Entries: an incorrect figure is entered in the
records and then posted to the correct account. Example: Cash $1,000 for plant
repairs is entered as $100; plant repairs account is debited with $100.
Error in Transactions and Journal Entries: Failure to prepare certain receiving
reports. Personnel at individual stores failed to prepare receiving reports for
shipments of goods directly from wholesalers. This significant deficiency increases
the chance that the company will pay for merchandise that has not been received.
Errors in Accounts and Ledgers: Capitalization of certain repairs and
maintenance expense items. A material amount of certain of these expense items
may be improperly recorded into the property and plant asset accounts. The
companys controls related both to the original recording and to the review of that
recording may be ineffective in preventing or detecting the misstatements.

2.
Frauds: This category result from intentional errors. Fraudulent financial
reporting occurs when management chooses to intentionally manipulate the
financial statements to serve their own purposes
Employee fraud, or fraud by nonmanagement employees, is generally designed to
directly convert cash or other assets to the employees personal benefit. Typically,
the employee circumvents the companys internal control system for personal gain.
Management fraud is more insidious than employee fraud because it often escapes
detection until the organization has suffered irreparable damage or loss. Usually
management fraud does not involve the direct theft of assets. Top management
may engage in
fraudulent activities to drive up the market price of the companys stock to create
an illusion that an entity is healthier and more prosperous than, in fact, it is. This
may be done to meet investor expectations or to take advantage of stock options
that have been loaded into the managers compensation package. If the fraud
involves misappropriation of assets, it frequently is shrouded in a maze of complex
business transactions, often involving related third parties. The following frauds may
occur to the company:

Employee Theft: When a single individual or department has responsibility for

both asset custody

and record keeping, the potential for fraud exists. Assets can be stolen or lost and
the accounting records falsified to hide the event. Lets assume our company
operates a large storeroom containing thousands of goods ready for shipment.
Detailed perpetual inventory records were maintained by the employee in charge of
the storeroom. A shortage of several products developed as a result of theft by
another employee who had acquired an unauthorized key to the storeroom. The
employee responsible for the storeroom discovered the discrepancy between the
products in stock and the quantities of clubs as shown by the records. Fearing
criticism of his recordkeeping, he changed the inventory records to agree with the
quantities on hand. The thefts continued, and large losses were sustained before
the shortages were discovered. If the inventory records had been maintained by
someone not responsible for physical custody of the merchandise, there would have
been no incentive to conceal a shortage by falsifying the records.
-

Lapping: Lapping involves the use of customer checks, received in payment

of their accounts, to conceal cash previously stolen by an employee. For
example, one employee first steals and cashes Customer As check for $500.
To conceal the accounting imbalance caused by the loss of the asset,
Customer As account is not credited. Later (the next billing period), the
employee uses a $500 check received from Customer B and applies this to
Customer As account. Funds received in the next period from Customer C are
then applied to the account of Customer B, and so on. Employees involved in
this sort of fraud often rationalize that they are simply borrowing the cash
and plan to repay it at some future date. This kind of accounting cover-up
must continue indefinitely or until the employee returns the funds.
Transaction Fraud that involves deleting, altering, or adding false
transactionsto divert assets to the perpetrator. A common type of transaction
fraud involves the distribution of fraudulent paychecks to nonexistent
employees. For example, a supervisor of our company keeps an employee
who has left the organization on the payroll. Each week, the supervisor
continues to submit time cards to the payroll department just as if the
employee were still working. Lets assume the supervisor is responsible for
distributing paychecks to employees. The supervisor may then forge the
former employees signature on the check and cash it. Although our company
has lost cash, the fraud can go undetected because the credit to the cash
account is offset by a debit to payroll expense.
Kickback Fraud: The kickback is a form of fraud associated with purchasing.
Our company expects the purchasing agents to select the vendor that
provides the best products at the lowest price. However, to influence the
purchasing agent in his or her decision, vendors may grant the agent
financial favors (cash, presents, football tickets, and so on). This activity can
result in orders being placed with vendors that supply inferior products or
charge excessive prices.

3.
Disagreement: This category result when different people arrive at different
conclusions based on the same set of facts. Because accounting involves judgment
and estimates, opportunities for honest disagreements in judgment abound. These
disagreements often come about because of the different incentives that motivate
those involved with producing the financial statements. An example of a
disagreement might be differing views about what percentage of reported
receivables will be collected or how long equipment and other assets will last.
III)
SOLUTIONS: The company has the following those policies and procedures, in
addition to the control environment and accounting system that management has
adopted to provide reasonable assurance that the companys established objectives
will be met and that financial reports are accurate.
1.
Adequate Segregation of Duties: the company makes sure that no one
department or person should handle all aspects of a transaction from beginning to
end. No one individual should perform more than one of the functions of authorizing
transactions, recording transactions, and maintaining custody over assets. The goal
is to not allow an individual to have incompatible duties that would allow him or her
to both perpetrate and conceal errors or fraud in the normal course of his or her
duties.
- the authorization for a transaction is separate from the processing of the
transaction. For example, the purchasing department are not allowed initiate
purchases until the inventory control department gives
authorization. This separation of tasks is a control to prevent individuals from
purchasing unnecessary inventory.
-

Responsibility for the custody of assets are separated from the recordkeeping
responsibility. For example, the department that has physical custody of
finished goods inventory (the warehouse) are not allowed to keep the official
inventory records.
A credit sales transaction may be used to illustrate appropriate authorization
and segregation

procedures. Top management may have generally authorized the sale of

merchandise at specified credit terms to customers who meet certain requirements.
The credit department may approve the sales transactions by ascertaining that the
extension of credit and terms of sale is in compliance with company policies. Once
the sale is approved, the shipping department executes the transaction by obtaining
custody of the merchandise from the inventory stores department and shipping it to
the customer. The accounting department uses copies of the documentation

created by the sales, credit, and shipping departments as a basis for recording the
transaction and billing the customer. With this segregation of duties, no one
department or individual can initiate and execute an unauthorized transaction.
2.
Proper Procedures for Authorization: Our company has established proper
authorization for every transaction. While the board of directors and upper-level
management possess a fairly general power of authorization, a clerk has limited
authority. The board would authorize important issues like dividends, a general
change in policies like to extend a particular customers credit limit beyond the
normal amount; a clerk is restricted to authorizing credit or a specific cash
transaction. Only certain people are authorized to enter data into accounting
records and prepare accounting reports.
3.
Physical Control Over Assets and Records: The purpose of access controls is
to ensure that only authorized personnel have access to the firms assets.
Unauthorized access exposes assets to misappropriation, damage, and theft.
Therefore, access controls play an important role in safeguarding
assets. We have physical security devices, such as locks,safes, fences, and
electronic and infrared alarm systems to control against direct access. Improper
indirect access to assets, generally accomplished by falsifying financial records, are
also paid attention to by our company. We have activities that safeguard financial
records such as maintaining control at all times over unissued prenumbered
documents, as well as other journals and ledgers, and restricting access to
computer programs and data files.Only authorized individuals are allowed access to
the companys valuable assets. We also make periodic comparisons should be made
between accounting records and the physical assets on
hand to make sure waste, loss, or theft of the related assets may go undetected.
4.
Adequate Documents and Records: we have established a document
retention policy to make sure that corporate information should be available and
easily accessible, when required.All the accounting records of the company are
sufficiently recorded, making them easily traceable from the financial statements to
the ledger accounts, to the journals, to the source documents, and back to their
original source.
5.
Independent Check on Performance: the company applies verification
procedures to independently checks the accounting system to identify errors and
misrepresentations. Verification
takes place by an individual who is not directly involved with the transaction or task
being verified. Through independent verification procedures, the company
management can assess the performance

of individuals, the integrity of the transaction processing system, and the

correctness of data contained in accounting records. Examples of independent
verifications include: Comparing physical assets with accounting records,
Reconciling subsidiary accounts with control accounts, reconciling the bank
statement, reviewing management reports (both computer and manually
generated) that summarize
business activityThe company also periodically rotates employees into different
jobs and forces them to take scheduled vacations.

IV)

CONCLUSION