Independent auditing means the inspection and certification of professional auditors in independent auditing organizations on the accuracy and appropriateness of accounting document, data and the balance sheet of enterprises, institutions, organizations a nd social associations (hereinafter referred to as accounting entities) when requested by such entities.

Having been certified by a professional auditor, accounting documents, data, and the balance sheet of the accounting entity shall be the basis for conducting and managing the operations of the entity, a basis for high level administrative bodies and State financial body to approve the annual accounting report of the entity, a basis for the calculation of tax liabilities by tax offices and calculation of other payments payable to State budget, and a basis for shareholders, investors, joint venture parties, clients, organizations, and individuals to deal with the relationship of the relevant parties in respect of rights and obligations during the course of operation of the entity.

Independent auditing activities also assist accounting entities to identify and timely correct intentional or unintentional mistakes, and to prevent breaches and damages which may arise during the course of business and usage of capital.

Independent auditing shall be carried out at the request of the following entities:

• (1) Enterprises with foreign owned capital operating under the foreign investment law of Vietnam;

• (2) Limited liability and shareholding companies;

• (3) Private companies;

• (4) Co-operatives;

• (5) State enterprises;

• (6) Non-profit organizations and social associations;

• (7) International organizations operating in Vietnam.

Independent auditing activities shall be carried out by professional auditors (hereinafter referred to as auditor). An auditor shall be a person who satisfies all conditions stipulated in this Regulations, recognized by an authorized State body, and permitted to practice in independent auditing organizations.

An independent auditing organization shall be a business enterprise (an auditing company or office) established in accordance with provisions currently in force on the establishment of business enterprises and the provisions of these Regulations.

The Ministry of finance shall be the State administrative body in respect of independent auditing activities.

Having obtained a written agreement from the Ministry of finance, all foreign auditing organizations carrying out auditing activities and financial accounting consultancy services in the territory of Vietnam must be issued with a license from the State Co mmittee for Co-operation and Investment. The activities of foreign auditors and auditing organizations must abide by the Law on foreign Investment of the Socialist Republic of Vietnam, the provisions of these Regulations and international auditing practic es which are accepted by the State of Vietnam.

Entities which request for audits shall have the freedom to choose from the auditing organizations legally operating in Vietnam and to sign an auditing contract with such organization.

Entities requesting audits shall be responsible for timely provision of necessary and relevant information and documents which are accurate in order to facilitate favorable conditions for auditors to carry out auditing activities and to pay fully all audi ting fees on time in accordance with the agreed contract.

Auditing activities must be carried out in accordance with the procedure and specialized business method stipulated by the Ministry of finance. Upon completing the audit, an auditor must prepare an audit report, state his opinion in the report, and be ful ly responsible for his opinion.

The auditing report must be objective, true and fair, signed by the auditor, and certified, signed and sealed by a senior member of the auditing organization.

An auditor must be a Vietnamese citizen or a foreign person permitted to reside in Vietnam and registered to practice the profession with an independent auditing organization operating legally in the territory of Vietnam.

A Vietnamese citizen who satisfies all the following conditions shall be recognized as an auditor and shall be permitted to register to practice the profession with an independent auditing organization in Vietnam:

• (1) A clear history: one who is of true character and honest, have a thorough knowledge of law and policies, and State regimes on finance, economics, accounting and statistics; also the person not have previous sentence or convictions.

• (2) Holds an university degree or similar qualification of a secondary college which specializes in finance and accounting, and have experience in finance or accounting of at least five years (in respect of an university graduate) or ten (10) years (i n respect of graduates of a secondary college).

• (3) Passed the auditor exam set by the State Qualification Board and issued with a certificate by the Ministry of finance.

Current employees of the State shall not be permitted to register to practice as an auditor in independent auditing organizations. Auditors who have their practicing certificate withdrawn shall not be permitted to re-register to practice the profession.

A foreign person shall be permitted to register to practice the profession with an independent auditing organization in Vietnam if such person is issued with an auditor certificate by the Vietnamese Minister of finance or by an international auditing orga nization which the Ministry of finance of Vietnam recognized.

An auditor shall be permitted to carry out the following auditing services:

• (1) Inspect the lawfulness and reasonableness of records, documents and accounting data, and compliance with State financial and accounting standards and regulations.

• (2) Inspect and certify level of truthfulness, fairness, and reasonableness of the statement of balance prepared by accounting entities.

• (3) Inspect and certify the value of the capital contributed by joint venture parties and shareholders; inspect and certify whether the accounting data and balance sheet prepared by entities involved in a joint venture, dissolution, merger, division, privatization, bankruptcy, and other cases are true and fair and complete and accurate in accordance with the law.

• (4) Carry out financial and accountancy valuation, and consultancy service in respect of financial, accountancy, and taxation management at the request of the client.

An auditor shall have a duty to perform an audit in accordance with the following principles:

• (1) Comply with the law of the State of Vietnam.

• (2) Ensure that the data is true, independent, objective, fair and confidential.

• (3) Comply with all Vietnamese accounting and auditing standards which are currently in force and all internationally recognized accounting and auditing standards which the State of Vietnam accepts.

• (4) The auditor shall only be permitted to carry out auditing services for a client entity which is not in any way economically related to the auditor and the head of such entity must not be a relation of the auditor.

An auditor shall have the following responsibilities:

• (1) To comply strictly with all auditing principles stipulated in article 14 of these Regulations; to perform faithfully all terms of the auditing contract; to be responsible before the law and responsible to the independent auditing organization and client for all auditing results and opinions stated in the audit report.

• (2) Whilst carrying out his duty, an auditor must not hinder or interfere with the management activities of the entity which is subject to an audit and shall only be permitted to receive the audit fee which has been agreed to in the auditing contract.

• (3) Where an auditor breaches the provisions of these Regulations or the law, the auditor may faces the withdrawal of his practicing certificate, be dealt with in accordance with the law, and liable for payment of compensation if the client suffers ma terial damages.

An auditor shall have the right to:

• (1) be professionally independent in carrying out his work;

• (2) request the client to supply all accounting and financial documents and other documents which are relevant to the performance of an audit;
• (3) compare and verify all economic information relating to the entity which is being audited, within and outside the entity (if require);

• (4) report any breaches of the law identified during an audit and to request that the relevant entity take appropriate measures to correct such breaches, and to state his opinion in the audit report;

• (5) refuse an audit request of a client if the auditor considers that there are insufficient conditions or that he lacks the capacity to perform the audit.

To be established, an independent auditing organization (an auditing company or office) must satisfies the following conditions:

• (1) Satisfies all conditions stipulated by the provisions of the law on the establishment of all businesses which are currently in force.

• (2) Must have at least five personnel who are issued with an auditor certificate. The head of the auditing organization must be an auditor.

• (3) Must have a written approval of the Ministry of finance and an establishment license issued by the State Committee for Co-operation and Investment in accordance with the provisions of the law.

Having obtain permission to establish, an independent auditing organization must carry out the business registration procedure at an authorized State body, advertise the business in newspapers in accordance with the provisions of the law, and register the list of auditors with the Ministry of finance. An independent auditing organization must re-register or apply for permission to add any changes to the content of its file registered with the State body.

The independent auditing organization shall, within the scope of its management authority, be responsible for managing the professional activities of its auditors, be responsible before the law and to its clients for all breaches of practicing standards c ommitted by the organization or its auditors, and have the responsibility to compensate clients for damages caused.

An independent auditing organization shall be an independent economic accounting entity permitted to collect fees from the provision of service in order to cover all expenses. The level of fees charged as stated in each auditing contract agreed to between the two parties shall be based on the amount and complexity of the audit work and the list of audit fees determined by the Ministry of finance.

The independent auditing organization must carry out all obligations to the State Budget in accordance with the law and purchase insurance cover from insurance companies to cover the risk of having to pay clients compensation for damages caused.

Independent auditing organizations be considered as a business and be subject to inspections and supervisions of State managing bodies.

When using accounting data and reports of accounting entities which have been inspected and certified by an independent auditing organization State managing bodies shall make a second inspection if there is any doubt and, depending on their responsibiliti es and power, make administrative decisions. The accounting entity concerned must accept the decision of the State managing body and at the same time request the auditing organization to reconsider the audit results, and if the accounting entity is unsati sfied or dispute the decision it may petition to a regional financial authority or the Ministry of finance for consideration or resolution.

The Ministry of finance shall carry out the State management function in respect of auditing activities. State management consists of:

• (1) Promulgation of auditing standards and principles, and other guidance documents on auditing methods and profession.

• (2) Promulgation of provisions on and guidelines for the implementation of regulations on training and fostering in the auditing profession, regulations on the type of exam and the issue of the auditor practicing certificate, and regulations on the es tablishment of a State Examination Board for the purpose of organizing exams and issuing auditor practicing certificates in accordance with the provisions of the State.

• (3) Evaluate application files for the establishment of an auditing organization, and organize the registration and implementation of a uniform administrative system of auditors.

• (4) Stipulate a list of auditing fees which applies uniformly in the auditing profession.

• (5) Inspect whether auditing organizations comply with the law and auditing regulations in carrying out auditing activities and deal with any dissatisfaction or dispute which may arise from the audit report.

These Regulations shall be of full force and effect as of the date of signing and shall apply to all independent Vietnamese auditing organizations and all foreign auditing organizations operating in Vietnam.

All previous provisions which are inconsistent with these Regulations are repealed.