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MINISTRY Of fiNANCE THE SOCIALIST REPUBLIC Of VIETNAM
No 22TC/CDKT Independence-freedom-Happiness
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Hanoi, March 19th 1994.
1. GENERAL PROVISIONS
1/ Independent audit is defined as a type of auditing and financial accountancy, constancy services conducted by the professional auditors of the independent auditing organizations in accordance with the requirements of enterprises, organizations and agen cies.
The functions of independent audit as to examine , certify the correctness, faithfulness and reasonableness of accountancy data and documents and balance sheets of enterprises, organizations and agencies (hereinafter called briefly as an unit) and based o n the results of audit, make the conclusion of evaluating the compliance with the law and regulations, financing and accounting polices and regime as well as the effectiveness of operation of units.
The accountancy data and document and balance sheets of units which have been examined and certified by independent audit are the reliable basis for satisfying the requirements of the unit, state management bodies and all organizations, individuals and ag encies who are involved and interested in the operation of the unit.
2/ Objects of independent audit are mainly the enterprises of all sectors of the economy. Apart from the enterprises, objects of independent audit may also be the administration and non- productive units, mass organizations, social associations and intern ational organizations; the audit of which is required either by themselves or by Management bodies at higher level, taxation organizations or State finance agencies.
for those objects of independent audit, which are the enterprises with foreign Invested capital and operate - in accordance with the Law on foreign Investment in Vietnam, the limited corporations or the stock companies operating in conformity with the La w on company, the audit shall be implemented annually and their balance sheet to be submitted to the State Management Authorities must be accompanied by the Audit Report made by either independent auditing organizations legally operating in Vietnam or oth er independent auditing organizations approved by the Ministry of finance.
for other objects of audit, in the immediate time, auditing operations can only be carried out either when they are needed by the accounting unit itself (for example the need of the owner of enterprise, Management Board, Cooperative's members conference e tc.) or when they are required by the functional management bodies of the state (the organization in charge of management at higher level, financial authorities, taxation organizations) and only within the scope of the required content (Striking the annua l Balance sheet, striking the Balance sheet for the completion of capital construction projects, determination of capital value of a joint-venture, calculation of value of equalized enterprises, determination of business results, liquidation and concessio n and sales of property etc.)
3/ The operation of independent audit shall be implemented by the professional auditors (hereinafter referred to as auditors)
The auditors are those people who are recognized and entitled by the state to do business in the field of independent audit. The auditors have to carry out business registration at a legally- established auditing organization.
4/ As an enterprise, the independent auditing agency (an auditing company or auditing office) must be set up by organizations, agencies or founders and must comply with the existing Regulations in establishment of enterprise (the Law on state enterprises , the Law on Private Enterprises, Company Law, Law on foreign Investment in Vietnam) and with the provision on the establishment of auditing agencies provided for in the Regulation on independent audit.
5/ foreign auditing agencies involving in auditing operations and financing, accounting, consultancy within the territory of Vietnam in the forms of joint-venture, contractual business cooperation with Vietnamese auditing agencies or auditing company wit h 100% foreign invested capital must be licensed by the State Committee for Cooperation and Investment after having the approval in writing by the Ministry of finance.
The operation of foreign auditors and foreign auditing agencies must conform to the Law on foreign Investment in Vietnam, the provision in the Regulations on independent audit, the existing regime and policies of Vietnam, and the international auditing p ractices recognized by the Vietnamese State.
6/ The unit or organizations asking for audit are entitled to freely choose either Vietnamese or foreign Auditing agencies that legally operate in Vietnam to conclude the auditing contracts. In case the unit invites a foreign auditing company that has not yet been allowed to operate in Vietnam, such unit then must report to and obtain the approval by the Ministry of finance and at the same time bears the responsibility to pay the amount of tax which should have to be paid by the foreign auditing company to the Vietnamese state in accordance with the law regulating this operation in Vietnam.
7/ The auditing operation shall be implemented in accordance with the existing auditing methods and standards in Vietnam or international auditing standards that are recognized by the Vietnamese state. On the completion of auditing operations, auditors ar e required to make auditing reports, note their own opinion and remarks down in such auditing report and bear responsibility for these opinions and remarks. The auditing reports must contain the following issues:
+ The faithfulness, reasonableness of data in the accounting reports of the unit
+ The situation of implementing the accounting with in the unit and its compliance with the accounting regime and regulations
+ Recommendations
Auditing Reports must be truthful and objective. Auditing report must be signed by auditor and certified, signed and sealed by the leadership of auditing organizations.
II. AUDITORS
8/ Vietnamese citizens recognized ad auditors to carry out auditing profession must have the sufficient conditions as follows:
Having clear cirriculum vital certified by his/her office of work or by authority of the locality where he/she resides; having virtue such as honesty, incorruptibility, mastering law and Regulations, state policies and regime of economies, finance, accoun tancy and statistics, having no police and criminal records.
Having graduation diplomas of university of finance or vocational school of finance and accountancy; having involved in financing and accounting activities for at least 5 years (in case of graduation from universities) or for at least 10 years (in case o f graduation from vocational school).
Having passed the examination for auditor selection held by the examination council at state level and awarded certificate by the Minister of finance.
+ Having been accepted to work in an independent auditing agencies legally operating in Vietnam and having registered the list of auditors at the Ministry of finance.
Offices currently working for the Government are not allowed to be registered to carry out auditing business in independent auditing organization.
9/ foreign nationals wishing to carry out auditing business in Vietnam must have sufficient conditions as follows:
+ Permission of legal residence in Vietnam.
+ Having certificate of auditor awarded either by the Ministry of finance of Vietnam or an international auditing organization recognized by the Ministry of finance of Vietnam and mastering Vietnamese laws on economy, finance, accountancy and audit.
+ Having been accepted to work in an auditing organization legally established in Vietnam.
+ Having registered the list of auditors at the Ministry of finance.
10/ The training and education of professional knowledge and examinations of auditors selection shall be conducted in accordance with the unified program and regulations specified by the Ministry of finance.
Examinees successfully passing the selection examinations shall be awarded certificate of passing auditor selection examination by the state selection council and awarded the certificate of auditor by the Minister of finance once they are registered to work in an independent organization legally operating in Vietnam.
The certificate of auditor shall be valid for a period of five years from the date of award. In case the above - mentioned duration expires, holder of certificate shall have to fulfill the procedures to obtain the new one.
11/ Auditor is allowed to carry out services of audit and finance accountancy, consultancy as follows:
+ Examine the legality of the documents, bills and receipts and data of accountancy, the implementation of accountancy financial regimes and regulations of the State.
+ Examine and certify the value of capital contributed by the parties to joint ventures, by shareholders; examine and certify the faithfulness, reasonableness and completeness of the accountancy data and the balance - sheets of cases such as the joint ven ture, dissolution, merger (or incorporation), division, equitization, bankruptcy and others as specified by law and regulations.
+ Carry out inspection of finance, accountancy and consultative services with regard to management of finance, accountancy, and taxation...etc, in accordance with the requirements of customers.
In addition to the above - mentioned services of auditing, financial consultation and accountancy, auditor may carry out other advisory services in accordance with the contents of operation as specified in the license of establishment of the auditing or ganization.
12/ Auditor must carry out the auditing professions in conformity with the following principles:
+ Compliance with the law and regulation of the Vietnamese State.
+ Guarranty of the faithfulness, independence, objectivity, equality and confidentiality of data.
+ Compliance with the currently - existing criteria of accountancy and audit of Vietnam and the universal international criteria of accountancy and audit recognized by Vietnam.
13/ Auditor can only carry out auditing services for customer units with which the auditor has no economic relations (such as contribution of equity capital, fund lending, concluding of contracts of production, service, and goods consuming agent... etc), no family ties with the leader of the units (such as wife, husband, father, mother, grandfather, grandmother, son/daughter or brother/sister) and for which the auditor does not carry out business such as keeping the books of accountancy and striking th e balance - sheets.
14/ Auditor is responsible to:
+ Comply seriously with the specified principles of audit; properly implement the provisions of the audit contract; establish the audit report, sign the audit report and bear responsibility before the law, the independent audit organization and the custo mer for the faithfulness, objectivity of the results of the audit and the remarks in the audit report.
+ While discharging his/her tasks, auditor is not allowed to obstruct or interfere in the coordinating work of the unit which is being audited and not to accept any sum of money other than the audit fees agreed upon in the audit contract.
+ Auditor violating the regulations of audit, breaching the law (such as deliberately contravening regulations, cooperating with and defending the wrongdoer, using the professional measures to cover up mistakes, receiving bribery, making unobjective and u nfaithful reports) depending on the degree of seriousness may be deprived of certificate of auditor and handled in accordance with currently-existing law; in case the violations and mistakes cause material losses to the customers, auditor shall have to ma ke compensation for the losses.
15/ Auditor is entitled to:
+ Be independent with respect to their professions (compliance with the law, the professional criteria and measure).
+ Request the customers to provide / supply fully and in a timely manner documents of accountancy, finance and other documents related to the content of audit.
+ Compare and verify economic information related to the audited units within or outside the establishment (if it is necessary).
+ During the auditing process, if the phenomenon of violation of law committed by the audited establishment is detected, auditor is entitled to inform and recommend the establishment to take measures to correct their mistakes/ violations, and to note down his/ her view in the report of audit.
+ Auditor is entitled to refuse to carry out audit for customers should he finds out that there are insufficient conditions or insufficient ability to do so.
III. ORGANIZATION Of AUDIT:
16/ Agencies, organizations, founders wishing to establish independent auditing organization (company or office of Audit) must have the following conditions:
+ Having all the conditions specified by the currently - existing law and regulations with the regard to the establishment of business enterprises (state-owned enterprises, liability limited company , joint stock company, private-owned enterprise depend ing on each case).
+ Having at least 5 people upward who are awarded certificates of auditor. The head of the auditing organization must be auditor himself.
+ Obtaining the approval in writing by the Minister of finance regarding permission to establish and the decision on establishment made by State competent agency in accordance with the law and regulations. The order and procedures of accessing the files a nd making decision on establishment of the independent auditing organization shall be implemented in accordance with the currently-existing law and regulations regarding the establishment of business enterprise of all kinds.
17/ After obtaining license to establish, the independent auditing organization shall have to fulfill the procedures of registration of business at the state competent agency and shall have to make announcement on central and local newspaper concerning t he name, address, duty and functions, and the leader of the organization as specified by the law. All the changes of the independent auditing organizations regarding the contents registered at State agency shall have to be registered again or apply for su pplement.
18/ The independent auditing organization shall have to register its list of auditors at the Ministry of finance.
After 15 days, from the date the auditing organization register the list of auditor, the Ministry of finance shall award the certificate of auditor to those who have passed successfully the auditor selecting examination and have been accepted to work at t he auditing organization.
During its operation, the auditing organization shall have to report in timely manner to the Ministry of finance the list of those auditors who relinquish their jobs who are transferred to other jobs or deprived of the right to carry out their jobs so a s to erase their names from the list of auditors and withdraw the awarded certificates of auditors. Those auditors who relinquish their jobs and are transferred to other jobs or are deprived of the right to carry out auditing jobs shall have to submit th eir certificates of auditors to the Ministry of finance within one month from the date they officially end their work at the auditing organization. After the above mentioned date, the certificate of auditor awarded by the Minister of finance shall have no legal effect.
19. The independent auditing organization shall be responsible for managing and coordinating all professional activities of auditors managed by the organization.
In case the auditor violates the principles and regulations of conducting the profession, the auditing organization shall also be jointly responsible. Should the auditors cause losses to the customers the auditing organization shall be held responsible be fore the customers for compensating for the losses in accordance with the provisions committed in the auditing contract.
20. The independent auditing organization is an independent is an independent economically accounting establishment which is allowed to charge services fees to cover its spending. The level of fees charged by each auditing contract shall be agreed upon by both sides on the basis of the amount of work, complication of work, duration of work and the price frame of the auditing fees specified by the Ministry of finance. The independent auditing organization shall have to buy insurance at insurance organiza tions legally operating in Vietnam in anticipation of the risk of compensating for the looses caused to customers.
21. The independent auditing organization shall have to fulfill all the obligations regarding taxation as well as other sums to be paid to the state budget as specified by the law.
IV. THE STATE MANAGEMENT REGARDING AUDITING OPERATION
22. The operation of the independent auditing organization in the capacity as a business enterprise shall have to comply with the State law and regulations and be subject to the examination and supervision of the State agencies with management functions.
The data and documents of accountancy and balance sheets of business enterprises, organizations, and agencies certified by the independent auditing organization shall be trusted and used by State agencies to serve their requirements of management. In cas e the data and documents of accountancy and balance sheets have already been certified by audit but still lack the sufficient fidelity required or contain some doubts, the State management agencies , within their entrusted power and responsibility, shal l directly reexamine and make decision of management in the basis of he results of their examinations. The business enterprises, organizations, agencies shall have to implement the decision by the state management agencies, and at the same time request t he auditing organization to reconsider the report of about the results of audit, and if there are differences and disputes, they shall recommend the local financial agencies or the Ministry of finance to consider the settlement.
23. The Ministry of finance shall exercise the State management functions with regard to the auditing operation in the national economy. The State management function of the Ministry of finance shall be implemented through the following measures:
+ Issuing and guiding the implementation of the principles, criteria and professional methods of audit applied in the national economy.
+ Issuing and instructing the implementation of the programs of training and educating profession for auditors, the regulations of selection examinations and awarding certificate to carry out auditor's job; establishing the Selection Council at State leve l and organizing selection examinations so as to award certificates of auditor.
+ Assessing and notifying opinions with regard to files of application for establishment of auditing organization organizing registration and uniformly managing the list of auditors.
+ Specification of the price frame of fees of audit after reaching agreement with the pricing commission of the government so as to be uniformly applied in the auditing operations.
+ Examining and supervising the law and regulations of audit in the operation of the auditing organizations, settling deference and disputes arising out of the results of audit. With the regard to all differences and disputes concerning the results of aud it, the opinions of the Minister of finance shall be final.
PROVISION Of IMPLEMENTATION
This circular shall take effect of implementation from the date of its signing. The auditing organizations established prior to the date "the Regulations on independent audit" has effects of implementation shall be allowed to operate in accordance with th e registered charter, and carry out preparatory work for their personnel's and experts to participate in the auditor selecting examinations, register their list of auditors with the Ministry of finance and reorganize their operation in conformity with the Regulations.
for the Ministry of finance
Minister
HO TE (Signed)