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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No.
832/TC-QD-CDKT
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Hanoi
,October 28, 1997
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DECISION
PROMULGATING THE REGULATION ON INTERNAL AUDIT
THE MINISTER OF FINANCE
Pursuant to the Ordinance on Accountancy and
Statistics issued together with Order No.06-LCT/HDNN8 of May 20, 1988 of the
State Council of the Socialist Republic of Vietnam;
Pursuant to Decree No.178-CP of October 28, 1994 of the Government on the
tasks, powers and organizational structure of the Ministry of Finance;
In furtherance of Decree No.59-CP of October 3, 1996 of the Government on
accounting and auditing work of State enterprises.
DECIDES
Article 1.- To issue
together with this Decision the Regulation on Internal Audit to be applied by
State enterprises.
Article 2.- This
Regulation shall take effect from January 1st, 1998. The State enterprises, the
head of the Finance Ministry's Office, the head of the Department for
Accounting Regime and the General Director of the General Department for the
Management of State's ital and Properties at Enterprises shall have to
implement this Regulation.
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FOR THE
MINISTER OF FINANCE
VICE MINISTER
Vu Mong Giao
REGULATION
ON INTERNAL AUDIT (TO BE APPLIED TO STATE ENTERPRISES)
(issued together with Decision No.832-TC/QD/CDKT of October 28, 1997 of the
Minister of Finance)
Chapter I
GENERAL PROVISIONS
Article 1.- Accounting
data, documents and financial statements of an enterprise shall serve as legal
basis for the evaluation of its production and business situation and results
as well as the fulfillment of its obligations towards the State and relevant
parties.
Article 2.- The
enterprise shall have to take responsibility before law for the adequacy,
authenticity and rationality of accounting data and information stated in the
promulgated financial statements.
Article 3.- The
enterprise shall have to regularly organize internal audits to assess the
quality and authenticity of economic and financial information; the safe
protection of its properties; the observance of law, policies and regimes of
the State as well as the resolutions and decisions of the Managing Board and
the Directorate of the enterprise (including a joint stock company or joint
venture where the State enterprise's ital contribution makes up more than 50%).
Article 4.- Basing
itself on this Regulation, the enterprise shall set up and maintain a suitable
and effective internal control system of its own and its member units.
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1. Auditing financial statements and business
administration accounting reports of the enterprise and its member units;
2. Auditing the law observance;
3. Auditing operations.
Article 6.- An internal
audit has three functions: inspection, certification and assessment.
The internal audit shall have the following
tasks:
1. To inspect the conformity, effectiveness and
efficiency of the internal control system;
2. To inspect and certify the quality and
authenticity of economic and financial information stated in financial
statements and business administration accounting reports before they are
submitted for signing and approval;
3. To inspect the observance of principles on
operations and business management; especially the observance of law, policies,
financial and accounting regimes of the State as well as the resolutions and
decisions of the Managing Board and the Directorate of the enterprise;
4. To detect loopholes, weaknesses and frauds in
the management and protection of the enterprise's assets; to propose ways to
improve and perfect the management and business control system of the
enterprise.
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Chapter II
PROVISIONS ON THE
CONTENTS, ORDER AND METHODS OF INTERNAL AUDIT
Article 9.- Contents of
an internal audit
1. Auditing operations:
- Inspecting the mobilization, distribution and
economical and effective use of resources (including human resources,
materials, goods, properties, ital..., and business advantages...)... of the
enterprise;
- Inspecting the efficiency of production and
business activities; the distribution and use of incomes; the results of ital
preservation and development;
- Inspecting and assessing the efficiency of
operations of the functional departments in achieving the enterprise's business
objectives.
2. Auditing the law observance
- Inspecting the observance of law, policies,
financial and accounting regimes and the management regime of the State, as
well as the execution of policies, resolutions, decisions and regulations of
the Managing Board and the Directorate;
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- Inspecting the observance of the accounting
principles, policies and standards, from the making of vouchers, the
application of the accounting system, the recording of accounts, the summing-up
of information and the presentation of financial statements and business
administration accounting reports to the archive of accounting books...
3. Auditing financial statements and business
administration accounting reports
- Inspecting and certifying the timeliness,
adequacy, objectiveness and authenticity of financial statements and business
administration accounting reports before they are signed for approval and
promulgation by the (General) Director;
- Inspecting and assessing financial statements
and business administration accounting reports; making necessary proposals and
providing consultancy regarding production and business activities so as to
ensure their rationality and efficiency.
Article 10.-
Implementation order and steps of an internal audit
1. Drawing up plan and selecting auditing method
- Drawing up a plan and program, determining the
objective(s), contents, scope and time for the internal audit;
- Defining the scope of the internal audit; the
method and mode of auditing and measures for organization of implementation;
organizing auditing forces (including auditors inside and outside the
enterprise and experts to be mobilized).
2. Preparation for the audit
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- Studying new policies, regulations,
undertakings and measures arising in accounting and auditing work;
- Considering the previous audit reports,
materials and files (if any), including materials outside the enterprise but
related to the audit; summarizing information that should be examined in the
subsequent audit; collecting and preparing forms, programs and guidances for
the to-be-conducted audit.
3. Conducting the audit:
- During the audit, the internal auditors shall
have to consider, collect and assess all necessary related evidences, including
evidences outside the enterprise...;
- Considering and assessing the implementation
of policies and regulations during the practical operations of the enterprise.
- Assessing the possibility of making errors,
mistakes and frauds in each kind of professional transaction and each economic activity.
Assessing the importance and risks of professional transactions arising within
the enterprise.
- Analyzing and surveying main items,
additionally surveying details; considering the subsequent events, evaluating
the audit's results.
- The implementation steps of an audit must
comply with the audit procedures and be recorded in the audit documents and
files.
4. Completion of the audit
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The internal auditor(s) shall have to make an
audit report;
The audit report must present all contents and
results of the audit according to the set objectives and requirements; certify
the adequacy and rationality of the annual financial statements and business
administration accounting reports before they are submitted for signing and
approval; propose resolutions and measures for handling errors, frauds and
violations, as well as necessary solutions to raise the quality and efficiency
of business management of the enterprise;
The audit report shall be sent to the Chairman
of the Managing Board and the (General) Director of the enterprise. The
circulation and promulgation of the internal audit report shall depend on the
nature of the audit and be decided by the Chairman of the Managing Board and
the (General) Director. As for reports on the auditing of financial statements
and business administration accounting reports, they must be attached to the
financial statements and business administration accounting reports before
circulation.
4.2. Re-examination of audit results is a work following
the audit, aimed at reviewing the implementation of the proposals, handling
measures and solutions mentioned in the report on audit at managerial and
business department of the enterprise.
Article 11.- Methods of
conducting an internal audit
Depending on the nature of the audit, the
auditors shall have to select and apply auditing methods and procedures suited
to the objectives and requirements of the audit. The selected and applied
auditing procedures and methods include observation, actual inventory,
certification, consideration; comparison of legal documents, materials, regimes
and law; collection and evaluation of evidences; calculation, comparison,
analysis and examination on computers; summing-up, selection of information,
determination of causes and the extent of their respective involvement;
prediction and forecast of trends and possibilities; and other steps of
inspection and assessment which the auditors deem necessary to be taken for
each specific case.
Chapter III
INTERNAL AUDITORS
Article 12.- A person
appointed or assigned to work as an internal auditor shall have to meet the
following criteria:
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2. Being a university graduate of economic,
financial, accountancy or business administration speciality;
3. Having worked in the field of financial or
accounting management for 5 years or more, with at least 3 years working at the
enterprise where he/she is assigned to work as an auditor.
4. Having been trained in auditing
professionalism and internal audit under the uniform program of the Ministry of
Finance, and got certificate thereof.
Article 13.- Appointment,
dismissal of internal auditor(s)
An internal auditor shall be appointed and
dismissed directly by the General Director or Director of the enterprise. The
internal auditor who has been dismissed for his/her violation of discipline shall
not be re-appointed.
The auditor shall not be allowed to assume any
executive or business administration responsibility at the enterprise.
Article 14.-
Responsibilities of the internal auditor
1. An internal auditor shall perform tasks
according to the auditing plan already ratified by the General Director or the
Director and shall take responsibility before the (General) Director for the
quality, accuracy and rationality of the audit report as well as the audited
financial and accounting information.
2. While performing his/her tasks, the internal
auditor shall have to observe law, auditing principles and criteria, as well as
current policies and regulations of the State.
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4. Observing principles on keeping secret the
audited data and documents (except for cases of requests by the court or the
obligations related to professional criteria).
Article 15.- Powers of
the internal auditor
1. To be professionally independent. Not submit
to any control or interference when carrying out auditing activities and
presenting his/her opinions in the audit report.
2. To be entitled to request the departments
and/or individuals subject to the audit as well as the relevant sections to
provide information and materials for the audit.
3. To be entitled to sign for certification the
report on internal audit conducted by individual(s) or take responsibility for
the performance of the assigned auditing tasks.
4. To make suggestions, solutions, proposals and
advice on improving and perfecting the production and business control and
management; to prevent errors, frauds, wrong doings in the enterprise...
5. To reserve his/her own opinions already
presented in the internal audit report; to be entitled to propose the
functional State agency to reconsider the decision of the (General) Director on
his/her dismissal.
Chapter IV
ORGANIZATION OF INTERNAL
AUDITING APPARATUS
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1. Enterprises shall have to organize their own
internal auditing apparatuses to conduct internal audits therein. An
enterprise's internal auditing apparatus shall be organized into a section,
department, or group, working team directly under the (General) Director of the
enterprise.
The internal auditing apparatus is composed of:
the head and deputy-head (if any) of the internal auditing section, the head of
the internal auditing group and internal auditors. The number of internal
auditors shall depend on the enterprise's business scale, area of operations,
and number of member units, on the complexity of the audit, the business
management requirements and the auditors' professional qualifications and
abilities.
In production conglomerates (corporations,
unions of enterprises...), the internal auditing sections (departments) must
have enough personnel and abilities to conduct audit within the units and
member units.
2. The internal auditing section shall be
organized independently from the business administration and management
sections of the enterprise (including finance-accountancy section); and subject
to the direction and management by the (General) Director of the enterprise.
At the request of the internal auditing section,
the (General) Director may appoint specialists on various professional fields
of the enterprise or hire specialists from outside (if necessary) to take part
in some or all contents of the audit.
Article 17.- Head of
the internal auditing section
An internal auditing section(department) of an
enterprise is led by the section head.
The head of the internal auditing section
(department) shall be appointed by the (General) Director after obtaining a
written consent from the General Department and the Department for the
Management of the State's ital and Properties at Enterprise (under the Ministry
of Finance).
The head of the internal auditing section
(department) shall sign and take responsibility before the (General) Director
and before law for internal audit reports.
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1. To take initiative in working out the annual
auditing plans and programs.
2. To organize internal audits within the enterprise
according to the auditing plans and programs already ratified by the (General)
Director.
3. To manage, arrange and assign tasks to the
auditors and take measures for training and fostering auditors, thus constantly
raising the professional skills and abilities of the auditors and the internal
auditing apparatus.
4. To propose the (General) Director to promote,
appoint, reward or discipline internal auditors.
5. To propose the mobilization of auditors from
member units or experts from the concerned sections in the enterprise to take
part in audits when necessary.
6. To propose changes of policies and lines with
a view to raising the efficiency of the business management and control.
7. To report any detected violation of law or
any decision contrary to the undertakings, policies and regulations, to the
competent levels for solutions and prompt settlement.
Article 18.- The
internal auditing apparatus at an enterprise having attached units:
- For member units of a corporation or union of
enterprises with independent legal person status: They must organize
independent auditing sections or appoint a number of internal auditors to
perform the internal audit.
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Internal auditors working in member enterprises
with independent legal person status or without independent legal person status
shall be directly or indirectly attached to the internal auditing apparatus of
higher-level units and submit to the General Director's or Director's
direction.
Chapter V
ORGANIZATION OF
IMPLEMENTATION
Article 19.- This
Regulation takes effect from January 1st, 1998.
Basing themselves on this Regulation, the State
corporations shall organize internal audit in their respective corporation and
each of their member enterprises.
In the course of organization of implementation,
any problem or difficulty should be reported to the Ministry of Finance for
uniform settlement. Any issue considered inappropriate shall be promptly
reported to the Ministry of Finance for study, amendment and supplement.