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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No.
105/2004/ND-CP
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Hanoi,
March 30, 2004
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DECREE
ON INDEPENDENT AUDIT
THE GOVERNMENT
Pursuant to the December 25,
2001 Law on Organization of the Government;
Pursuant to Article 34 of the June 17, 2003 Accounting Law;
At the proposal of the Finance Minister,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.-
This Decree prescribes auditors, auditing enterprises, validity of audit
results, cases of compulsory audit and contains other regulations related to
independent auditing activities in order to unify the management of independent
auditing activities, define rights and responsibilities of audited units and
auditing enterprises, protect interests of the community and lawful interests
of investors, ensure the truthful, rational and public supply of economic and
financial information, and satisfy the management requirements of State agencies,
enterprises and individuals.
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In this Decree, the words and
phrases below are construed as follows:
1. Independent audit means the
inspection and certification by auditors and auditing enterprises of
truthfulness and rationality of accounting documents and data and financial
statements of enterprises and organizations (hereinafter referred collectively
to as audited units) when so requested by such units.
2. Auditors mean persons who
fully meet the criteria and conditions for practicing independent audit, as
prescribed in Articles 13 and 14 of this Decree.
3. Profession-practicing
auditors mean auditors who have already registered for profession practice in
an auditing enterprise established and operating under Vietnamese laws and are
authorized to sign audit reports.
4. Auditing enterprises mean
enterprises established and operating under law provisions on enterprise
establishment and operation in Vietnam and the provisions of this Decree.
5. Audit standards mean
regulations and guidance on auditing principles and procedures, which serve as
basis for auditors and auditing enterprises to conduct audit as well as basis
for controlling the quality of auditing activities.
6. Audit reports mean written
reports made and publicized by auditors or auditing enterprises, expressing
their official opinions on the financial statements of the audited unit.
Article 3.-
Validity of audit results
Accounting documents and data
and financial statements of audited units, after being inspected and certified
by auditors and auditing enterprises shall serve as reliable bases for:
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2. Shareholders, investors,
parties to joint ventures or associations, clients and other organizations and
individuals to deal with interest and obligation relationships of involved
parties in the course of operation of the units;
3. Helping the audited units
detect, handle and promptly prevent errors which may occur in their operations,
thus contributing to publicization of financial statements, serving the
management and administration of the units, and making the investment
environment healthy.
Article 4.-
Principles of independent auditing activities
1. Compliance with Vietnamese
laws and audit standards.
2. Being answerable to law for
professional activities and audit results.
3. Compliance with auditors'
professional ethics.
4. Assurance of professional
independence, interests, truthfulness, legality and objectivity of independent
auditing activities.
5. Confidentiality of
information of audited units, except otherwise agreed by the audited units or
provided for by law.
Article 5.-
Rights of audited units
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Article 6.-
Responsibilities of audited units
1. To supply promptly, fully and
truthfully all information and documents necessary for the audit.
2. To coordinate with, and
create favorable conditions for, auditors to conduct the audit.
3. To pay fully and in time auditing
charges as agreed upon in contracts.
4. In cases where they sign
auditing contracts with an auditing enterprise for three consecutive years or
more, they shall have to request such auditing enterprise to change
profession-practicing auditors and persons responsible for signing audit
reports.
Article 7.-
Rights to join professional organizations
1. Profession-practicing
auditors and auditing enterprises are entitled to join professional accounting
and auditing organizations.
2. Professional auditing
organizations, when being assigned the responsibility to manage the
professional practice of auditors, shall have to formulate management
regulations and perform other tasks prescribed by law.
Article 8.-
Foreign auditing organizations conducting auditing activities in Vietnam
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Article 9.-
Encouragement of audit
The State encourages all
enterprises and organizations to hire auditing enterprises to audit their
annual financial statements or investment project settlement reports before
submitting them to competent State agencies or making financial publicization.
Article
10.- Compulsory audit
1. Annual financial statements
of the following enterprises and organizations must be audited by auditing
enterprises:
a/ Foreign-invested enterprises;
b/ Organizations engaged in
credit and/or banking activities and the Development Assistance Fund;
c/ Financial institutions and
insurance business enterprises;
d/ Particularly for joint-stock
companies and limited liability companies which participate in listing and
trading on the securities market, the audit shall be conducted according to the
law provisions on securities trading; if they borrow capital from banks, the
audit shall be conducted according to the law provisions on credit.
2. Annual financial statements
of the following enterprises and organizations must be audited by auditing
enterprises according to the provisions of this Decree:
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b/ Reports on settlement of
construction investment capital of group-A projects.
3. Other subjects defined by
laws, ordinances, the Government's decrees and the Prime Minister's decisions.
4. State enterprises, the
Development Assistance Fund and investment projects, which have already been
included in a year's audit plan of the State audit agency, shall not
compulsorily have their financial statements in that year audited by auditing
enterprises.
Article
11.- Enterprises and organizations which compulsorily have their financial
statements audited according to the provisions in Article 10 of this Decree
shall have to sign audit contracts with auditing enterprises at least 30 days
before the end of the annual accounting period.
Article
12.- Organizations and individuals are strictly forbidden to intervene in
the selection of auditors and auditing enterprises by audited units, unless
otherwise provided for by law.
Chapter II
AUDITORS
Article
13.- Criteria of auditors
1. Auditors must have the
following criteria:
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b/ Having bachelor degrees in
economics- finance-banking or accounting-auditing and having been engaged in
practical financial or accounting work for at least five years, or having
worked as assistant auditors in auditing enterprises for at least four years;
c/ Being able to use a common
foreign language and having a good command of computers;
d/ Having auditor's certificates
granted by the Finance Minister.
2. To be recognized as auditors,
persons who have accounting specialist's certificates or accounting or audit
certificates, issued by foreign or international accounting and/or auditing
organizations and recognized by Vietnam's Finance Ministry, must pass
examinations in Vietnamese economic, financial, accounting and audit laws,
organized by the Finance Ministry and are granted auditor's certificates by the
Finance Minister.
3. The Finance Ministry
prescribes the contents of examinations, examination councils, and procedures
for granting and withdrawing auditor's certificates.
Article
14.- Conditions of profession-practicing auditors
1. Vietnamese who fully meet the
following conditions shall be recognized as profession-practicing auditors and
entitled to register for practicing independent audit:
a/ Fully meeting the criteria of
auditors, prescribed in Clause 1 or 2, Article 13 of this Decree;
b/ Having labor contracts to
work in an auditing enterprise established and operating under Vietnamese laws,
except for cases where it is prescribed by Vietnamese laws that labor contracts
are not required.
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a/ Fully meeting the criteria of
auditors, prescribed in Clause 1 or 2, Article 13 of this Decree;
b/ Being permitted to reside in
Vietnam for one year or more;
c/ Having labor contracts to
work in an auditing enterprise established and operating under Vietnamese laws.
3. At a given time, an auditor
shall only be allowed to register for practice in one auditing enterprise. In
cases where auditors have already registered for audit practice but actually do
not practice the profession or concurrently practice their profession in other
auditing enterprises, they shall have their names deleted from the list of
registered auditors.
4. Persons registered for audit
practice for the second time onward must additionally meet the condition that
they have taken part in all annual refresher programs according to the Finance
Ministry's regulations.
Article
15.- Persons not allowed to register for independent audit practice
1. Persons who fail to fully
meet the conditions prescribed in Article 14 of this Decree.
2. Public servants as provided
for by the legislation on public servants.
3. Persons who are banned from
practicing audit profession under court judgments or decisions; persons who are
being examined for penal liability; persons who are serving imprisonment
sentences or had been convicted of one of economic or position-related crimes
in the financial and accounting domain and have not yet had their criminal
records remitted.
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5. Persons who have limited or
lost civil act capacity.
6. Persons who have been
convicted of serious or exceptionally serious economic crimes.
7. Individuals who have
committed acts of violation causing great damage to financial, accounting,
auditing or economic management activities and been disciplined with caution or
a more severe disciplinary form within the last three years.
Article
16.- Rights of profession-practicing auditors
1. To be professionally
independent.
2. To audit financial statements
and provide services of auditing enterprises specified in Article 22 of this
Decree.
3. To request audited units to
supply fully and promptly accounting documents and other documents and
information related to the service contracts.
4. To inspect and certify
economic and financial information related to audited units from sources inside
and outside the units. To request competent units and/or individuals to provide
professional expertise or consultancy when necessary.
Article
17.- Responsibilities of profession-practicing auditors
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2. In the course of providing services,
auditors must not intervene in the affairs of audited units.
3. To sign audit reports and
take responsibility for their professional activities.
4. To refuse to conduct audits
for their clients if they deem they are not fully qualified or do not meet
fully the conditions therefor or their clients violate the provisions of this
Decree.
5. To constantly improve their
professional knowledge and experiences. To take part in annual knowledge
updating programs according to the Finance Ministry's regulations.
6. Profession-practicing
auditors who violate Articles 15, 17, 18 and 19 of this Decree shall, depending
on the nature and seriousness of their violations, be suspended or indefinitely
banned from registering for audit practice, or bear responsibility according to
law provisions.
7. Other responsibilities
prescribed by law.
Article
18.- Practicing auditors shall not be allowed to conduct audits in the
following cases:
1. They are not on the announced
list of practicing auditors;
2. They are currently performing
the jobs of recording accounting books, making financial statements, conducting
internal audit or providing services of asset valuation, management consultancy
or financial consultancy for the audited units or already performed the
above-said jobs in the previous year;
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4. Their parents, wives or
husbands, children and/or blood siblings are members of the leaderships or
chief accountants of the audited units;
5. The audited units make
requests contrary to professional ethics or professional auditing requirements
or in contravention of law provisions.
Article
19.- Prohibited acts of practicing auditors
1. Purchasing stocks of any types
of the audited units, regardless of their quantities.
2. Purchasing bonds or other
assets of the audited units.
3. Receiving any sums of money
or material benefits from the audited units apart from service charges and
expenses already agreed upon in contracts, or abuse their positions as auditors
to get other benefits from the audited units.
4. Leasing, lending or letting
other parties use their names and auditor's certificates to conduct
professional activities.
5. Working for two auditing
enterprises or more at a time.
6. Disclosing information on the
audited units they have acquired in the course of practicing their profession,
except otherwise agreed by the audited units or provided for by law.
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Chapter III
AUDITING ENTERPRISES
Article
20.- Auditing enterprises
1. Auditing enterprises are
established and operate according to law provisions in forms of partnership,
private enterprise and enterprise under the Law on Foreign Investment in Vietnam.
2. The establishment,
organization, management and operation of auditing enterprises must comply with
the provisions of the enterprise legislation and the provisions of this Decree.
3. State-run auditing
enterprises, joint-stock auditing companies and limited liability auditing
companies, which have been established and commenced their operation under the
provisions of the enterprise legislation before the effective date of this
Decree, may be transformed into one of the three enterprise forms prescribed in
Clause 1 of this Article within three years as from the effective date of this
Decree.
4. When changing their names,
relocating their headquarters, or changing their practice domains or the list of
auditors, the auditing enterprises shall, within 10 days after effecting the
changes, have to notify such in writing to the Finance Ministry.
Article
21.- Branches of auditing enterprises
1. Branches of auditing
enterprises are their attached units operating under the authorization of such
auditing enterprises, within the practice domains stated in the business
registration certificates of the auditing enterprises.
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3. Auditing enterprises must be
responsible for the activities of the auditing branches they have set up.
Article
22.- Services to be provided
1. Auditing enterprises may
register to provide the following audit services:
a/ Financial statement audit;
b/ Financial statement audit for
taxation purpose and tax settlement;
c/ Operation audit;
d/ Compliance audit;
e/ Internal audit;
f/ Audit of completed investment
capital settlement reports (including annual financial statements);
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h/ Financial information audit;
i/ Verification of financial
information on the basis of pre-agreed procedures.
2. Auditing enterprises may
register to provide the following other services:
a/ Financial consultancy;
b/ Tax consultancy;
c/ Human resource consultancy;
d/ Information technology
application consultancy;
e/ Management consultancy;
f/ Accounting service;
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h/ Service of fostering and
updating financial, accounting and auditing knowledge;
i/ Other relevant financial,
accounting and tax services as prescribed by law;
j/ Service of reviewing
financial statements.
3. Auditing enterprises must not
register and conduct business in domains and trades irrelevant to the services
prescribed in Clauses 1 and 2 of this Article.
Article
23.- Conditions for establishment and operation of auditing enterprises
1. An auditing enterprise shall
be established only when it has at least three auditors having audit practice
certificates, and at least one of its managers must be an auditor having the
practice certificate.
2. Within 30 days after they are
granted business registration certificates, auditing enterprises shall have to
report to the Finance Ministry on their establishment and the lists of auditors
registered for professional practice in the enterprises.
3. In the course of operation,
auditing enterprises must ensure the constant professional practice of at least
three auditors. After six consecutive months, if they fail to satisfy this
condition, they must stop the provision of auditing services.
Article
24.- Rights of auditing enterprises
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2. To hire domestic and foreign
experts to perform service contracts or enter into audit cooperation with other
auditing enterprises according to law provisions.
3. To set up their branches
according to the provisions in Article 21 of this Decree, or set up bases for
overseas operation according to law provisions.
4. To join professional audit
organizations; join as a member of the International Audit Organization.
5. To request audited units to
supply fully and promptly accounting documents and other necessary documents
and information related to service contracts.
6. To inspect and certify
economic and financial information related to audited units from sources inside
and outside such units. To request competent units and individuals to give
professional expertise or consultancy when necessary.
7. To exercise other rights
provided for by law for enterprises.
Article
25.- Obligations of auditing enterprises
1. To operate in the practice
domains stated in investment licenses or business registration certificates.
2. To perform the contents under
contracts already signed with their clients.
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4. To purchase professional
liability insurance for their auditors or set up professional risk reserve
funds according to the Finance Ministry's regulations to create sources for
payment of compensations for damage caused by enterprises, which are at fault,
to their clients. Expenses for insurance purchase or setting up of professional
risk reserve funds shall be accounted as business expenses according to the
Finance Ministry's regulations.
5. In the auditing course, if
they detect signs of violating financial and accounting legislations by the audited
units, they are obliged to notify such to the audited units or write their
comments in audit reports.
6. To supply auditing dossiers
and documents at written requests of competent State agencies according to law
provisions.
7. To perform other obligations
according to law provisions on enterprises.
Article
26.- Responsibilities of auditing enterprises
1. To directly manage
professional activities of auditors registered for practice in the enterprises.
To bear civil liability for professional activities conducted by auditors,
which are related to auditing enterprises.
2. For all services provided to
their clients, service contracts or written commitments must be made according
to law provisions on contracts and the audit standards.
3. To fully implement the
provisions of already signed service contracts.
4. To be held responsible before
law, clients and users of audit results and provided services.
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Article
27.- Auditing enterprises must not conduct audit in the following cases
1. They fail to notify the lists
of profession-practicing auditors to the Finance Ministry;
2. They are providing services
of recording accounting books, making financial statements, internal audit,
valuating assets, management consultancy, financial consultancy or performed
such services in the preceding year for their clients.
3. Members of their leaderships
have economic or financial relations with the audited units, or are parents,
wives or husbands, children or blood siblings of members of the leaderships or
chief accountants of the audited units;
4. The audited units make requests
contrary to professional ethics or professional auditing requirements or in
contravention of law provisions.
Article
28.- Prohibited acts of auditing enterprises
1. Acting in connivance or
collusion with the audited units to falsify contents of financial statements;
2. Buying or receiving as
donations or gifts from the audited units any types of stocks, regardless of
their quantities;
3. Buying stocks or other assets
of the audited units;
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5. Using material benefits or
relations with a third party to bribe, press or buy off the audited units when
providing services or seeking clients;
6. Undertaking to perform the
job of debt collection for the audited units;
7. Letting other parties use
their names to conduct professional activities;
8. Other activities contrary to
the provisions of law.
Article
29.- Audit reports
1. Independent audit shall be
conducted by auditors and auditing enterprises. Upon finishing the auditing
job, auditors and auditing enterprises must make audit reports, clearly stating
their opinions on audit results.
2. Audit reports must be
independent, objective and truthful, have signatures of profession-practicing
auditors who conduct the audit and of auditors who are representatives at law
of the auditing enterprises or persons authorized in writing by the
representatives at law to sign and seal. Profession-practicing auditors and
auditing enterprises shall be held responsible before law and the audited units
for their own auditing opinions.
3. One of the two auditors
giving their signatures in an audit report of a foreign auditing organization
established and operating in Vietnam or not yet established in Vietnam must be
Vietnamese, except for the cases prescribed in Clause 3, Article 30 of this
Decree.
Article
30.- Foreign auditing organizations
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1. When a foreign auditing
organization admits an auditing enterprise established and operating under
Vietnamese laws as its member, it shall conduct audit under its name and its
member organization's name.
2. When a foreign auditing
organization cooperates with an auditing enterprise established and operating
under Vietnamese laws in each separate audit, its audit report must have the
signature of the Vietnamese auditing enterprise.
3. If a foreign auditing
organization wishes to conduct independently an audit in Vietnam and circulate
its audit reports in Vietnam, it must obtain the Finance Ministry's approval
for each audit.
Article
31.- Termination of operation of auditing enterprises and branches of
auditing enterprises
Auditing enterprises and
branches of auditing enterprises shall terminate their operations in the
following cases:
1. They voluntarily terminate
their operations;
2. They have their investment
licenses or business registration certificates withdrawn;
3. Other cases according to the
law provisions on enterprises.
Article
32.- Auditing service charge and other service charges
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a/ Work contents, volumes and
nature determined in audit contracts;
b/ Working duration and
conditions for auditors to perform the services;
c/ Professional levels,
experiences and prestige of auditors and auditing enterprises;
d/ Where State agencies prescribe
audit charge rates, the auditing service charge to be collected shall be based
on the audit charge rate prescribed for each type of auditing services.
2. Auditing enterprises and
audited units may agree to apply one of the following methods of calculating
the auditing service charge:
a/ Calculating according to
working hours of practicing auditors and charge rate per hour;
b/ Calculating according to each
auditing service with package charge;
c/ Calculating according to each
auditing service at charge rates in percentage (%) of contract value or project
value;
d/ Calculating under
multi-period audit contracts with fixed charge rate for each period.
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Chapter IV
STATE MANAGEMENT OVER
INDEPENDENT AUDITING ACTIVITIES
Article
33.- Contents of State management over independent auditing activities
1. Formulating and directing the
materialization of the strategy, planning and plans on development of
independent audit in Vietnam.
2. Promulgating, disseminating,
directing and organizing the implementation of the audit standards and guidance
for implementation of the audit standards and audit professional methods.
3. Promulgating and organizing
the implementation of the Regulation on professional training and fostering in
audit and annual knowledge updating; prescribing modes of examination and
granting of auditor's certificates; setting up the State-level examination
council, and organizing examinations and granting of auditor's certificates.
4. Uniformly managing the list
of auditors and auditing enterprises currently practicing the indepen-dent
audit nationwide. Once every two years, the Finance Ministry shall publicly
announce the list of auditors and auditing enterprises registered for practice.
5. Inspecting the observance of
the legislation on independent audit, audit standards and relevant regulations
by auditing enterprises.
6. Suspending the implementation
of, and requesting amendments to, regulations and decisions of auditing
enterprises which are contrary to law provisions on organization of auditing
enterprises and audit practice.
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8. Managing activities of
international cooperation on audit.
9. Settling complaints and
denunciations, and handling violations of the legislation on independent audit.
Article 34-
Responsibilities of the agencies in charge of State management over independent
audit
1. The Government shall exercise
the uniform State management over independent auditing activities.
2. The Finance Ministry shall be
answerable to the Government for performing the function of State management
over independent auditing activities.
3. The ministries and the
ministerial-level agencies shall, within the ambit of their respective tasks
and powers, have to exercise the State management over independent auditing
activities and auditing enterprises in domains they are assigned to manage.
4. The People's Committees of
the provinces and centrally-run cities shall, within the ambit of their
respective tasks and powers, have to exercise the State management over
independent auditing activities and auditing enterprises in their respective
localities.
Article
35.- Settlement of differences or disputes
1. When a difference or dispute
over audit results related auditing contracts arises, the concerned parties
shall carry out the procedures for settling such difference or dispute
according to law provisions.
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Article
36.- Withdrawal of investment licenses, business registration certificates
or auditor's certificates
1. The Finance Ministry and the functional
agencies may propose the Ministry of Planning and Investment or the business
registries to withdraw investment licenses, certificates of registration of
audit service business or refuse to make audit practice registration when
auditing enterprises violate Article 23, 24, 25, 26, 27, 28 or 29 of this
Decree.
2. The Finance Ministry may
withdraw auditor's certificates of practicing auditors who violate Article 17,
18 or 19 of this Decree.
Chapter V
COMMENDATION AND
HANDLING OF VIOLATIONS
Article 37.-
Commendation
Organizations and individuals
that record achievements in independent auditing activities shall be commended
and/or rewarded according to law provisions.
Article
38.- Handling of violations
Organizations and individuals
that commit acts of violating the provisions of this Decree shall, depending on
the nature and seriousness of their violations, be disciplined, administrative
sanctioned or examined for penal liability. If causing any damage, they must
pay compensations therefor according to law provisions.
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IMPLEMENTATION PROVISIONS
Article
39.- This Decree takes effect 15 days after its publication in the Official
Gazette and replaces the Government's Decree No. 07/CP of January 29, 1994
promulgating the Regulation on independent audit in the national economy. The
Finance Minister shall have to guide the implementation of this Decree.
Article
40.- The ministers, the heads of the ministerial-level agencies, the heads
of the Government-attached agencies, the presidents of the People's Committees
of the provinces and centrally-run cities shall have to implement this Decree.
Article
41.- The previous stipulations contrary to this Decree shall all be hereby
annulled.
ON BEHALF OF THE
GOVERNMENT
PRIME MINISTER
Phan Van Khai