Circular No. 157/2014/TT-BTC on quality control of independent audit services

CIRCULAR

Regulations on Quality Control of Auditing Services

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Pursuant to the Law on Independent Auditing No. 67/2011/QH12 dated March 29, 2011;

Pursuant to the Securities Law No. 70/2006/QH11 dated June 29, 2006 and the Law Amending and Supplementing the Securities Law No. 62/2010/QH12 dated November 24, 2010;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 17/2012/NĐ-CP dated March 13, 2012 of the Government detailing and guiding the implementation of certain provisions of the Independent Audit Law;

the Director the proposal of Director of the Accounting and Auditing Department,

The Minister of Finance issues this Circular on quality control of auditing services.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the organization and implementation of quality control of auditing services, review engagement services, financial information assurance services, and other related services as provided for in Clause 1, Article 40 of the Law on Independent Auditing (hereinafter referred to as auditing services) by practicing auditors and auditing firms, including foreign auditing firm branches operating in Vietnam.

Article 2. Applicability

1. Auditing firms currently operating in Vietnam and foreign auditing firm branches in Vietnam (hereinafter referred to as auditing firms).

2. Practicing auditors.

3. Professional organizations for auditing.

4. Organizations and individuals implementing quality control of auditing services.

5. Other related agencies, organizations, and individuals.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. Laws and regulations refer to normative legal documents issued by competent authorities; documents issued by professional organizations, enterprises, and other organizations that are not contrary to laws which the entities subject to quality control of auditing services must comply with.

2. Professional standards include auditing standards, review engagement standards, other assurance service standards, and ethical requirements relevant thereto.

3. Quality control of auditing services refers to the process of reviewing the quality of auditing services and supervising the auditing activities of auditing firms and practicing auditors based on regulations and procedures established and promulgated by competent authorities to ensure that auditing firms and practicing auditors comply with professional standards, laws, and relevant regulations during their operations.

4. Review of the quality of auditing services involves performing procedures to assess the internal quality control system of auditing firms and evaluate the quality of completed auditing service contracts of auditing firms and practicing auditors.

5. Supervision of auditing activities is a management process involving regular examination and evaluation of compliance with professional standards, laws, and relevant regulations by auditing firms and practicing auditors.

Chapter II

SPECIFIC PROVISIONS

Section 1

QUALITY CONTROL OF AUDITING SERVICES

Article 4. Objectives of Quality Control of Auditing Services

1. To assess the establishment, dissemination, and implementation of internal quality control policies and procedures of auditing firms.

2. To assess the compliance with professional standards, laws, and relevant regulations in providing auditing services by auditing firms and practicing auditors.

3. To identify, correct, and promptly address any violations discovered through quality control of auditing services.

4. To contribute to amending, supplementing, and perfecting the legal framework on independent auditing while enhancing the quality of auditing services.

Article 5. Content of Quality Control for Audit Services

1. Checking the establishment, issuance, and implementation of internal quality control policies and procedures by audit firms.

2. Reviewing the completion of audit service contracts performed by audit firms and practicing auditors.

3. Verifying compliance with other regulations on independent auditing and related laws, including:

a) Registration and maintenance of conditions for conducting audit services by audit firms;

b) Registration and maintenance of conditions for practicing auditors;

c) Conducting independent audits for entities with public interest;

d) Fulfillment of obligations by audit firms, practicing auditors, and other relevant matters.

4. Monitoring the implementation of regulations on independent auditing and related laws as stipulated in Clause 3 of this Article.

Article 6. Forms of Quality Control for Audit Services

1. Supervising the quality of audit services and compliance with laws on independent auditing

a) Evaluating the annual self-inspection report on audit service quality submitted by audit firms to the Ministry of Finance and the State Securities Commission;

b) Assessing the quality of audit reports by audit firms through financial statements of mandatory audit entities sent to the Ministry of Finance, the State Securities Commission, and relevant agencies as prescribed;

c) Verifying compliance with registration and maintenance requirements for practicing auditors' conditions and audit service business conditions of audit firms;

d) Monitoring through annual reports submitted by audit firms to the Ministry of Finance and the State Securities Commission as prescribed and other information collected during management.

2. Directly inspecting the quality of audit services

a) The competent authority (Ministry of Finance, State Securities Commission) establishes inspection teams periodically or unexpectedly at audit firms;

b) Inspecting signs of non-compliance with audit service quality standards by audit firms and practicing auditors;

c) Investigating complaints and reports related to independent auditing activities.

Article 7. Subjects of Quality Control for Audit Services

Subjects of quality control for audit services include:

1. Audit firms.

2. Practicing auditors.

Article 8. Allocation and Coordination in Quality Control for Audit Services

1. Audit firms and practicing auditors are responsible for self-quality control of audit services they provide.

2. The Ministry of Finance is responsible for managing and organizing the implementation of quality control for audit services.

3. The State Securities Commission is responsible for quality control of audit services for audit firms and practicing auditors approved to audit entities with public interest in the securities sector.

4. Professional organizations in auditing have the responsibility to coordinate with the Ministry of Finance and the State Securities Commission to implement quality control for audit services.

Article 9. Responsibilities of entities in the supervision of audit service quality

1. Responsibilities of audit firms

a) Establishing and implementing policies and procedures for quality control of audit services to ensure that all audit service contracts are conducted in accordance with professional standards, laws, and relevant regulations;

b) Annually, based on the direct quality control inspection process for audit services stipulated in Article 19 of this Circular, professional standards, laws, and relevant regulations, audit firms shall apply these to organize self-inspections of audit service quality, develop plans and measures to correct and address deficiencies and errors identified through inspections. Upon completion of the self-inspection work, the audit firm shall prepare a Report on the Results of Self-Inspection of Audit Service Quality according to the model prescribed in Appendix No. 02 issued together with this Circular;

c) By no later than May 31 each year, audit firms must submit the Report on the Results of Self-Inspection of Audit Service Quality to the Ministry of Finance. In cases where an audit firm is approved to audit public interest entities in the securities sector, the Report on the Results of Self-Inspection of Audit Service Quality must be submitted simultaneously to the State Securities Commission;

d) In addition to submitting the Report on the Results of Self-Inspection of Audit Service Quality mentioned above, audit firms have the responsibility to report to the Ministry of Finance or the State Securities Commission (hereinafter referred to collectively as the supervisory agency) when requested about independent audit activities;

2. Responsibilities of the Ministry of Finance

a) Review and evaluate the Report on the Results of Self-Inspection of Audit Service Quality to monitor compliance with professional standards, laws, and relevant regulations by audit firms and practicing auditors;

b) Notify the State Securities Commission and the auditing profession organization of the list of audit firms subject to annual direct quality control inspections;

c) Mobilize practicing auditors and experienced professionals with appropriate expertise to participate in the Inspection Team and establish the Inspection Team at audit firms subject to inspection by the Ministry of Finance;

d) Develop, issue, and update guidance materials for inspection to serve the quality control inspection of audit services at audit firms subject to inspection by the Ministry of Finance. Organize training sessions on inspection procedures for members participating in the Inspection Team mobilized by the Ministry of Finance;

đ) Issue decisions to conduct inspections and organize the implementation of direct inspections at audit firms, except those audit firms already directly inspected by the State Securities Commission;

e) Prepare a Summary Report on Inspection Results and a Summary Report on Violations Identified Through Inspections for periodic direct inspections at audit firms subject to inspection by the Ministry of Finance;

g) Handle violations identified through quality control inspections of audit services within their authority or transfer them to competent authorities for handling in accordance with the law;

h) Monitor, inspect, and supervise the implementation of post-inspection recommendations by audit firms and practicing auditors subject to inspection by the Ministry of Finance;

i) Organize exchanges, dissemination, and lessons learned from annual quality control inspections of audit services for practicing auditors and audit firms subject to quality control oversight by the Ministry of Finance;

3. Responsibilities of the State Securities Commission

a) Review and evaluate the Report on the Results of Self-Inspection of Audit Service Quality to monitor compliance with professional standards, laws, and relevant regulations by audit firms and practicing auditors approved to audit public interest entities in the securities sector;

b) Propose a list of audit firms approved to audit public interest entities in the securities sector for direct quality control inspections to be submitted to the Ministry of Finance for approval;

c) Mobilize practicing auditors and experienced professionals with appropriate expertise to participate in the Inspection Team and establish the Inspection Team at audit firms subject to inspection by the State Securities Commission;

d) Develop and update guidance materials for inspection to serve the quality control inspection of audit services at audit firms subject to inspection by the State Securities Commission. Organize training sessions on inspection procedures for members participating in the Inspection Team mobilized by the State Securities Commission;

đ) Issue decisions to conduct inspections and organize the implementation of direct inspections at audit firms approved to audit public interest entities in the securities sector based on the list of audit firms to be inspected which has been approved by the Ministry of Finance;

e) Prepare a Summary Report on Inspection Results and a Summary Report on Violations Identified Through Inspections for periodic direct inspections at audit firms subject to inspection by the State Securities Commission and submit these reports to the Ministry of Finance no later than 15 days from the end of the direct inspection activities at audit firms;

g) Handle violations identified through inspections within the authority prescribed by securities and securities market laws. In cases exceeding authority, report to the Ministry of Finance for handling;

h) Monitor, inspect, and supervise the implementation of post-inspection recommendations by audit firms subject to inspection by the State Securities Commission;

i) Organize exchanges, dissemination, and lessons learned from annual quality control inspections of audit services for practicing auditors and audit firms subject to quality control oversight by the State Securities Commission;

4. Responsibilities of the Auditing Profession Organization

a) Dispatch staff with experience and appropriate expertise to participate in the Inspection Team when requested by the Ministry of Finance and the State Securities Commission;

b) Coordinate with construction inspection agencies to update materials for direct quality service audit inspections;

c) Coordinate with training agencies to organize professional training sessions on quality service audit inspections for members participating in the Inspection Team;

d) Coordinate with relevant agencies to organize exchanges, disseminate, and draw lessons from annual quality service audit inspections for practicing auditors and auditing firms;

đ) Implement quality control of audit services for its members according to the functions, tasks, and authorities of the Professional Organization for Auditing;

e) Direct, monitor, inspect, and supervise the implementation of post-inspection recommendations for inspected entities that are members of the Professional Organization for Auditing;

Article 10. Costs of Quality Control of Audit Services

1. The costs of quality control of audit services shall be guaranteed by the state budget in accordance with prescribed regulations.

2. The contents of expenses related to quality control activities of audit services include:

a) Travel allowances for individuals participating in the Inspection Team who are officials and civil servants of the Ministry of Finance and the State Securities Commission, implemented in accordance with prescribed regulations.

For expenses for members of the Inspection Team who are mobilized from the Professional Organization for Auditing, practicing auditors mobilized from auditing firms, and other entities paid by the Ministry of Finance (or the State Securities Commission), such expenses shall be applied as prescribed regulations for state officials and civil servants;

b) Expenses for remuneration for members of the specialized council to advise the Minister of Finance on handling recommendations regarding audit reports and audit quality, and the results of audit service quality inspections;

c) Other actual expenses related to quality control activities of audit services, approved by the competent authority in accordance with prescribed regulations.

3. The preparation, execution, and settlement of expenses for quality control activities of audit services shall be carried out in accordance with the provisions of the State Budget Law and guiding documents of the State Budget Law.

Section 2

DIRECT QUALITY SERVICE AUDIT INSPECTION

Article 11. Scope and Requirements for Direct Inspection

1. The scope of periodic direct inspection of audit service quality:

a) Covering all factors affecting audit service quality and components of the audit service quality control system as stipulated in Quality Control Standard No. 1 (VSQC1);

b) Covering all audit services provided by the auditing firm;

d) Inspection documents include materials related to the establishment and implementation of quality control policies and procedures of the auditing firm; audit documents and files; accounting documents; personnel-related policies; minutes of the Board of Directors' meetings, management plans of the auditing firm's Board of Directors, and other related documents and files;

đ) The scope of inspection does not include issues unrelated to audit service quality and compliance with independent audit laws and securities laws of the auditing firm and practicing auditors;

2. Requirements for the direct inspection process of audit service quality:

a) Compliance with laws on independent audits and securities;

b) Ensuring independence between Inspection Team members and the Team Leader and the inspected entities in terms of rights and interests;

c) Ensuring objectivity from the organization and implementation of inspection tasks to the conclusion on inspection results;

d) Conducted based on adherence to confidentiality requirements under laws on independent audits, standards, and relevant professional ethics regulations;

đ) After each direct inspection at each auditing firm, the Inspection Team must prepare an Inspection Result Report. Evaluation and conclusions about the audit service quality inspection results must be based on the review, assessment, and professional judgment of the Inspection Team members and clearly stated in the Inspection Result Report. Conclusions about deficiencies and errors of the inspected entity must be supported by appropriate evidence.

Article 12. Rights and Obligations of the Object Under Direct Inspection

1. Rights of the Object Under Direct Inspection

a) Notify in writing to the inspection agency, the Head of the Inspection Team when there is evidence that the Head of the Inspection Team or members of the Inspection Team violate independence;

b) Explain and make recommendations to the inspection agency regarding contents in the inspection conclusion of the Inspection Team that still have differing opinions.

2. Obligations of the Object Under Direct Inspection

a) Cooperate and create favorable conditions for the Inspection Team to carry out inspection work;

b) Provide complete, timely, accurate, and truthful documents and information related to the inspection content as stipulated in Point d Clause 1 Article 11 of this Circular;

c) Arrange practicing auditors and relevant persons to work with the Inspection Team;

d) Exchange with the Inspection Team about the business situation and explain, provide information on issues requested by the Inspection Team;

e) Sign the report on the inspection results immediately upon completion of the inspection;

f) Implement the conclusions of the Inspection Team, take corrective measures for any errors or deficiencies discovered during the inspection process.

Article 13. Time Limit for Direct Inspection

1. Regular Inspection:

a) Inspect at least once every three years for auditing enterprises approved to audit public interest entities in the securities sector;

b) Inspect at least once every four years for auditing enterprises approved to audit other public interest entities (excluding auditing enterprises approved to audit public interest entities in the securities sector);

c) Inspect at least once every five years for auditing enterprises not covered under Points a and b of this Clause;

d) In cases where the periodic direct inspection of the quality of auditing services provided by an auditing enterprise results in a conclusion that the quality of auditing services is ranked 3 "Quality of auditing services does not meet requirements" or ranked 4 "Weak quality of auditing services, serious errors," such auditing enterprise will be subject to re-inspection within one to two years thereafter.

2. Spot Inspection:

An auditing enterprise may be subject to surprise inspections if it falls under any of the following circumstances:

a) There are signs of misconduct in the results of auditing services or serious violations of professional standards, laws, and related regulations during its operations and provision of auditing services;

b) Provides an auditing service contract that could lead to significant auditing risks, replacing an auditing service contract provided by another auditing enterprise to the same client without justifiable reasons;

c) There is a major dispute among shareholders or significant changes in practicing auditors of the auditing enterprise that could significantly impact the quality of auditing services provided by the auditing enterprise;

d) There are reports or accusations of unfair competition practices to attract clients or harm the interests of other auditing enterprises.

3. An auditing enterprise that has been subject to a surprise inspection may not be subject to a regular inspection in the same year or a regular inspection may be combined with a surprise inspection to verify the issues mentioned in Clause 2 of this Article.

Article 14. Time for Direct Inspection

1. The regular direct inspection of service quality at auditing enterprises shall be conducted in the third or fourth quarter of each year. In case there is a change from the above time, the Ministry of Finance will issue a specific announcement.

2. The maximum duration for a direct inspection of service quality is seven working days. If it is necessary to extend the inspection period due to complex issues, the Head of the Inspection Team shall report to the decision-making authority for consideration and decision.

Article 15. Organization of the Inspection Team

1. The inspecting agency must establish an Inspection Team for each direct inspection at auditing enterprises under its quality control scope.

2. The Inspection Team consists of the Head of the Inspection Team and members. The number of members participating in the Inspection Team depends on the scale of the inspection. Members of the Inspection Team can be mobilized from the Ministry of Finance, the State Securities Commission, the Professional Organization for Auditing, and auditing enterprises.

3. Members of the Inspection Team and the Head of the Inspection Team must meet the qualifications and experience specified in Article 16 of this Circular.

4. Members of the Inspection Team and the Head of the Inspection Team shall not participate in direct inspections at auditing enterprises if they fall into any of the following cases:

a) They are founding members or have invested capital in the inspected auditing enterprise;

b) They are members of the Board of Directors of the inspected auditing enterprise;

c) They have significant direct or indirect interests with the inspected entity;

d) Their parents, spouse, children, siblings, or cousins (of themselves or their spouse) have significant direct or indirect interests with the inspected entity or are members of the Board of Directors of the inspected auditing enterprise;

đ) They have previously worked at the inspected auditing enterprise and left that job, and the period from the date of leaving to the date of the decision to establish the Inspection Team has not yet reached twenty-four months.

Article 16. Standards for Members of the Inspection Team and the Head of the Inspection Team

1. Members of the Inspection Team (excluding officials of the Ministry of Finance and the State Securities Commission) must meet the following standards:

a) Hold an auditor certificate and have at least thirty-six months of practical experience in auditing practice or have participated in three years of quality service inspection teams since obtaining the auditor certificate up to the date of establishing the Inspection Team. Auditors nominated by auditing enterprises to join the Inspection Team must have achieved satisfactory results in the most recent quality service inspection;

In the case of inspections at auditing enterprises approved to audit entities with public interest, members joining the Inspection Team must be individuals who are or have been members of the Board of Directors responsible for overall service contracts or individuals with equivalent qualifications, having at least twenty-four months of practical auditing or reviewing auditing quality for entities with public interest from the date of approval by the competent authority to audit such entities until the date of establishing the Inspection Team;

b) Have knowledge of professional standards, laws, and related regulations applicable to the type of services being inspected and practical experience in the relevant field or industry related to the service contracts being inspected;

c) Possess professional ethics, independence, honesty, objectivity, and a high sense of responsibility;

d) Have completed training courses on inspection procedures and practices organized by the inspecting agency, with mandatory training hours of sixteen hours for first-time participants in the Inspection Team and eight hours for experienced participants from previous years; Training hours are counted towards the annual mandatory knowledge update hours for practicing auditors;

đ) Not have been administratively punished in the fields of accounting, independent auditing, securities, or disciplined by the Professional Organization for Auditing within the last three years up to the date of establishing the Inspection Team.

2. The Head of the Inspection Team shall be assigned by the inspecting agency appropriately for each inspection.

Article 17. Rights and Obligations of Members of the Inspection Team

1. Rights of members of the Inspection Team:

a) Request the inspected entity to provide complete and timely documents, information, arrange working time, and explain issues within the scope of inspection assigned;

b) Inspect, compare, verify relevant information both inside and outside the audited entity during the implementation of the inspection according to the assignment of the Head of the Inspection Team;

c) Draw conclusions and make recommendations within the scope of inspection assigned;

d) Reserve their opinions on the inspection results if these opinions differ from the conclusions and recommendations in the Report on Inspection Results;

đ) Draft Administrative Violation Records according to the authority prescribed by laws on administrative penalties;

2. Obligations of members of the Inspection Team:

a) Sign a written commitment regarding independence and confidentiality with the inspected entity according to Appendix No. 03 issued together with this Circular and ensure compliance with such commitments;

b) Refuse to conduct inspections if they consider that independence cannot be guaranteed, professional competence is insufficient, or standards are not met as stipulated in Clause 1, Article 16 of this Circular;

c) Perform tasks assigned by the Head of the Inspection Team honestly, impartially, truthfully, and without bias, maintaining professional caution;

d) Collect sufficient appropriate evidence to form conclusions about the content of work assigned by the Head of the Inspection Team. Report promptly to the Head of the Inspection Team about any deficiencies or errors discovered through inspection;

đ) Not transfer duties to others without the consent of the Head of the Inspection Team;

e) Participate in meetings between the Inspection Team and the inspected entity concerning issues related to the scope of inspection assigned;

g) Sign the Report on Inspection Results and other documents related to the work performed according to the assignment of the Head of the Inspection Team;

h) Not disclose information about inspection files and documents except as provided by law;

i) Comply with regulations on quality control of audit services in this Circular;

Article 18. Rights and Obligations of the Head of the Inspection Team

1. Rights of the Head of the Inspection Team:

In addition to the rights of members of the Inspection Team specified in Clause 1, Article 17 of this Circular, the Head of the Inspection Team also has the following rights:

a) Assign tasks and coordinate work for members of the Inspection Team to implement the inspection plan;

b) Require the inspected entity to arrange personnel to cooperate in working according to the inspection plan;

c) Propose to the inspection agency on handling violations discovered through inspection;

2. Obligations of the Head of the Inspection Team:

In addition to the obligations of members of the Inspection Team specified in Clause 2, Article 17 of this Circular, the Head of the Inspection Team also has the following obligations:

a) Organize the inspection appropriately for the inspected entity;

b) Direct the collection, examination, review, and processing of all related documents, ensuring the collection and retention of sufficient appropriate evidence about the work carried out by the Inspection Team as a basis for drawing inspection conclusions;

c) Supervise the performance of tasks assigned to members of the Inspection Team, serve as the point of contact for exchanging issues discovered during the inspection with the inspected entity;

d) Report promptly to the inspection agency when the audited entity reports that the Head of the Inspection Team or members of the Inspection Team have violated independence or when there is disagreement between members of the Inspection Team and the inspected entity during the inspection period or upon request from the inspection agency;

đ) Draft, sign the Report on Inspection Results and bear overall responsibility for the honesty and impartiality of the inspection results.

Article 19. Direct Quality Audit Service Inspection Process

1. The regular direct quality audit service inspection process consists of four stages:

a) Preparation stage;

b) Implementation stage;

c) Completion stage;

d) Post-inspection stage.

The detailed provisions for the regular direct quality audit service inspection process are set forth in Appendix No. 01 issued together with this Circular.

2. For any unscheduled inspections of audit service quality at auditing firms as stipulated in Clause 2, Article 13 of this Circular, the quality audit service inspection process specified in Appendix No. 01 issued together with this Circular shall be applied in accordance with the purpose and requirements of each inspection.

Article 20. Inspection Guidance Materials

1. The inspecting authority is responsible for developing, issuing, and updating inspection guidance materials to serve the direct inspection of audit service quality at auditing firms under its jurisdiction.

2. Professional organizations in auditing shall cooperate with the inspecting authority to develop, issue, and update direct inspection guidance materials for audit service quality.

Article 21. Selection of Branches and Service Contracts for Direct Inspection

1. Selection of branches for inspection

Direct inspection of audit service quality is usually conducted at the headquarters of the auditing firm. However, for auditing firms with multiple branches, the inspection may be carried out on some selected branches according to the choice of the Inspection Team.

The selection of branches for inspection must meet the objective that the Inspection Team has sufficient reasonable basis to conclude whether the policies and procedures for controlling audit service quality have been established, disseminated, and uniformly implemented throughout the auditing firm.

The specific regulations on selecting branches for inspection are provided in the direct inspection guidance materials for audit service quality issued by the inspecting authority.

2. Selection of files on service contracts for inspection

a) The selection of audit service contract files for inspection must meet the objective that the Inspection Team has sufficient reasonable basis to conclude on the quality of audit services of the inspected auditing firm;

b) The files on service contracts selected for inspection must include audit services, review services, and other assurance services of the inspected auditing firm, focusing on contracts with high risk levels. Factors for assessing the risk level of a contract include: scale, field, industry; level of assurance provided (audit, review of financial statements, financial information, and other assurance services); performing group; disputes, litigation; customers receiving multiple types of services simultaneously; customers with large service fees; customers with excessively high or low service fees relative to their scale; risks related to customers and special customers; previous inspection results and first-year contracts; contracts with audited reports completed too quickly or too slowly compared to the accounting period;

c) The inspected auditing firm must provide a list of clients categorized by type of audit contract, financial statement review contract, financial information contract, and other assurance service contracts. The files on service contracts selected for inspection must detail:

c1) By the client's business sector (such as manufacturing, trade, banking, insurance);

c2) By the type of enterprise, organization, and size of the client (Joint Stock Company; Limited Liability Company, Partnership, Private Enterprise, Cooperative, Administrative and Public Service Unit, Social Organization, International Project, and other organizations);

c3) By the form of client capital ownership (Foreign-invested enterprises, state-owned enterprises, and other enterprises, organizations);

c4) Clients are public interest entities and other enterprises, organizations;

c5) Practicing auditors responsible for signing audit reports, review service reports, or other assurance service reports.

d) The Inspection Team may select one of the service contract files that the inspected auditing firm evaluates as being of good quality. In addition to the service contract files selected for inspection in accordance with the inspection requirements, the Inspection Team may also choose some service contract files for inspection of issues of concern;

đ) In a regular inspection, at least three service contract files must be selected for inspection. Each service contract file selected for inspection, the inspected auditing firm must provide relevant documents such as audited financial statements, audit reports, service contracts in accordance with professional standards, laws, and related regulations;

e) The service contract files selected for inspection shall only be notified to the inspected auditing firm at the beginning of the inspection. During the inspection period, the Inspection Team has the right to select any service contract file for inspection without prior notice to the inspected auditing firm. The service contract files selected for inspection must fall within the scope of the inspection.

Article 22. Inspection Conclusions

1. Depending on the degree of compliance with professional standards, laws, and related regulations reflected in each audit service contract file and the overall audit firm inspection file, based on the classification results from the system inspection section, technical inspection section, and professional judgment, the Inspection Team must issue conclusions as follows:

a) The conclusion on the system inspection result must be evaluated according to one of the following four types of opinions:

a1) Type 1: Good quality control system for audit services;

a2) Type 2: Quality control system for audit services meets requirements;

a3) Type 3: Quality control system for audit services does not meet requirements;

a4) Type 4: Weak quality control system for audit services, with serious errors.

b) The conclusion on the technical inspection result must be evaluated according to one of the following four types of opinions:

b1) Type 1: Good quality of audit file;

b2) Type 2: Audit file quality meets requirements;

b3) Type 3: Audit file quality does not meet requirements;

b4) Type 4: Poor quality of audit file, with serious errors.

c) The general conclusion on the audit service quality inspection result of the audit firm must be evaluated according to one of the following four types of opinions:

c1) Type 1: Good quality of audit services;

c2) Type 2: Audit service quality meets requirements;

c3) Type 3: Audit service quality does not meet requirements;

c4) Type 4: Poor quality of audit services, with serious errors.

2. In cases where the inspected audit firm fails to provide complete files and documents as required by the Inspection Team, the audit service quality inspection result of the audit firm can only be classified as Type 3 or Type 4 according to Point c Clause 1 of this Article.

3. The conclusion on the audit service quality inspection result does not provide any assurance regarding the quality control system for audit services and the quality of individual contracts inspected for the audit firm.

4. The inspecting authority is responsible for issuing and updating the criteria for evaluating and classifying audit service quality inspections applicable to audit firms within their inspection scope.

Article 23. Handling Disagreements on Inspection Results

1. When there are disagreements on inspection results, if necessary, the inspecting authority may seek advice from experts or establish a Professional Council to review the inspection results.

2. The Professional Council includes representatives from the Ministry of Finance or the State Securities Commission, representatives from the auditing profession organization, and practicing auditors mobilized from the audit firm. The Chairman of the Professional Council must be a Department-level Leader of the Ministry of Finance or a Leader of the State Securities Commission. Practicing auditors mobilized from the audit firm must have experience equivalent to that of the Board Member responsible for overseeing the service contract. Members of the Professional Council must ensure independence from the inspected entity, the Inspection Team Leader, and relevant Inspection Team members.

3. The inspected audit firm has the right to explain and provide necessary information as a basis for the Professional Council to issue a formal conclusion on the inspection results.

4. Based on the materials provided by the Inspection Team and the inspected audit firm, the Professional Council members will examine, discuss, and evaluate to reach a conclusion on each issue with differing opinions.

Article 24. Post-inspection Handling

1. Within thirty days from the date of signing the Report on the Results of Inspection, the audited enterprises must submit the Report on Measures to Correct Errors and Implement Recommendations of the Inspection Team to the inspection authority. In cases where the audited enterprise is a member of a Professional Organization for Auditing, the Report on Measures to Correct Errors and Implement Recommendations of the Inspection Team must also be submitted to the Professional Organization for Auditing.

The Report on Measures to Correct Errors and Implement Recommendations of the Inspection Team serves as a reference document for the next quality service audit inspection.

2. The inspection authority shall be responsible for preparing the Summary Report on Inspection Results and the Summary Report on Violations Discovered through Direct Quality Service Audit Inspections of entities directly inspected by their unit.

The format of the Summary Report on Inspection Results and the Summary Report on Violations Discovered through Inspection is specified in the guidance documents for direct quality service audit inspections.

Article 25. Inspection Files

1. The inspection file includes: List of audited enterprises subject to inspection; List of members of the Inspection Team; Decision to inspect; Documents provided by the Inspection Team; Decision to establish the Expert Board; Decision on post-inspection handling and other related documents.

2. The Inspection Team must include in the inspection file all relevant information and appropriate evidence serving as the basis for forming conclusions about each audited enterprise, including the Report on Inspection Results, Administrative Violation Record (if applicable), Quality Control System Evaluation Tables for auditing services, Evaluation Tables for selected service contract files, working documents prepared by the Inspection Team, documents provided by the inspected entity, and other related documents.

The Head of the Inspection Team must hand over the entire inspection file to the inspection authority immediately upon completion of the inspection at each audited enterprise.

3. Storage of Inspection Files

The inspection authority is responsible for archiving the inspection files received from the Head of the Inspection Team. The retention period for inspection files shall be carried out in accordance with the legal provisions governing the storage of documents by state agencies.

Section 3

HANDLING VIOLATIONS IN QUALITY SERVICE AUDIT INSPECTIONS

1. For Audited Enterprises

An audited enterprise that commits serious professional errors or violates professional standards as stipulated in Point c Clause 1 Article 27 of the Independent Audit Law will be suspended from providing auditing services for a period of three to six months from the effective date of the penalty decision if it falls under any of the following circumstances:

a) Receiving a quality service audit classification of 3 "Quality of auditing services does not meet requirements" in two consecutive inspections;

b) Receiving a quality service audit classification of 4 "Weak quality of auditing services, serious errors."

2. For Practicing Auditors

A practicing auditor who commits errors regarding the quality of auditing services will be penalized according to the legal provisions on administrative penalties in the field of independent auditing.

Article 27. Handling Violations by Members of the Inspection Team

1. The Head of the Inspection Team and members of the Inspection Team shall not participate in the Inspection Team immediately upon discovery of a violation if they fall under any of the following circumstances:

a) Making demands contrary to professional ethics or contrary to the provisions of the law during the inspection process at the auditing firm;

b) Failing to comply with the obligations of members of the Inspection Team and the Head of the Inspection Team as stipulated in Clause 2, Article 17 and Clause 2, Article 18 of this Circular;

2. The Head of the Inspection Team and members of the Inspection Team who violate the provisions of Clause 1 of this Article may be subject to disciplinary decisions by the competent authority or organization managing cadres according to the relevant laws, depending on the severity of the violation.

Section 4

PUBLIC ANNOUNCEMENT OF INSPECTION RESULTS

REGULAR QUALITY SERVICE AUDIT INSPECTION

Article 28. Publicizing the Results of Quality Service Audit Inspections

Reports on the results of quality service audit inspections shall be publicized within the scope of the inspected auditing firm and compiled into the Annual Summary Report on Inspection Results. The annual summary report on inspection results will be published on the electronic information website of the Ministry of Finance, the State Securities Commission, and the Professional Organization for Auditors.

Chapter III

IMPLEMENTATION

Article 29. Implementation Organization

1. This Circular takes effect from the date of issuance.

2. Provisions related to the control of quality service audit in auditing firms as stipulated in the Quality Control Regulations for Accounting and Audit Services issued together with Decision No. 32/2007/QD-BTC dated May 15, 2007 of the Ministry of Finance shall cease to be effective from the date this Circular takes effect.

3. The Director of the Accounting and Audit System Department, the Chairman of the State Securities Commission, the Director of the Ministry's Office, the Chairman of the Vietnam Association of Certified Public Accountants, auditing firms, practicing auditors, and other organizations and individuals concerned are responsible for implementing this Circular.

4. In case of difficulties encountered during implementation, please reflect them to the Ministry of Finance for study and resolution./.