Circular No. 22/TC/CĐKT guiding the implementation of the independent audit regime in the national economy issued together with Decree No. 7-CP dated January 29, 1994.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 22-TC/CĐKT DATED MARCH 19, 1994 ON GUIDELINES FOR IMPLEMENTING THE INDEPENDENT AUDIT REGULATION IN THE NATIONAL ECONOMY ISSUED ACCOMPANYING DECREE NO. 7-CP DATED JANUARY 29, 1994 OF THE GOVERNMENT 

Implementing Decree No. 7-CP dated January 29, 1994 of the Government on the issuance of the Independent Audit Regulation in the national economy, the Ministry of Finance provides specific guidelines as follows:

II- SUPPORT MEASURES FOR STATE-OWNED AGRICULTURAL FARMS AND FORESTRY COMPANIES IN THE FIELD OF SCIENCE AND TECHNOLOGY

1. Independent audit is a type of service activity involving auditing and financial accounting advisory services carried out by professional auditors of independent audit organizations according to the requirements of enterprises, organizations, and agencies.

The function of independent auditors is to examine and confirm the accuracy, truthfulness, and reasonableness of accounting data, documents, and final reports of enterprises, organizations, and agencies (hereinafter referred to as units), and based on the audit results, provide conclusions evaluating compliance with laws, policies, financial and accounting systems, and the effectiveness of unit operations.

Accounting data, documents, and final reports of units that have been examined and confirmed by independent auditors serve as reliable bases meeting the requirements of the units, state agencies, and all organizations and individuals related to or concerned with the activities of the units.

2. The main objects of independent audit are enterprises belonging to various economic sectors. In addition to enterprises, the objects of independent audit may also include administrative and public service units, mass organizations, social organizations, and international organizations when these organizations have needs or when higher-level management agencies, tax authorities, or state agencies require it.

For audit objects that are foreign-invested enterprises operating under the Law on Foreign Investment in Vietnam, limited liability companies, joint-stock companies operating under the Law on Enterprises, annual audits must be conducted and annual final reports submitted to state management agencies must be accompanied by audit reports from independent audit organizations legally operating in Vietnam or other independent audit organizations approved by the Ministry of Finance.

For other audit objects, during the current phase, audits will be conducted when accounting units have needs (needs of enterprises, boards of directors, members' meetings...) or when state functional management agencies require them (higher-level supervisory agencies, financial agencies, tax agencies) and only within the scope of the required contents (annual settlement, completion of basic construction projects, determination of joint venture capital contribution value, joint-stock enterprise value, business results, asset liquidation, sale...).

3. Independent audit work is carried out by professional auditors (referred to as auditors).

Auditors are individuals recognized by the State and permitted to practice in the field of independent audit. Auditors must register their practice at a legally established audit organization.

4. An independent audit organization is a business entity (Audit Company or Audit Office) established by agencies, organizations, or founders in accordance with current regulations on establishing businesses (State Enterprise Law, Private Enterprise Law, Company Law, Law on Foreign Investment in Vietnam) and regulations on establishing audit organizations in the Independent Audit Regulation.

5. Foreign audit organizations conducting audit and financial advisory services on Vietnamese territory through joint ventures or business cooperation contracts with Vietnamese audit organizations or wholly foreign-owned audit companies must obtain a license from the State Committee for Cooperation and Investment of Vietnam after obtaining written agreement from the Ministry of Finance.

The activities of auditors and foreign audit organizations must comply with the Law on Foreign Investment in Vietnam, provisions in the Independent Audit Regulation, current Vietnamese regulations and policies, and internationally recognized auditing standards acknowledged by the Vietnamese State.

6. Units and organizations requesting audits have the freedom to choose Vietnamese or foreign audit organizations legally operating in Vietnam to sign audit contracts. If a unit invites a foreign audit organization that has not yet been permitted to operate in Vietnam, the unit must report and obtain approval from the Ministry of Finance, and the unit must bear full responsibility for paying the taxes that the foreign audit organization must pay to the Vietnamese State according to the relevant laws governing such activities in Vietnam.

7. Audit work must be conducted in accordance with current Vietnamese auditing methods and standards and internationally recognized auditing standards acknowledged by the Vietnamese State. Upon completion of the audit work, the auditor must prepare an audit report, record their comments in the audit report, and bear full responsibility for those comments. The audit report must contain the following main elements:

- The truthfulness and reasonableness of the figures on the unit's accounting report.

- The situation of accounting work implementation at the unit and compliance with accounting systems and regulations.

- Recommendations.

The audit report must be truthful and objective. The audit report must be signed by the auditor and confirmed, signed, and stamped by the leadership of the audit organizations.

II. AUDITORS.

1. Vietnamese citizens recognized as practicing auditors must meet the following criteria:

- Having a clear background verified by the working agency or local government where they reside, possessing honesty, integrity, a thorough understanding of laws and policies, economic, financial, accounting, and statistical systems of the State, and having no criminal record.

- Holding a bachelor's or specialized secondary degree in finance and accounting, with at least five years of experience in financial and accounting work if holding a bachelor's degree, or ten years if holding a secondary degree.

- Having passed the auditor examination organized by the National Examination Board and obtained a certificate from the Minister of Finance.

- Being accepted to work at an independent auditing organization legally operating in Vietnam and having registered the list of auditors with the Ministry of Finance.

Current civil servants may not register to practice auditing in an independent auditing organization.

2. Foreign citizens wishing to practice auditing in Vietnam must meet the following conditions:

- Having lawful residence in Vietnam.

- Possessing an auditor certificate issued by the Ministry of Finance of Vietnam or a certificate from an international auditing organization recognized by the Ministry of Finance of Vietnam, and must be proficient in Vietnamese economic, financial, accounting, and auditing laws.

- Being accepted to work at an auditing organization legally established in Vietnam.

- Having registered the list of auditors with the Ministry of Finance.

3. The training, professional knowledge enhancement, and auditor examination are conducted according to a unified program and regulation prescribed by the Ministry of Finance.

Successful candidates will be awarded an auditor certification by the State Examination Board and will receive an auditor certificate from the Minister of Finance when they are registered to work at an independent auditing organization legally operating in Vietnam.

The auditor certificate has validity for five years from the date of issuance. After this period, the holder must complete procedures to obtain a new certificate.

4. Auditors may perform the following auditing and financial advisory services:

- Checking the legality and compliance of financial documents, accounting data, and adherence to state accounting and financial regulations.

- Verifying and confirming the accuracy and reasonableness of final reports prepared by accounting units.

- Verifying and confirming the value of capital contributions by joint venture participants, shareholders, and the accuracy and completeness of accounting data and final reports of joint ventures, dissolution, mergers, spin-offs, shareholding transformation, bankruptcy, and other cases as stipulated by law.

Financial, accounting appraisals, and management advisory services related to finance, accounting, tax, etc., upon client request.

In addition to the aforementioned auditing and financial advisory services, auditors may also provide other advisory services as specified in the establishment permit of the auditing organization.

5. Auditors must carry out their auditing tasks in accordance with the following principles:

- Adhering to the laws of the Socialist Republic of Vietnam.

- Ensuring honesty, independence, objectivity, fairness, and confidentiality of information.

- Complying with current Vietnamese accounting and auditing standards and internationally recognized accounting and auditing standards acknowledged by the Vietnamese government.

6. Auditors may only perform auditing services for clients with whom they have no economic relationships (such as equity investment, lending, processing contracts, service contracts, agency sales, etc.), no familial relationships with unit leaders (spouse, parent, grandparent, child, or full sibling), and do not maintain accounting records or prepare final reports for the unit.

7. Auditors are responsible for:

- Strictly adhering to auditing principles; accurately fulfilling the terms of the auditing contract; preparing audit reports, signing the audit report, and being accountable under the law, to the independent auditing organization, and to the client regarding the honesty and objectivity of the audit results and comments in the audit report.

- During the performance of duties, auditors shall not obstruct or interfere with the management operations of the audited unit and shall not accept any payment outside the agreed-upon auditing fee in the contract.

- Auditors who violate auditing regulations, break the law (such as intentionally violating rules, colluding to cover up violations, using professional techniques to conceal errors, accepting bribes, providing unobjective and dishonest audit reports, etc.) may have their auditor certificates revoked and be subject to legal penalties depending on the severity; if such violations cause material damage to the client, the auditor must compensate for the loss.

8. Auditors have the right to:

- Professional independence (in accordance with the law, standards, and professional methods).

- Request clients to provide complete and timely financial and accounting documents and other relevant materials pertaining to the audit content.

- Verify and confirm related economic information within and outside the audited unit (if necessary).

- During the audit process, if auditors discover that the audited unit is violating the law, they have the right to inform and recommend corrective measures and include their opinions in the audit report.

- Auditors have the right to refuse to conduct audits for clients if they determine that the conditions or capabilities are insufficient.

III. AUDITING ORGANIZATIONS

1. Organizations, agencies, or founders wishing to establish an independent auditing organization (Company or Audit Office) must meet the following conditions:

- Meeting all legal requirements for establishing various types of enterprises (state-owned enterprises, limited liability companies, joint-stock companies, private enterprises, depending on the case).

- Having at least five individuals holding auditor certificates. The head of the auditing organization must be an auditor.

- Receiving written approval from the Minister of Finance for establishment permission and obtaining a decision on establishment from the competent authority according to the law. The procedures and formalities for reviewing applications and issuing decisions to establish independent auditing organizations are carried out according to current laws governing the establishment of various types of enterprises.

2. An independent auditing organization, after obtaining a license to establish, must complete business registration procedures with the competent state agency and announce its name, address, tasks, functions, and leadership personnel on central and local newspapers as required by law. Any changes to the registered information of an independent auditing organization with the state agency must be re-registered or supplementary permission sought.

3. An independent auditing organization must register the list of auditors of its own organization with the Ministry of Finance.

Within fifteen days from the date of the auditing organization's registration of the auditor list, the Ministry of Finance will issue auditor certificates to auditors who have passed the auditor examination and been accepted for work at the auditing organization.

During the course of operation, the auditing organization must promptly report to the Ministry of Finance the list of auditors who have left their profession, transferred to other jobs, or had their right to practice revoked so that their names can be removed from the auditor list and their auditor certificates recalled.

Auditors who leave their profession, transfer to other jobs, or have their right to practice revoked must submit their auditor certificates to the Ministry of Finance within one month from the official date of ceasing work at the auditing organization. Beyond this period, the auditor certificates issued by the Minister of Finance will lose their legal effect.

4. An independent auditing organization is responsible for managing and directing all professional activities of auditors under its management.

In cases where auditors violate professional principles and regulations, the auditing organization must bear joint responsibility. If an auditor causes damage to a client, the auditing organization must assume responsibility towards the client for compensating the damage according to the terms agreed upon in the audit contract.

5. An independent auditing organization is an independent economic accounting unit, entitled to charge service fees to cover expenses. The fee level for each audit contract is agreed upon by both parties based on the volume, complexity of the work, working time, and the fee framework set by the Ministry of Finance.

An independent auditing organization must purchase insurance from legally operating insurance organizations in Vietnam to guard against risks when compensating damages caused to clients.

6. An independent auditing organization must fully fulfill tax obligations and other payments to the state budget as prescribed by law.

IV. STATE MANAGEMENT OF AUDITING ACTIVITIES

1. The activities of independent auditing organizations must comply with state laws and be subject to inspection and supervision by state management agencies like a business enterprise.

Accounting data, financial statements, and final accounts reports of enterprises, organizations, and agencies confirmed by independent auditing organizations are trusted and utilized by state agencies for their management needs. In cases where confirmed accounting data, financial statements, and final accounts reports lack necessary reliability or raise suspicion, state management agencies within their authority and responsibilities directly re-examine and make management decisions based on their examination results. Enterprises, organizations, and agencies must comply with state management agencies' decisions, while requesting the auditing organization to reconsider the audit result report, if there is disagreement or dispute, they may appeal to the local finance authority or the Ministry of Finance for review and resolution.

2. The Ministry of Finance performs state management functions over auditing activities in the national economy. These management functions are carried out through the following measures:

- Issuing and guiding the implementation of principles, standards, and specialized methods of auditing applicable in the national economy.

- Issuing and directing the implementation of training programs and content for auditor skills enhancement, examination rules and issuance of auditor practice certificates, establishing national examination committees and organizing examinations to issue auditor certificates.

- Reviewing and announcing opinions on applications for establishment permits of auditing organizations. Organizing unified registration and management of auditor lists.

- Setting up a fee framework for auditing, after consultation with the Government Price Board, for uniform application in auditing activities.

- Inspecting and supervising compliance with laws and auditing regulations in the operations of auditing organizations, resolving disputes arising from audit results. The final opinion of the Minister of Finance on any disputes or conflicts regarding audit results is conclusive.

V. IMPLEMENTATION PROVISIONS.

This Circular takes effect from the date of signature. Independent auditing organizations established before the Audit Independence Regulation comes into force may continue their operations according to their registered charter, promote preparations for their staff to participate in auditor examination periods, register auditor lists with the Ministry of Finance, and reorganize their activities in accordance with the Audit Independence Regulation.