Circular No. 24/2021/TT-NHNN amending and supplementing certain articles of Circular No. 39/2011/TT-NHNN dated December 15, 2011, issued by the Governor of the State Bank of Vietnam on independent auditing for credit institutions and foreign bank branches.

CIRCULAR

Amending and supplementing certain Articles of Circular No. 39/2011/TT-NHNN dated December 15, 2011 issued by the Governor of the State Bank of Vietnam on independent auditing for credit institutions

of the Governor of the State Bank of Vietnam in December 2011

regarding independent audit for credit institutions,

foreign bank branches

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010, and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Independent Auditing Law dated March 29, 2011;

Pursuant to Decree No. 26/2014/NĐ-CP dated April 7, 2014 of the Government on the organization and operation of the Banking Inspection and Supervision; Decree No. 43/2019/NĐ-CP dated May 17, 2019 of the Government amending and supplementing certain Articles of Decree No. 26/2014/NĐ-CP dated April 7, 2014 of the Government on the organization and operation of the Banking Inspection and Supervision;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam hereby promulgates this Circular amending and supplementing certain Articles of Circular No. 39/2011/TT-NHNN dated December 15, 2011 issued by the Governor of the State Bank of Vietnam on independent auditing for credit institutions, foreign bank branches.

Article 1. Amending and supplementing certain Articles of Circular No. 39/2011/TT-NHNN

1. Amend and supplement Article 1 as follows:

"Article 1. Scope of Regulation

1. This Circular stipulates independent auditing for credit institutions, foreign bank branches.

2. Independent auditing of credit institutions under special supervision as provided for in Article 147 and Article 151a of the Law on Credit Institutions (as amended and supplemented) and independent auditing of credit institutions, foreign bank branches to serve banking inspection and supervision requirements as prescribed by the Government on the organization and operation of the Banking Inspection and Supervision shall be carried out in accordance with relevant laws and must comply with Articles 11, 12, 13, and 14 of this Circular.

2. Amending and supplementing Clause 2 Article 8 as follows:

"2. Independent auditing of the internal control system of credit institutions, foreign bank branches shall cover at least the following contents:

a) Auditing the internal control system of credit institutions, foreign bank branches (including mechanisms, policies, procedures, internal regulations) in compliance with current laws and regulations of the State Bank of Vietnam on the internal control system of credit institutions, foreign bank branches.

For contents of the internal control system that have been audited for compliance and have not changed, there is no need to re-audit those contents;

b) Auditing the operations of the internal control system regarding the preparation and presentation of financial statements;

c) In addition to the audit contents specified in points a and b of this clause, commercial banks and foreign bank branches must conduct audits of the operations of the internal control system regarding the internal assessment of the adequacy of capital of commercial banks and foreign bank branches as prescribed by the State Bank of Vietnam on the internal control system."

3. Supplementing Clause 3 to Article 8 as follows:

"3. Auditing activities concerning the internal control system of credit institutions, foreign bank branches as provided for in points b and c of Clause 2 of this Article aim to ensure the following requirements:

a) Efficiency and safety in operations; protection, management, and safe, efficient use of assets and resources;

b) Financial information and management information being true, reasonable, complete, and timely."

4. Amend and supplement Clause 4 of Article 9 as follows:

"4. Within ninety days from the date of receiving the audit report with a disclaimer opinion, credit institutions, foreign bank branches shall send the audit results back to the State Bank of Vietnam for reporting."

Article 5. Amend and supplement Clause 2 of Article 10 as follows:

"2. Audit reports on the financial statements of credit institutions, foreign bank branches must comply with the provisions of laws on independent auditing, accounting standards, Vietnamese auditing standards, and other relevant laws.

Audit reports on the operations of the internal control system of credit institutions, foreign bank branches must at least assess the compliance with current laws and guidelines of the State Bank of Vietnam in establishing and implementing the internal control system and evaluate the economic efficiency, effectiveness of operations of this system in preventing, detecting, and promptly addressing risks and other objectives of credit institutions, foreign bank branches as provided for in points b and c of Clause 2 of Article 8 of this Circular."

6. Amending and supplementing Clause 11 of Article 11 as follows:

"11. Auditing organizations, practicing auditors performing auditing of banks, non-bank credit institutions, foreign bank branches listed in the approved list of auditing organizations and practicing auditors for public interest entities published by the Ministry of Finance during the auditing period.

If the bank, non-bank credit institution is a public interest entity in the securities sector, then the auditing organization, practicing auditor performing auditing of the bank, non-bank credit institution must belong to the approved list of auditing organizations and practicing auditors for public interest entities in the securities sector published by the Securities Commission during the auditing period."

7. Amending and supplementing Clause 2 Article 12 as follows:

"2. Auditing organizations, practicing auditors performing auditing of microfinance organizations, people's credit funds listed in the approved list of auditing organizations and practicing auditors for public interest entities published by the Ministry of Finance during the auditing period."

8. Supplementing Clause 2a after Clause 2 of Article 12 as follows:

"2a. Not conducting independent auditing of the same microfinance organization, people's credit fund for five consecutive years immediately preceding the year of auditing."

9. Amending and supplementing Clauses 2, 4, and 5 of Article 15 as follows:

"2. Within thirty days from the date of deciding to select an independent auditing organization, it is responsible for sending a written notice about the selected independent auditing organization to the State Bank of Vietnam according to the following provisions:

a) Credit institutions and foreign bank branches shall send to the State Bank of Vietnam (through the Banking Inspection and Supervision Authority), except for cases provided for in point b of this clause;

b) The People's Credit Fund, foreign bank branch shall submit to the State Bank of Vietnam branch in the province or centrally governed city (hereinafter referred to as the State Bank of the province or city) where the People's Credit Fund or foreign bank branch is headquartered.

4. Within ninety days from the end of the fiscal year, submit the results of independent auditing to the State Bank of Vietnam as stipulated in points a and b of Clause 2 of this Article.

5. Conduct a re-audit for cases where the audit report contains a disclaimer opinion; send the results of the re-audit to the State Bank in accordance with points a and b of Clause 2 of this Article.

10. Amend and supplement Clause 2 of Article 16 as follows:

"2. Analyze, evaluate, and handle the results of independent audits and re-audits received in accordance with Clause 4 and Clause 5 of Article 15 of this Circular.

In case of discovering auditors and auditing organizations violating laws during the implementation of independent audits of credit institutions and foreign bank branches, the State Bank of the province or city shall promptly report and propose measures to the Governor of the State Bank (through the Banking Supervision Department).

11. Amend and supplement Clause 1 and Clause 3 of Article 17 as follows:

"1. Summarize, evaluate, and submit to the Governor of the State Bank for handling the reports of the State Bank of the province or city stipulated in Clause 3 of Article 16 of this Circular.

3. Report and propose to the Governor of the State Bank of Vietnam the following contents:

a) Consider and resolve cases stipulated in Clause 6 of Article 15 of this Circular;

b) Send a document to the Ministry of Finance upon discovery or receipt of reports from the State Bank of the province or city stipulated in Clause 2 of Article 16 of this Circular regarding auditors and auditing organizations violating laws during the implementation of independent audits of credit institutions and foreign bank branches.

Article 2. Repeal Clause 7 of Article 3, Clause 2 of Article 4, Clause 2 of Article 6, Clause 9 of Article 11, Clause 1 of Article 16, and Clause 5 of Article 17 of Circular No. 39/2011/TT-NHNN.

Article 3. Implementation Organization

The Director of the Office, the Director of the Banking Supervision Department, the Heads of units under the State Bank of Vietnam, credit institutions, and foreign bank branches are responsible for organizing the implementation of this Circular.

Article 4. Implementation provisions

1. This Circular takes effect from April 15, 2022, except for cases provided for in Clause 2 of this Article.

2. Independent audits of internal control systems concerning internal assessments of capital adequacy of commercial banks and foreign bank branches as prescribed in this Circular shall be conducted starting from the fiscal year 2022 onwards./.