Circular No. 60/2006/TT-BTC guiding standards and conditions for the establishment and operation of auditing firms

CIRCULAR

Guidelines for standards and conditions for establishment and operation of auditing enterprises

auditing enterprise    

Pursuant to the Enterprise Law dated November 29, 2005;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government on functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 105/2004/NĐ-CP dated March 30, 2004 of the Government on independent auditing;

Pursuant to Decree No. 133/2005/NĐ-CP dated October 31, 2005 of the Government amending and supplementing certain articles of Decree No. 105/2004/NĐ-CP dated March 30, 2004 of the Government on independent auditing;

The Ministry of Finance issues guidelines for standards and conditions for establishment and operation of auditing enterprises as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Auditing enterprises referred to in this Circular include enterprises established and operating under the provisions of law in the forms of limited liability companies (LLC), partnerships, and private enterprises.

An auditing LLC is an LLC with two members or more providing auditing services and related services.

An auditing partnership is a partnership providing auditing services and related services.

An auditing private enterprise is a private enterprise providing auditing services and related services.

2. Auditing LLCs, auditing partnerships, and auditing private enterprises shall be established and operate in accordance with the provisions of the Enterprise Law, Decree No. 105/2004/NĐ-CP dated March 30, 2004, Decree No. 133/2005/NĐ-CP dated October 31, 2005, Circular No. 64/2004/TT-BTC dated June 29, 2004 of the Ministry of Finance guiding the implementation of some articles of Decree No. 105/2004/NĐ-CP, and the guidelines on standards and conditions for establishment and operation set forth in this Circular.

3. Individuals shall not be members of an auditing LLC, partners of an auditing partnership, or owners of an auditing private enterprise, including:

a) Individuals prohibited from engaging in business activities under the law;

b) Individuals working for other enterprises providing auditing services.

4. Business registration dossier of auditing LLCs, auditing partnerships, and auditing private enterprises: In addition to the documents required by law, there must be certified copies of the Auditor Certificate issued three years prior to the date of business registration of the General Director (or Managing Director) and certified copies of at least two Auditor Certificates of two other individuals.

II. LIMITED LIABILITY COMPANY FOR AUDITING

1. Standards and conditions for establishment and operation of auditing LLCs:

a) Auditing LLCs must comply with the provisions of Article 20, Article 23 of Decree No. 105/2004/NĐ-CP and Article 1 of Decree No. 133/2005/NĐ-CP;

b) Members of an auditing LLC may be individuals or organizations. The number of members must be at least two and not exceed fifty;

c) Individual members must meet all the standards and conditions prescribed by law and stipulated in Point 2, Part II of this Circular;

d) Organizational members must appoint one person as their representative. The legal representative of an organizational member must meet all the standards and conditions prescribed by law and stipulated in Point 3, Part II of this Circular. Organizations currently operating in Vietnam that provide auditing services and organizations prohibited from engaging in business activities under the law shall not be members of an auditing LLC;

đ) When establishing and during the course of operation, an auditing LLC must have at least three individuals holding Auditor Certificates, including the General Director (or Managing Director).

2. Standards and conditions for individual members:

a) Must possess professional ethics in accounting and auditing as prescribed by ethical standards; be honest, incorruptible, and conscientious about complying with the law;

b) Individuals appointed as General Director (or Managing Director) of the company must hold an Auditor Certificate and must have at least three years of practical experience in auditing since obtaining the Auditor Certificate; must contribute at least 10% of the charter capital; shall not simultaneously manage, direct, or enter into labor contracts with other organizations or agencies;

c) Members of the Board of Directors directly responsible for auditing services must hold an Auditor Certificate. If the auditing LLC registers to provide other services as prescribed by law (such as accounting services, asset valuation services...), then the members of the Board of Directors directly responsible for those services must hold appropriate professional certificates as prescribed by law;

d) Must participate in contributing capital to the company;

đ) Individual members who are required to have a professional certificate under the law must work directly at the company.

3. Standards and conditions for the legal representative of organizational members:

a) Must possess professional ethics in accounting and auditing as prescribed by ethical standards; be honest, incorruptible, and conscientious about complying with the law;

b) Must have a power of attorney from the organizational member authorizing them to represent the member in performing rights and obligations as prescribed by law.

c) If the representative is appointed as General Director (or Managing Director) of the company, they must hold an Auditor Certificate and must have at least three years of practical experience in auditing since obtaining the Auditor Certificate; shall not simultaneously manage, direct, or enter into labor contracts with other organizations or agencies. The organizational member must contribute at least 10% of the charter capital;

4. Members of an auditing LLC may not transfer, gift, or give away their contributed capital to non-members who do not satisfy the standards and conditions for members prescribed in Points 2 and 3, Part II of this Circular, except where the Company Charter provides otherwise without contravening this Circular.

5. In case a member is an individual who dies or is declared dead by the Court, the heir under the will or under the law of that member may become a member of the company if they meet the standards and conditions for members as prescribed by law and stipulated in Points 2 and 3, Part II of this Circular, except where the Company's Articles of Association provide otherwise. If the heir does not meet the standards and conditions for members of a limited liability auditing company as prescribed, they have the right to request the company to return the contributed capital according to the provisions of the law.

III. AUDITING PARTNERSHIP

1. Standards and conditions for establishment and operation of auditing partnership:

a) An auditing partnership must be established and operate in accordance with the provisions of Article 20 and Article 23 of Decree No. 105/2004/ND-CP and Article 1 of Decree No. 133/2005/ND-CP.

b) An auditing partnership shall have general partners and capital contributors. The number of general partners must be at least two individuals. General partners must be natural persons. Capital contributors can be organizations or individuals.

c) General partners must meet all the standards and conditions as prescribed by law and stipulated in Point 2, Part III of this Circular.

d) When establishing and during its operation, an auditing partnership must have at least three individuals holding an Auditing Certificate, including one general partner serving as Director (or General Director) and at least one other general partner.

2. Standards and conditions for general partners:

a) Must possess professional ethics in accounting and auditing as prescribed by ethical standards; be honest, incorruptible, and conscientious about complying with the law;

b) A general partner appointed as Director (or General Director) of the company must hold an Auditing Certificate and must have at least three years of actual work experience in auditing from the date of obtaining the Auditing Certificate, and must contribute at least 10% of the registered capital; they cannot simultaneously manage, direct, or enter into employment contracts with other organizations or agencies.

c) A general partner directly responsible for auditing services must hold an Auditing Certificate. In cases where the auditing partnership registers to conduct other services as prescribed by law (such as accounting services, asset valuation services...), the general partner directly responsible for these services must hold a corresponding professional certificate as prescribed by law.

d) Must participate in contributing capital to the company;

đ) General partners and individuals required to hold a professional certificate as prescribed must work directly at the company.

3. New general partners accepted into the company must meet all the standards and conditions for general partners as prescribed by law and stipulated in Point 2, Part III of this Circular and must be approved by the Board of Members.

4. In case a general partner dies or is declared dead by the Court, the heir under the will or under the law of that general partner may become a general partner of the company if they meet the standards and conditions for general partners as prescribed by law and stipulated in Point 2, Part III of this Circular and are approved by the Board of Members. If they do not meet the prescribed standards and conditions for general partners, they may become a capital contributor or request the company to return the contributed capital according to the provisions of the law.

5. In case a capital contributor is an individual who dies or is declared dead by the Court, the heir under the will or under the law of that capital contributor becomes a capital contributor of the company.

6. A general partner will be expelled from the company after obtaining the consent of all remaining partners; or if that partner violates the law, breaches professional ethics in accounting and auditing, and has their Auditing Certificate revoked by the Ministry of Finance.

7. When a general partner due to old age or other reasons is unable to continue practicing, another person meeting the standards and conditions for general partners as prescribed by law and stipulated in Point 2, Part III of this Circular and approved by the Board of Members may take over their rights and obligations and become a general partner.

8. A general partner may convert to a capital contributor but still must bear responsibility as prescribed by law during their tenure as a general partner. An individual capital contributor may convert to a general partner if they voluntarily meet the standards and conditions for general partners as prescribed by law and stipulated in Point 2, Part III of this Circular and are approved by the Board of Members.

9. The Company's Articles of Association must specify the principles for appointing general partners to represent the company in signing audit reports (such as a general partner appointed as Director (or General Director) or someone authorized) and professional auditors performing audits.

IV. PRIVATE ENTERPRISE FOR AUDITING

1. Standards and conditions for establishment and operation of private enterprise for auditing:

a) A private enterprise for auditing must be established and operate in accordance with the provisions of Article 20 and Article 23 of Decree No. 105/2004/ND-CP and Article 1 of Decree No. 133/2005/ND-CP.

b) When establishing and during its operation, a private enterprise for auditing must have at least three individuals holding an Auditing Certificate, including a Director (or General Director).

c) The owner of a private enterprise for auditing must serve as Director (or General Director). The owner of a private enterprise for auditing must hold an Auditing Certificate and must have at least three years of actual work experience in auditing from the date of obtaining the Auditing Certificate. The owner of a private enterprise cannot simultaneously manage, direct, or enter into employment contracts with other organizations or agencies.

2. Standards and conditions for members of the Management Board of a private enterprise for auditing:

a) Must possess professional ethics in accounting and auditing as prescribed by ethical standards; be honest, incorruptible, and conscientious about complying with the law;

b) For a private enterprise for auditing that registers to conduct other services as prescribed by law (such as accounting services, asset valuation services...), the member of the Management Board directly responsible for these services must hold a corresponding professional certificate as prescribed by law.

V. TRANSITION OF FORMS OF AUDITING COMPANIES

1. When implementing the conversion of state-owned audit enterprises (state-owned enterprises, joint-stock companies converted from state-owned enterprises, limited liability companies) into audit enterprises as prescribed in this Circular, a conversion plan must be established and approved by the competent authority for each specific case according to the following principles:

a) The inventory and valuation of the enterprise must be carried out in accordance with the laws on converting state-owned companies into joint-stock companies.

b) The conversion must ensure the standards and conditions for establishment and operation stipulated in this Circular.

c) The transfer of state capital in audit enterprises with state ownership shall apply the public auction method as prescribed by the laws on restructuring and converting state-owned companies into joint-stock companies.

2. The conversion of pre-existing audit joint-stock companies into limited liability audit companies, partnership audit companies, or private audit enterprises must ensure the standards and conditions stipulated in this Circular and the decision of the Shareholders' Meeting; or according to the principle of dissolving the old company and simultaneously establishing a new company.

3. Limited liability audit companies and partnership audit companies established before the effective date of this Circular, if found not to meet the stipulated standards and conditions, must restructure their organization to ensure the standards and conditions stipulated in this Circular and register additional business operations according to current regulations.

4. The conversion of state-owned enterprises, limited liability companies, and audit joint-stock companies into limited liability audit companies, partnership audit companies, or private audit enterprises, and the restructuring of limited liability audit companies and partnership audit companies as prescribed in points 1, 2, and 3 of Part V of this Circular must be completed by April 21, 2007, as stipulated in point 3 of Article 20 of Decree No. 105/2004/NĐ-CP dated March 30, 2004, of the Government on independent auditing.

VI. IMPLEMENTATION

1. This Circular takes effect fifteen days after its publication in the Official Gazette.

2. Ministries, ministerial-level agencies, government-affiliated agencies, provincial People's Committees, audit enterprises, organizations, and individuals related to this matter are responsible for implementing this Circular.

During implementation, if there are any difficulties, they are requested to report to the Ministry of Finance for study and resolution./.