Decree No. 7/CP Issuing the Regulation on Independent Auditing in the National Economy

DECREE

Issuing regulations on independent auditing in the national economy

 

THE GOVERNMENT

Pursuant to the Government Organization Law dated September 30, 1992;

To meet the needs for development and to unify the management of independent auditing activities in the national economy;

At the proposal of the Minister of Finance;

 

DECREE:

Article 1. The regulations on independent auditing in the national economy are hereby promulgated together with this Decree.

Article 2. This Decree shall take effect from the date of signature. The Minister of Finance shall be responsible for guiding the implementation of the regulations promulgated together with this Decree.

Article 3. The Minister, Heads of Ministries equivalent to Ministries, Heads of Government Agencies, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decree./.

 

REGULATIONS

ON INDEPENDENT AUDITING IN THE NATIONAL ECONOMY

(Issued together with Decree No. 7-CP dated January 29, 1994 of the Government)

PART I

GENERAL PROVISIONS

Article 1. Independent auditing is the examination and verification by professional auditors belonging to independent auditing organizations of the accuracy and reasonableness of accounting documents, figures, and final accounts of enterprises, agencies, social organizations (referred to as accounting units) when requested by these units.

After verification by a professional auditor, the accounting documents, figures, and final accounts of accounting units serve as the basis for managing operations within the unit, for higher-level management agencies and state financial authorities to review annual final accounts of accounting units, for tax authorities to calculate taxes and other payments due from the unit to the state budget, for shareholders, investors, joint venture partners, customers, and individuals and organizations handling relationships involving rights and obligations among related parties during the operation of the unit.

Independent auditing also helps accounting units promptly identify and correct unintentional or intentional errors, prevent violations and losses that may occur in business operations and fund usage.

Article 2. Independent auditing is carried out upon request of the following entities:

1. Joint ventures with foreign capital operating under the Law on Foreign Investment of Vietnam;

2. Limited liability companies and joint stock companies;

3. Private businesses;

4. Cooperatives;

5. State-owned enterprises;

6. Public service organizations and social organizations;

7. International organizations in Vietnam.

Article 3. Independent auditing work is performed by professional auditors (referred to as auditors). Auditors are persons who meet the conditions stipulated in these regulations, recognized and permitted to practice in independent auditing organizations by competent state authorities.

Article 4. An independent auditing organization is a business entity (auditing company or auditing office) established according to current regulations on establishing various types of businesses and the provisions of these regulations.

Article 5. The Ministry of Finance is the state management agency for independent auditing activities.

Article 6. Foreign auditing organizations conducting auditing and financial-accounting advisory services in Vietnam must obtain a license from the State Committee on Cooperation and Investment of Vietnam after obtaining written agreement from the Ministry of Finance. Activities of foreign auditors and auditing organizations must comply with the Law on Foreign Investment of the Socialist Republic of Vietnam, the provisions of these regulations, and internationally recognized auditing practices.

Article 7. The entity requesting auditing has the freedom to choose legitimate independent auditing organizations in Vietnam to enter into auditing contracts.

The entity requesting auditing is responsible for timely, fully, and truthfully providing all necessary information and documents, facilitating auditors in performing auditing tasks, and paying auditing fees in full and on time as agreed in the contract.

Article 8. Auditing work must be conducted according to procedures and professional methods prescribed by the Ministry of Finance. Upon completion of the auditing work, the auditor must prepare an auditing report, record their comments in the report, and bear full responsibility for those opinions. The auditing report must be objective and truthful, signed by the auditor, and confirmed, signed, and stamped by the leader of the auditing organization.

 

PART II

AUDITORS

Article 9. Auditors must be Vietnamese citizens or foreign citizens residing legally in Vietnam, registered to practice at a legitimate independent auditing organization operating in Vietnam.

Article 10. Vietnamese citizens meeting the following conditions are recognized as auditors and permitted to register to practice at an independent auditing organization in Vietnam:

1. Having a clear background; being honest, incorruptible, knowledgeable about laws, policies, economic, financial, accounting, and statistical systems of the state; having no criminal record.

2. Holding a bachelor's or associate degree in finance or accounting, with at least five years of experience in financial or accounting work if holding a bachelor's degree, or ten years if holding an associate degree.

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

Article 11. Current civil servants are not allowed to register to practice in independent auditing organizations. Auditors whose registration permits have been revoked are not allowed to re-register to practice.

Article 12. Foreign citizens can register to practice at an independent auditing organization in Vietnam if they hold an auditor certificate issued by the Minister of Finance of Vietnam or a certificate issued by an international auditing organization recognized by the Vietnamese Ministry of Finance.

Article 13. Auditors can perform the following auditing services:

1. Checking the legality and validity of accounting vouchers, documents, figures, and compliance with state accounting and financial regulations.

2. Verifying and confirming the accuracy and reasonableness of final accounts prepared by accounting units.

3. Verifying and confirming the value of contributions of joint venture participants, shareholders, and the accuracy, completeness, and truthfulness of accounting figures and final accounts of joint ventures, dissolution, merger, division, shareholding transformation, bankruptcy, and other cases as prescribed by law.

4. Financial, accounting appraisals, and advisory services on financial and accounting management and taxation as requested by clients.

Article 14. Auditors carry out auditing tasks in accordance with the following principles:

1. Compliance with the laws of the Socialist Republic of Vietnam.

2. Ensure honesty, independence, objectivity, fairness, and confidentiality of data.

3. Comply with current accounting and auditing standards of Vietnam and internationally recognized accounting and auditing standards acknowledged by the Vietnamese State.

4. Auditors may only provide audit services to client entities where the auditors have no economic relationships and no close familial relationships with the entity's leadership.

Article 15. The auditor shall be responsible for:

1. Strictly adhering to the auditing principles stipulated in Article 14 of this Regulation; properly executing the terms of the audit contract; being liable under the law, before the independent audit organization, and before the client regarding the audit results and comments in the audit report.

2. During the performance of duties, the auditor shall not obstruct or interfere with the management operations of the audited entity and shall only accept audit fees agreed upon in the audit contract.

3. If auditors violate this Regulation or the law, they may have their auditor certification revoked and be subject to legal proceedings; if they cause material damage to the client, they must compensate.

Article 16. Auditors have the right to:

1. Professional independence.

2. Request clients to provide complete and timely financial and other documents relevant to the audit content.

3. Compare and verify economic information related to the audited entity both within and outside the entity (if necessary).

4. During the audit process, if violations of the law are discovered in the audited entity, the auditor has the right to notify and recommend that the entity take corrective measures and may include their opinion in the audit report.

5. Refuse to conduct audits for clients if deemed insufficiently qualified or capable to perform the audit.

 

CHAPTER III

INDEPENDENT AUDIT ORGANIZATIONS

Article 17. Independent audit organizations (audit companies or audit offices) wishing to be established must meet the following conditions:

1. Meet the legal requirements for establishing enterprises.

2. Have at least five individuals holding an auditor certificate. The head of the audit organization must be an auditor.

3. Be approved in writing by the Minister of Finance and obtain a business establishment license from the competent state authority according to the law.

Article 18. After obtaining permission to establish, independent audit organizations must register their business with the competent state authority, publish in accordance with the law, and register the list of auditors with the Ministry of Finance. Any changes to the registered content of independent audit organizations must be re-registered or supplemented with approval.

Article 19. Independent audit organizations are responsible for managing the professional activities of auditors under their supervision, are liable under the law and before clients for violations of the audit practice regulations of the organization and auditors, and must compensate for all damages caused to clients.

Article 20. Independent audit organizations are independent economic accounting units that charge service fees to cover all expenses. The fee level for each audit contract is agreed upon by both parties based on the volume and complexity of the work and the audit fee framework set by the Ministry of Finance.

Independent audit organizations must fully fulfill their obligations to the state budget as prescribed by law and need to purchase insurance from insurance organizations to mitigate risks when compensating for damages caused to clients.

 

PART IV

STATE MANAGEMENT OF AUDIT ACTIVITIES

Article 21. Independent audit organizations are subject to inspection and supervision by state management agencies like any enterprise.

When state management agencies use accounting data and final reports of accounting units that have been verified and confirmed by independent audit organizations, if there are questions, they will recheck and within their scope of responsibility and authority, make management decisions. Accounting units must comply with the decisions of state management agencies, while requesting the audit organization to review the audit results, and if there are disagreements and disputes, they should refer to local finance authorities or the Ministry of Finance for examination and resolution.

Article 22. The Ministry of Finance implements state management functions over audit activities. The content of state management includes:

1. Issuing auditing principles, standards, and guidance materials on professional methods and practices of auditing.

2. Issuing and directing the implementation of regulations on training, upgrading auditing skills, examination formats, and issuing auditor certificates, establishing a national examination board to organize examinations and issue auditor certificates as prescribed by the state.

3. Reviewing applications for permission to establish audit organizations, organizing registration, and uniformly managing the list of auditors.

4. Setting a unified audit fee framework for application in audit activities.

5. Inspecting compliance with laws and audit regulations in the activities of audit organizations, resolving disputes and disagreements about audit results.

Opinion The decision of the Minister of Finance regarding disputes and disagreements about audit results is final.

 

CHAPTER V

FINAL PROVISIONS

Article 23. This Regulation takes effect from the date of signing and applies to independent audit organizations in Vietnam and foreign audit organizations operating in Vietnam.

Article 24. All previous provisions contrary to this Regulation are abolished./.