Decree No. 84/2016/NĐ-CP on standards and conditions for practicing auditors and auditing organizations approved to audit entities with public interest.

DECREE

Regarding standards and conditions for practicing auditors and organizations approved to audit entities with public interest
auditing firm approved for auditing entities with public interest

________________

Pursuant to the Government Organization Law dated June 19, 2015;

Pursuant to the Independent Audit Law on March 29, 2011;

Pursuant to the Securities Law on June 29, 2006 and the Law Amending and Supplementing Certain Provisions of the Securities Law on November 24, 2010;

Pursuant to the Investment Law on November 26, 2014;

At the proposal of the Minister of Finance;

The Government promulgates the Decree on standards and conditions for practicing auditors and organizations approved to audit entities with public interest.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates standards and conditions for practicing auditors and organizations approved to audit entities with public interest.

Article 2. Applicability

1. Organizations conducting audits and practicing auditors approved to audit entities with public interest.

2. Entities with public interest, excluding non-publicly traded credit institutions that do not issue securities to the public.

3. Other organizations and individuals related to the examination of standards and conditions for practicing auditors and organizations approved to audit entities with public interest.

Article 3. Explanation of Terms

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

1. "Audit organization" means an auditing enterprise and a branch of a foreign auditing enterprise operating legally in Vietnam.

2. "Approved audit organization" means an audit organization approved by competent state authorities to conduct audits of entities with public interest.

3. "Approved practicing auditor" means a practicing auditor approved by competent state authorities to conduct audits of entities with public interest.

4. "Approval period" means the period during which an audit organization or approved practicing auditor is permitted to audit entities with public interest, calculated annually from January 1 to December 31.

Article 4. Entities with Public Interest

1. Entities with public interest are those specified in Article 53 of the Independent Audit Law.

2. Entities with public interest in the securities sector include: large publicly traded companies as defined by securities laws, listed organizations, organizations issuing securities to the public, securities companies, investment securities companies, funds, and fund management companies.

3. Other entities with public interest include:

a) Publicly traded companies, except for large publicly traded companies as defined in Clause 2 of this Article;

b) Insurance enterprises, reinsurance enterprises, insurance brokerage enterprises, branches of foreign non-life insurance enterprises (excluding insurance enterprises as defined in Clause 2 of this Article);

c) Enterprises and other organizations whose activities affect public interests according to the provisions of the law.

Chapter II

SPECIFIC PROVISIONS

Article 5. Conditions for Approved Audit Organizations

1. An approved audit organization conducting audits for entities with public interest must meet the following conditions:

b) Have a charter capital or paid-up capital (for branches of foreign auditing enterprises in Vietnam) of at least 6 billion VND and must maintain shareholders' equity on the balance sheet at no less than 6 billion VND continuously;

c) Have at least 10 practicing auditors, including the Director or General Director, who meet the standards set forth in Article 6 of this Decree;

đ) Have issued audit reports on annual financial statements for at least 200 audited entities from October 1 of the previous year to September 30 of the year of application submission;

In case the audit organization has been approved in the year of application submission, it must additionally meet the condition of having issued audit reports on annual financial statements (or reviewed financial statements) for at least 10 entities with public interest from October 1 of the previous year to September 30 of the year of application submission;

2. For approved audit organizations conducting audits for entities with public interest in the securities sector, in addition to meeting the conditions specified in Points a, b, e, g, h, and i of Clause 1 of this Article, they must also meet the following conditions:

a) Have at least 15 practicing auditors, including the Director or General Director, who meet the standards set forth in Article 6 of this Decree;

In case the audit organization has been approved in the year of application submission, it must additionally meet the condition of having issued audit reports on annual financial statements (or reviewed financial statements) for at least 20 entities with public interest in the securities sector from October 1 of the previous year to September 30 of the year of application submission.

Article 6. Standards for practicing auditors approved

In addition to the standards prescribed in the Law on Independent Auditing, approved practicing auditors must meet the following standards:

1. Their names must be listed in the registry of auditors meeting the conditions for auditing practice, published by the Ministry of Finance at the time of submitting the application for audit implementation registration.

2. They must have at least 24 months of actual auditing practice in Vietnam from the date they were recognized as meeting the conditions for auditing practice to the date of submitting the application for audit implementation registration.

Article 7. Cases where auditing organizations and practicing auditors are not considered for approval

1. The cases not subject to consideration and approval include:

a) Auditing organizations currently suspended from operating auditing services according to the laws on independent auditing;

b) Auditing organizations that fail to promptly correct and rectify violations as advised by competent state agencies;

c) Auditing organizations involved in disputes regarding audit results and found by competent state agencies to have committed violations;

d) Auditing organizations whose audit quality does not meet requirements based on the results of inspections or conclusions by competent authorities in the year under review;

đ) Practicing auditors responsible for audit files whose audit quality does not meet requirements based on the results of inspections or conclusions by competent authorities in the year under review;

e) Auditing organizations and practicing auditors who violate laws related to auditing practice and have been administratively sanctioned by competent authorities according to the law in the year under review;

g) Auditing organizations and practicing auditors who falsify or misrepresent information in their registration applications for auditing participation;

h) Auditing organizations and practicing auditors who fail to provide explanations, do not meet explanation requirements, or fail to provide information and data related to auditing activities as requested by competent state agencies;

i) Auditing organizations and practicing auditors whose approval status has been revoked within less than 24 months from the revocation date;

k) Auditing organizations and practicing auditors who fail to report or submit reports as required by the laws on independent auditing.

2. Auditing organizations and practicing auditors falling under any of the cases specified in Points d, đ, g, and h of Clause 1 of this Article shall only be considered for approval after 12 months from the date of the conclusion or decision on handling by the competent authority.

Article 8. Handling of audit contracts signed in cases of non-approval

1. Auditing organizations and practicing auditors not approved in any period shall not continue to perform audit contracts and other assurance services already signed and shall not sign new audit contracts with public interest entities during that period, except as provided in Clause 2 of this Article.

2. Auditing organizations and practicing auditors approved in the previous period but not approved in the subsequent period may only continue to implement financial statement audit contracts signed with public interest entities in the subsequent period if all of the following conditions are met:

a) They have conducted a review of the interim financial statements for public interest entities required to undergo such reviews during the approved period;

b) They issue an audit report on the financial statements within 90 days from the end of the fiscal year of the public interest entity.

Article 9. Documents for registering to conduct audits for entities with public interest

1. An audit registration form for entities with public interest (in accordance with the model attached to this Decree).

3. A list of practicing auditors proposed for approval, specifying the actual period (number of months) of practicing auditing in Vietnam from the date they were recognized as meeting the conditions for practicing auditing by the competent authority.

4. Financial statements and operational reports of the auditing organization for the most recent fiscal year, including:

a) Audited financial statements;

b) The list of audit reports as prescribed in Point đ Clause 1 or Point c Clause 2 of Article 5 of this Decree;

c) The organizational structure, operations, and auditing experience of practicing auditors and the auditing organization;

d) Any administrative penalties imposed on the auditing organization for violations of laws (if any);

đ) Significant changes during the fiscal year affecting the organization, operations, and business results of the auditing organization (such as increases or decreases in capital contributions; increases or decreases in charter capital);

e) Significant changes related to practicing auditors during the year (such as increases or decreases in the number of practicing auditors, ethical violations by practicing auditors);

6. In cases of re-registration, the auditing organization is not required to submit the documents specified in Clause 2, Point c, Point g Clause 4, and Clause 5 of this Article if there have been no changes compared to the previous registration.

Article 10. Review, Approval, and Publicizing of Lists of Auditing Organizations and Practicing Auditors

1. From October 1 to October 20 each year, auditing organizations must submit one set of documents as stipulated in Article 9 of this Decree to the Ministry of Finance to be approved to conduct audits for entities with public interest. If the auditing organization registers to audit entities with public interest in the securities sector, it must simultaneously submit one set of documents to the State Securities Commission.

2. During the review process, if the documents do not comply with the regulations, within ten working days from the date of receiving the documents, the competent authority will request the auditing organization to complete the documents. The auditing organization must complete the documents before November 5. If the documents do not meet the requirements, the competent authority will notify the auditing organization in writing.

3. The Ministry of Finance will review, approve, and publicize the lists of auditing organizations and approved practicing auditors who can conduct audits for entities with public interest on its website or electronic portal before November 15 each year. Auditing organizations and practicing auditors listed in this list are permitted to conduct audits for entities with public interest as prescribed in Clause 3 of Article 4 of this Decree.

The State Securities Commission will review, approve, and publicize the lists of auditing organizations and approved practicing auditors who can conduct audits for entities with public interest in the securities sector on its website or electronic portal before November 20 each year. Auditing organizations and practicing auditors listed in this list are permitted to conduct audits for entities with public interest as prescribed in Clause 2 of Article 4 of this Decree.

4. Based on the approved lists of auditing organizations and practicing auditors, entities with public interest shall select auditing organizations and practicing auditors to sign contracts for conducting audits for their entities. The lists of approved auditing organizations and practicing auditors for entities with public interest and the lists of approved auditing organizations and practicing auditors for entities with public interest in the securities sector will be updated upon decisions made by the competent authorities.

Chapter III

IMPLEMENTATION

Article 11. Effectiveness and Implementation Responsibility

1. This Decree takes effect from July 1, 2016.

2. The Minister of Finance is responsible for guiding the implementation of this Decree. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees, and relevant organizations and individuals are responsible for enforcing this Decree.