Decision No. 89/2007/QD-BTC On the issuance of the Regulation on the approval of auditing firms for auditing organizations issuing securities, listed organizations, and securities trading organizations.

Pursuant to …;

Von regarding the issuance of the Audit Firm Selection Regulation for audit firms approved to audit issuers, listed entities, and securities trading organizations

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THE MINISTER OF FINANCE

Pursuant to the Enterprise Law No. 60/2005/QH11 dated November 29, 2005;

Pursuant to the Securities Law No. 70/2006/QH11 dated June 29, 2006, and the Government Decree No. 14/2007/NĐ-CP dated January 19, 2007 detailing certain provisions of the Securities Law;

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

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

Based on the proposal of the Director of the Accounting and Auditing Department and the Chairman of the State Securities Commission,

DECISION:

Article 1. The accompanying this Decision is the "Audit Firm Selection Regulation for audit firms approved to audit issuers, listed entities, and securities trading organizations."

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Decision No. 76/2004/QĐ-BTC dated September 22, 2004 of the Minister of Finance on the Audit Firm Selection Regulation for audit firms approved to audit issuers, listed entities, or securities trading organizations.

Article 3. The Chairman of the State Securities Commission, the Director of the Accounting and Auditing Department, the Head of the Ministry's Office, Heads of relevant units under the Ministry of Finance, Directors of auditing firms operating in Vietnam, Heads of securities issuing organizations, listed organizations, securities trading organizations, stock exchanges, and securities trading centers are responsible for implementing this Decision./.

REGULATIONS

SELECTION OF AUDIT FIRMS APPROVED FOR AUDITING ISSUERS, LISTED ENTITIES, AND SECURITIES TRADING ORGANIZATIONS
(Issued pursuant to Decision No. 89/2007/QĐ-BTC dated October 24, 2007 of the Minister of Finance)

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

Article 1Scope of Application

1. This Regulation applies to audit firms approved by the Ministry of Finance to audit issuers of securities to the public, listed entities, and securities trading organizations as defined in Article 20 and Article 23 of the Government Decree No. 105/2004/NĐ-CP dated March 30, 2004 on independent auditing, Article 1 of the Government Decree No. 133/2005/NĐ-CP dated October 31, 2005 amending and supplementing certain articles of the Government Decree No. 105/2004/NĐ-CP, and meeting the conditions set forth in this Regulation.

2. This Regulation also applies to the objects specified in Article 2 of this Regulation.

Article 2: The mandatory subjects that must be audited by an approved audit firm include:

1. Enterprises and organizations that have issued securities to the public (hereinafter referred to collectively as issuers).

Enterprises and organizations planning to issue securities to the public within the next three years must engage an approved audit firm to audit their financial statements for the two preceding years before issuance.

2. Organizations listed on stock exchanges and securities trading centers (hereinafter referred to collectively as listed entities).

3. Securities companies, investment securities companies, fund management companies, and investment securities funds (hereinafter referred to collectively as securities trading organizations).

Article 3: Annual financial statements of issuers, listed entities, and securities trading organizations must be audited, including:

1. Balance sheet;

2. Income statement;

3. Cash flow statement;

4. Notes to the financial statements;

5. Consolidated financial statements (if the issuer is a parent company, it must prepare consolidated financial statements in accordance with accounting laws);

6. Additional reports as prescribed by the Ministry of Finance.

Article 4: Quarterly and semi-annual financial statements of issuers, listed entities, and securities trading organizations, if required to be reviewed by an auditor before being made public, must be reviewed by a practicing auditor of an approved audit firm in accordance with Auditing Standard No. 910 "Review of Financial Statements" issued by Decision No. 195/2003/QĐ-BTC dated November 28, 2003 of the Minister of Finance.

II. STANDARDS AND CONDITIONS FOR SELECTING AUDIT FIRMS AND AUDITORS

Article 5: An approved audit firm must meet the following standards and conditions:

1. Standards and conditions stipulated in Article 20 and Article 23 of the Government Decree No. 105/2004/NĐ-CP dated March 30, 2004 on independent auditing and Article 1 of the Government Decree No. 133/2005/NĐ-CP dated October 31, 2005 amending and supplementing certain articles of the Government Decree No. 105/2004/NĐ-CP.

2. Standards and conditions stipulated in this Regulation:

2.1. Registered capital or equity capital of at least 2 billion VND for domestic audit firms; minimum registered capital of 300,000 USD for foreign-invested audit firms;

2.2. At least seven practicing auditors and meeting all the standards and conditions stipulated in Article 8 of this Regulation;

2.3. Duration of auditing activities in Vietnam:

a) At least three full years from the date of establishment to the date of submission of the application to participate in auditing. In cases where audit firms must convert their business form according to the Government Decree No. 105/2004/NĐ-CP dated March 30, 2004 on independent auditing and the Government Decree No. 133/2005/NĐ-CP dated October 31, 2005 amending and supplementing certain articles of the Government Decree No. 105/2004/NĐ-CP, the date of establishment is the date recorded in the Business Registration Certificate prior to conversion;

b) In cases where audit firms have been operating in Vietnam for at least six months but less than three years from the date of establishment to the date of submission of the application to participate in auditing, the seven practicing auditors must have at least three full years of auditing experience since obtaining their Auditor Certificate and must meet the requirements stipulated in Clause 1 of Article 8 and points a, d, đ, e, g of Clause 2 of Article 8 of this Regulation.

2.4. Have a minimum of 30 audit clients annually for the two most recent years. For auditing enterprises that have been operating according to the provisions of Point b, Clause 2.3, Article 5, at the time of submitting the Application for Participation in Auditing, they must have a minimum of 30 audit clients.

2.5. Submit the registration application for participation in auditing fully and on time as prescribed in Article 10 of this Regulation.

2.6. Not violate the provisions set forth in Points a, b, and d, Clause 1, Article 12 of this Regulation.

In case there is a violation of the provisions set forth in Point d, Clause 1, Article 12 or a violation related to auditing practice and penalized according to the law, consideration will only be given after one year.

Article 6: An auditing enterprise that has been approved may not conduct auditing for issuers, listed organizations, and securities trading organizations in the following cases:

1. The cases stipulated in Article 27 of Decree No. 105/2004/NĐ-CP.

2. The cases stipulated in this Regulation, including:

a) The auditing enterprise has economic relations such as joint ventures, joint operations, shareholding... with issuers, listed organizations, securities trading organizations, or vice versa;

b) The auditing enterprise and issuers, listed organizations, securities trading organizations have the same organization or individual holding five percent or more of each party's capital;

c) The auditing enterprise is a client currently enjoying preferential conditions from the issuer, listed organization, or securities trading organization being audited (such as receiving credit with preferential terms, guarantee without collateral...);

d) The auditing enterprise is currently performing or has performed within the two consecutive preceding years services such as bookkeeping, financial statement preparation, internal auditing, asset valuation, management consulting, and financial consulting for the issuer, listed organization, or securities trading organization being audited.

Article 7: Joint ventures and associations in auditing for issuers, listed organizations, and securities trading organizations can only be carried out between auditing enterprises approved under this Regulation.

Article 8: Auditors practicing and representatives of leadership of auditing enterprises approved to audit for issuers, listed organizations, and securities trading organizations must meet the following standards and conditions:

1. The standards and conditions prescribed in Article 14 of Decree No. 105/2004/NĐ-CP dated March 30, 2004, of the Government on independent auditing, 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 dated March 30, 2004, of the Government on independent auditing, and Circular No. 60/2006/TT-BTC dated June 28, 2006, of the Ministry of Finance guiding the standards and conditions for establishment and operation of auditing enterprises.

2. The standards and conditions prescribed in this Regulation, including:

a) Being registered in the list of practicing auditors confirmed by the Vietnam Association of Certified Public Accountants (VACPA) and not being a part-time employee for an auditing enterprise;

b) Vietnamese practicing auditors must have at least two full years of auditing experience after obtaining the Auditor Certificate;

c) Foreign practicing auditors must have at least two full years of auditing practice experience in Vietnam;

d) Not being a shareholder or a legal representative for shareholders with voting rights of the issuer, listed organization, or securities trading organization being audited;

đ) Not being a person responsible for managing or operating the issuer, listed organization, or securities trading organization being audited;

e) Not being a client currently enjoying preferential conditions from the issuer, listed organization, or securities trading organization being audited;

g) Not having close familial relationships such as father, mother, spouse, children, or full siblings with persons responsible for managing or operating (including chief accountants) the issuer, listed organization, or securities trading organization being audited.

III. PROCEDURES FOR REVIEWING AND APPROVING AUDITING ENTERPRISES

Article 9: Period for reviewing and approving auditing enterprises

1. Annually, the State Securities Commission conducts reviews and approvals of auditing enterprises meeting the conditions for auditing issuers, listed organizations, and securities trading organizations.

2. From October 1 to October 30 each year, auditing enterprises wishing to participate in auditing issuers, listed organizations, and securities trading organizations must submit two sets of application files to the State Securities Commission as prescribed in Article 10 of this Regulation.

Article 10: The registration dossier for participating in auditing includes:

1. Application for participation in auditing for issuers, listed organizations, and securities trading organizations (in Form 01 attached).

2. Certified copies of the Business Registration Certificate (or Investment Certificate) at the time of establishment and most recent, and the Company Charter.

3. A list of registered auditing practitioners with confirmation from the Vietnam Association of Certified Public Accountants (VACPA), accompanied by brief resumes summarizing the work experience of the auditing practitioner and the audit firm's director.

4. Financial statements and operational reports of the audit firm for the immediately preceding year, including:

a) Financial statements. In cases where the audit firm is required to undergo mandatory auditing, audited financial statements must be submitted.

b) A list of clients who have been audited in the two years prior to the submission of the Application for Participation in Auditing or up to the date of submission (for audit firms whose operating period is calculated according to point b, Clause 2.3, Article 5).

c) The organizational structure, operations, and auditing experience of the auditing practitioner and the audit firm.

d) Any violations of laws by the audit firm (if any).

đ) Significant changes during the fiscal year that affect the organization, operations, and business results of the audit firm.

e) Significant changes related to the auditing practitioner (due to increases or decreases in the number of practitioners, breaches of professional ethics by practitioners...).

For subsequent registrations, documents specified in Clause 2 of this Article and brief resumes in Clause 3 of this Article need not be submitted (unless there are changes).

Article 11: Publicize the list of audit firms and certified public accountants approved

1. By November 15th each year, the State Securities Commission shall publicly announce the list of audit firms and the list of certified public accountants of audit firms approved to conduct audits for issuers, listed organizations, and securities trading organizations. This announcement shall be made in accordance with Appendix 02 at the following addresses:

a) Written notification to Ministries, agencies equivalent to Ministries, state-owned corporations, Provincial Finance Departments, business registration agencies in provinces and cities, Stock Exchanges, Securities Trading Centers, the Vietnam Association of Certified Public Accountants (VACPA), the Accounting and Auditing Department of the Ministry of Finance, and other entities specified in Clauses 2 and 3 of Article 2 of this Regulation. Stock Exchanges and Securities Trading Centers must publicly display the list of approved audit firms and certified public accountants at their trading locations.

b) Announcement on the websites of the State Securities Commission, the Ministry of Finance, and VACPA.

If the State Securities Commission does not approve an audit firm to conduct audits for issuers, listed organizations, and securities trading organizations, it must issue a formal letter stating the reasons for non-approval.

2. Within the approved period, if the number of approved certified public accountants decreases to a level that does not meet the conditions stipulated in Article 5 of this Regulation, the approved audit firm must notify the State Securities Commission in writing along with a list of new certified public accountants proposed to be added to the list of approved certified public accountants.

3. Based on the list of approved audit firms and certified public accountants, issuers, listed organizations, and securities trading organizations may consider and select audit firms and certified public accountants to enter into contracts for conducting audits for their units.

Article 12: Suspension or Revocation of Approved Audit Status

1. An audit firm or practicing auditor shall be suspended from their approved audit status for a period in the following cases:

a) Violating obligations stipulated in Clause 3 and Clause 4 of Article 13 of this Regulation;

b) Audit results failing to meet requirements based on accounting standards, auditing standards, and relevant laws as assessed by the State Securities Commission;

c) The audit firm not having at least seven practicing auditors with approved status continuously for six months;

d) Pending legal proceedings concerning complaints about audit results.

2. An audit firm or practicing auditor whose approved audit status has been suspended for a period may continue to perform audits under existing contracts but shall not enter into new contracts with issuers, listed entities, and securities trading organizations from the date of notification by the State Securities Commission until the next approval.

3. An audit firm or auditor shall have their approved audit status revoked in the following cases:

a) The audit firm voluntarily withdraws its application to participate in auditing;

b) The audit firm's business registration certificate (or investment certificate) is revoked, or the practicing auditor's auditing certificate is revoked according to Clause 1 of Article 36 of Government Decree No. 105/2004/NĐ-CP dated March 30, 2004 on independent auditing;

c) Seriously violating obligations stipulated in Article 13 of this Regulation.

4. An audit firm or practicing auditor whose approved audit status has been revoked shall not continue to perform audits for issuers, listed entities, and securities trading organizations from the date of notification by the State Securities Commission until the next approval.

5. An audit firm or practicing auditor whose approved audit status has been revoked due to the circumstances specified in point b and point c of Clause 3 of this Article shall not be considered for reapproval for two years.

Article 13: An approved audit firm shall have the obligation to:

1. Be thoroughly familiar with legal provisions related to securities and the securities market concerning financial statements of the audited entity;

2. Provide explanations or information, data related to auditing activities when there are complaints as requested by the State Securities Commission;

3. During the auditing process, if discovering that the issuer, listed entity, or securities trading organization does not comply with laws and regulations related to the audited financial statements, they must report and recommend measures to prevent, correct, and address violations to the audited entity; record opinions in the Audit Report or Management Letter regarding unaddressed violations according to auditing standards;

4. After issuing the audit report, if there are suspicions or discoveries of significant violations by the audited entity due to non-compliance with laws and regulations related to the audited financial statements, the audit firm must follow procedures to notify the audited entity and third parties as prescribed by auditing standards and notify the State Securities Commission;

5. Maintain confidentiality of information according to legal provisions on auditing;

6. In case the audit firm prepares an inaccurate and misleading audit report causing damage to clients and users of the audit results, the audit firm shall bear responsibility for compensating the damage caused to the client or be subject to legal sanctions;

7. An approved audit firm shall fulfill other obligations as prescribed by law.

IV. IMPLEMENTATION

Article 14: The State Securities Commission shall be responsible for:

1. Receiving applications to participate in auditing for issuers, listed organizations, and securities trading organizations; ensuring confidentiality of information in the application in accordance with the law.

2. Reviewing applications and conducting on-site inspections at enterprises when necessary to approve or respond if conditions for approval are not met; implementing procedures to suspend or revoke approved auditing qualifications; publicly announcing lists of auditing firms and certified auditors who meet the conditions to participate in auditing for issuers, listed organizations, and securities trading organizations. In carrying out this responsibility, the State Securities Commission must coordinate with units assigned the responsibility to manage auditing practices such as the Accounting and Auditing Department of the Ministry of Finance and the Vietnam Association of Certified Public Accountants (VACPA).

3. Receiving audited financial reports from issuers, listed organizations, and securities trading organizations and performing state management responsibilities as prescribed.

4. When using information and data in audited financial reports of approved auditing firms and finding doubts, the State Securities Commission must directly re-examine and make management decisions based on the results of the re-examination.

Article 15: Any amendments or supplements to this Regulation shall be decided by the Minister of Finance.