Nghị định 105/2004/NĐ-CP về kiểm toán độc lập

DECREE

ON INDEPENDENT AUDIT

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to Article 34 of the June 17, 2003 Accounting Law;
At the proposal of the Finance Minister,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- This Decree prescribes auditors, auditing enterprises, validity of audit results, cases of compulsory audit and contains other regulations related to independent auditing activities in order to unify the management of independent auditing activities, define rights and responsibilities of audited units and auditing enterprises, protect interests of the community and lawful interests of investors, ensure the truthful, rational and public supply of economic and financial information, and satisfy the management requirements of State agencies, enterprises and individuals.

Article 2.- Interpretation of terms

In this Decree, the words and phrases below are construed as follows:

1. Independent audit means the inspection and certification by auditors and auditing enterprises of truthfulness and rationality of accounting documents and data and financial statements of enterprises and organizations (hereinafter referred collectively to as audited units) when so requested by such units.

2. Auditors mean persons who fully meet the criteria and conditions for practicing independent audit, as prescribed in Articles 13 and 14 of this Decree.

3. Profession-practicing auditors mean auditors who have already registered for profession practice in an auditing enterprise established and operating under Vietnamese laws and are authorized to sign audit reports.

4. Auditing enterprises mean enterprises established and operating under law provisions on enterprise establishment and operation in Vietnam and the provisions of this Decree.

5. Audit standards mean regulations and guidance on auditing principles and procedures, which serve as basis for auditors and auditing enterprises to conduct audit as well as basis for controlling the quality of auditing activities.

6. Audit reports mean written reports made and publicized by auditors or auditing enterprises, expressing their official opinions on the financial statements of the audited unit.

Article 3.- Validity of audit results

Accounting documents and data and financial statements of audited units, after being inspected and certified by auditors and auditing enterprises shall serve as reliable bases for:

1. State agencies and superior units to use in the management and administration according to their respective functions and tasks;

2. Shareholders, investors, parties to joint ventures or associations, clients and other organizations and individuals to deal with interest and obligation relationships of involved parties in the course of operation of the units;

3. Helping the audited units detect, handle and promptly prevent errors which may occur in their operations, thus contributing to publicization of financial statements, serving the management and administration of the units, and making the investment environment healthy.

Article 4.- Principles of independent auditing activities

1. Compliance with Vietnamese laws and audit standards.

2. Being answerable to law for professional activities and audit results.

3. Compliance with auditors' professional ethics.

4. Assurance of professional independence, interests, truthfulness, legality and objectivity of independent auditing activities.

5. Confidentiality of information of audited units, except otherwise agreed by the audited units or provided for by law.

Article 5.- Rights of audited units

Audited units may select auditing enterprises and auditors fully satisfying the conditions for lawful profession practice in Vietnam as prescribed in Article 23 of this Decree to sign contracts on provision of auditing services with, except otherwise provided for by law.

Article 6.- Responsibilities of audited units

1. To supply promptly, fully and truthfully all information and documents necessary for the audit.

2. To coordinate with, and create favorable conditions for, auditors to conduct the audit.

3. To pay fully and in time auditing charges as agreed upon in contracts.

4. In cases where they sign auditing contracts with an auditing enterprise for three consecutive years or more, they shall have to request such auditing enterprise to change profession-practicing auditors and persons responsible for signing audit reports.

Article 7.- Rights to join professional organizations

1. Profession-practicing auditors and auditing enterprises are entitled to join professional accounting and auditing organizations.

2. Professional auditing organizations, when being assigned the responsibility to manage the professional practice of auditors, shall have to formulate management regulations and perform other tasks prescribed by law.

Article 8.- Foreign auditing organizations conducting auditing activities in Vietnam

Foreign organizations and individuals conducting auditing activities in Vietnam must comply with the Law on Foreign Investment in Vietnam and the provisions of this Decree, unless otherwise provided for by international agreements which the Socialist Republic of Vietnam has signed or acceded to.

Article 9.- Encouragement of audit

The State encourages all enterprises and organizations to hire auditing enterprises to audit their annual financial statements or investment project settlement reports before submitting them to competent State agencies or making financial publicization.

Article 10.- Compulsory audit

1. Annual financial statements of the following enterprises and organizations must be audited by auditing enterprises:

a/ Foreign-invested enterprises;

b/ Organizations engaged in credit and/or banking activities and the Development Assistance Fund;

c/ Financial institutions and insurance business enterprises;

d/ Particularly for joint-stock companies and limited liability companies which participate in listing and trading on the securities market, the audit shall be conducted according to the law provisions on securities trading; if they borrow capital from banks, the audit shall be conducted according to the law provisions on credit.

2. Annual financial statements of the following enterprises and organizations must be audited by auditing enterprises according to the provisions of this Decree:

a/ State enterprises;

b/ Reports on settlement of construction investment capital of group-A projects.

3. Other subjects defined by laws, ordinances, the Government's decrees and the Prime Minister's decisions.

4. State enterprises, the Development Assistance Fund and investment projects, which have already been included in a year's audit plan of the State audit agency, shall not compulsorily have their financial statements in that year audited by auditing enterprises.

Article 11.- Enterprises and organizations which compulsorily have their financial statements audited according to the provisions in Article 10 of this Decree shall have to sign audit contracts with auditing enterprises at least 30 days before the end of the annual accounting period.

Article 12.- Organizations and individuals are strictly forbidden to intervene in the selection of auditors and auditing enterprises by audited units, unless otherwise provided for by law.

Chapter II

AUDITORS

Article 13.- Criteria of auditors

1. Auditors must have the following criteria:

a/ Having professional ethical qualities, being honest and incorruptible and having a good sense of law observance; not falling into the subjects prescribed in Clauses 3, 4, 5, 6 and 7, Article 15 of this Decree;

b/ Having bachelor degrees in economics- finance-banking or accounting-auditing and having been engaged in practical financial or accounting work for at least five years, or having worked as assistant auditors in auditing enterprises for at least four years;

c/ Being able to use a common foreign language and having a good command of computers;

d/ Having auditor's certificates granted by the Finance Minister.

2. To be recognized as auditors, persons who have accounting specialist's certificates or accounting or audit certificates, issued by foreign or international accounting and/or auditing organizations and recognized by Vietnam's Finance Ministry, must pass examinations in Vietnamese economic, financial, accounting and audit laws, organized by the Finance Ministry and are granted auditor's certificates by the Finance Minister.

3. The Finance Ministry prescribes the contents of examinations, examination councils, and procedures for granting and withdrawing auditor's certificates.

Article 14.- Conditions of profession-practicing auditors

1. Vietnamese who fully meet the following conditions shall be recognized as profession-practicing auditors and entitled to register for practicing independent audit:

a/ Fully meeting the criteria of auditors, prescribed in Clause 1 or 2, Article 13 of this Decree;

b/ Having labor contracts to work in an auditing enterprise established and operating under Vietnamese laws, except for cases where it is prescribed by Vietnamese laws that labor contracts are not required.

2. Foreigners who fully meet the following conditions shall be recognized as profession-practicing auditors and entitled to register for practicing independent audit in Vietnam:

a/ Fully meeting the criteria of auditors, prescribed in Clause 1 or 2, Article 13 of this Decree;

b/ Being permitted to reside in Vietnam for one year or more;

c/ Having labor contracts to work in an auditing enterprise established and operating under Vietnamese laws.

3. At a given time, an auditor shall only be allowed to register for practice in one auditing enterprise. In cases where auditors have already registered for audit practice but actually do not practice the profession or concurrently practice their profession in other auditing enterprises, they shall have their names deleted from the list of registered auditors.

4. Persons registered for audit practice for the second time onward must additionally meet the condition that they have taken part in all annual refresher programs according to the Finance Ministry's regulations.

Article 15.- Persons not allowed to register for independent audit practice

1. Persons who fail to fully meet the conditions prescribed in Article 14 of this Decree.

2. Public servants as provided for by the legislation on public servants.

3. Persons who are banned from practicing audit profession under court judgments or decisions; persons who are being examined for penal liability; persons who are serving imprisonment sentences or had been convicted of one of economic or position-related crimes in the financial and accounting domain and have not yet had their criminal records remitted.

4. Persons who are being on administrative probation.

5. Persons who have limited or lost civil act capacity.

6. Persons who have been convicted of serious or exceptionally serious economic crimes.

7. Individuals who have committed acts of violation causing great damage to financial, accounting, auditing or economic management activities and been disciplined with caution or a more severe disciplinary form within the last three years.

Article 16.- Rights of profession-practicing auditors

1. To be professionally independent.

2. To audit financial statements and provide services of auditing enterprises specified in Article 22 of this Decree.

3. To request audited units to supply fully and promptly accounting documents and other documents and information related to the service contracts.

4. To inspect and certify economic and financial information related to audited units from sources inside and outside the units. To request competent units and/or individuals to provide professional expertise or consultancy when necessary.

Article 17.- Responsibilities of profession-practicing auditors

1. To observe the principles of independent auditing activities prescribed in Article 4 of this Decree.

2. In the course of providing services, auditors must not intervene in the affairs of audited units.

3. To sign audit reports and take responsibility for their professional activities.

4. To refuse to conduct audits for their clients if they deem they are not fully qualified or do not meet fully the conditions therefor or their clients violate the provisions of this Decree.

5. To constantly improve their professional knowledge and experiences. To take part in annual knowledge updating programs according to the Finance Ministry's regulations.

6. Profession-practicing auditors who violate Articles 15, 17, 18 and 19 of this Decree shall, depending on the nature and seriousness of their violations, be suspended or indefinitely banned from registering for audit practice, or bear responsibility according to law provisions.

7. Other responsibilities prescribed by law.

Article 18.- Practicing auditors shall not be allowed to conduct audits in the following cases:

1. They are not on the announced list of practicing auditors;

2. They are currently performing the jobs of recording accounting books, making financial statements, conducting internal audit or providing services of asset valuation, management consultancy or financial consultancy for the audited units or already performed the above-said jobs in the previous year;

3. They have economic-financial relations with the audited units such as capital contribution or purchase of shares;

4. Their parents, wives or husbands, children and/or blood siblings are members of the leaderships or chief accountants of the audited units;

5. The audited units make requests contrary to professional ethics or professional auditing requirements or in contravention of law provisions.

Article 19.- Prohibited acts of practicing auditors

1. Purchasing stocks of any types of the audited units, regardless of their quantities.

2. Purchasing bonds or other assets of the audited units.

3. Receiving any sums of money or material benefits from the audited units apart from service charges and expenses already agreed upon in contracts, or abuse their positions as auditors to get other benefits from the audited units.

4. Leasing, lending or letting other parties use their names and auditor's certificates to conduct professional activities.

5. Working for two auditing enterprises or more at a time.

6. Disclosing information on the audited units they have acquired in the course of practicing their profession, except otherwise agreed by the audited units or provided for by law.

7. Committing other acts prohibited by the audit legislation.

Chapter III

AUDITING ENTERPRISES

Article 20.- Auditing enterprises

1. Auditing enterprises are established and operate according to law provisions in forms of partnership, private enterprise and enterprise under the Law on Foreign Investment in Vietnam.

2. The establishment, organization, management and operation of auditing enterprises must comply with the provisions of the enterprise legislation and the provisions of this Decree.

3. State-run auditing enterprises, joint-stock auditing companies and limited liability auditing companies, which have been established and commenced their operation under the provisions of the enterprise legislation before the effective date of this Decree, may be transformed into one of the three enterprise forms prescribed in Clause 1 of this Article within three years as from the effective date of this Decree.

4. When changing their names, relocating their headquarters, or changing their practice domains or the list of auditors, the auditing enterprises shall, within 10 days after effecting the changes, have to notify such in writing to the Finance Ministry.

Article 21.- Branches of auditing enterprises

1. Branches of auditing enterprises are their attached units operating under the authorization of such auditing enterprises, within the practice domains stated in the business registration certificates of the auditing enterprises.

2. Auditing enterprises' branches are set up and operate according to the law provisions on setting up of branches, and the heads of auditing enterprises' branches must be practicing auditors who satisfy all criteria and conditions prescribed in this Decree.

3. Auditing enterprises must be responsible for the activities of the auditing branches they have set up.

Article 22.- Services to be provided

1. Auditing enterprises may register to provide the following audit services:

a/ Financial statement audit;

b/ Financial statement audit for taxation purpose and tax settlement;

c/ Operation audit;

d/ Compliance audit;

e/ Internal audit;

f/ Audit of completed investment capital settlement reports (including annual financial statements);

g/ Project settlement report audit;

h/ Financial information audit;

i/ Verification of financial information on the basis of pre-agreed procedures.

2. Auditing enterprises may register to provide the following other services:

a/ Financial consultancy;

b/ Tax consultancy;

c/ Human resource consultancy;

d/ Information technology application consultancy;

e/ Management consultancy;

f/ Accounting service;

g/ Asset valuation service;

h/ Service of fostering and updating financial, accounting and auditing knowledge;

i/ Other relevant financial, accounting and tax services as prescribed by law;

j/ Service of reviewing financial statements.

3. Auditing enterprises must not register and conduct business in domains and trades irrelevant to the services prescribed in Clauses 1 and 2 of this Article.

Article 23.- Conditions for establishment and operation of auditing enterprises

1. An auditing enterprise shall be established only when it has at least three auditors having audit practice certificates, and at least one of its managers must be an auditor having the practice certificate.

2. Within 30 days after they are granted business registration certificates, auditing enterprises shall have to report to the Finance Ministry on their establishment and the lists of auditors registered for professional practice in the enterprises.

3. In the course of operation, auditing enterprises must ensure the constant professional practice of at least three auditors. After six consecutive months, if they fail to satisfy this condition, they must stop the provision of auditing services.

Article 24.- Rights of auditing enterprises

1. To provide services already stated in their investment licenses or business registration certificates; to refuse providing services when they deem they fail to fully meet the qualifications and conditions or the professional ethics can be breached.

2. To hire domestic and foreign experts to perform service contracts or enter into audit cooperation with other auditing enterprises according to law provisions.

3. To set up their branches according to the provisions in Article 21 of this Decree, or set up bases for overseas operation according to law provisions.

4. To join professional audit organizations; join as a member of the International Audit Organization.

5. To request audited units to supply fully and promptly accounting documents and other necessary documents and information related to service contracts.

6. To inspect and certify economic and financial information related to audited units from sources inside and outside such units. To request competent units and individuals to give professional expertise or consultancy when necessary.

7. To exercise other rights provided for by law for enterprises.

Article 25.- Obligations of auditing enterprises

1. To operate in the practice domains stated in investment licenses or business registration certificates.

2. To perform the contents under contracts already signed with their clients.

3. To pay compensations for damage caused by their auditors, who are at fault, to clients when providing auditing services and other relevant services.

4. To purchase professional liability insurance for their auditors or set up professional risk reserve funds according to the Finance Ministry's regulations to create sources for payment of compensations for damage caused by enterprises, which are at fault, to their clients. Expenses for insurance purchase or setting up of professional risk reserve funds shall be accounted as business expenses according to the Finance Ministry's regulations.

5. In the auditing course, if they detect signs of violating financial and accounting legislations by the audited units, they are obliged to notify such to the audited units or write their comments in audit reports.

6. To supply auditing dossiers and documents at written requests of competent State agencies according to law provisions.

7. To perform other obligations according to law provisions on enterprises.

Article 26.- Responsibilities of auditing enterprises

1. To directly manage professional activities of auditors registered for practice in the enterprises. To bear civil liability for professional activities conducted by auditors, which are related to auditing enterprises.

2. For all services provided to their clients, service contracts or written commitments must be made according to law provisions on contracts and the audit standards.

3. To fully implement the provisions of already signed service contracts.

4. To be held responsible before law, clients and users of audit results and provided services.

5. To organize by themselves the control of operation quality and submit to the auditing operation quality control by the Finance Ministry or professional audit organizations.

Article 27.- Auditing enterprises must not conduct audit in the following cases

1. They fail to notify the lists of profession-practicing auditors to the Finance Ministry;

2. They are providing services of recording accounting books, making financial statements, internal audit, valuating assets, management consultancy, financial consultancy or performed such services in the preceding year for their clients.

3. Members of their leaderships have economic or financial relations with the audited units, or are parents, wives or husbands, children or blood siblings of members of the leaderships or chief accountants of the audited units;

4. The audited units make requests contrary to professional ethics or professional auditing requirements or in contravention of law provisions.

Article 28.- Prohibited acts of auditing enterprises

1. Acting in connivance or collusion with the audited units to falsify contents of financial statements;

2. Buying or receiving as donations or gifts from the audited units any types of stocks, regardless of their quantities;

3. Buying stocks or other assets of the audited units;

4. Suggesting or receiving remunerations in any form beside the auditing charges and expenses stated in contracts or abusing their positions to collect other benefits;

5. Using material benefits or relations with a third party to bribe, press or buy off the audited units when providing services or seeking clients;

6. Undertaking to perform the job of debt collection for the audited units;

7. Letting other parties use their names to conduct professional activities;

8. Other activities contrary to the provisions of law.

Article 29.- Audit reports

1. Independent audit shall be conducted by auditors and auditing enterprises. Upon finishing the auditing job, auditors and auditing enterprises must make audit reports, clearly stating their opinions on audit results.

2. Audit reports must be independent, objective and truthful, have signatures of profession-practicing auditors who conduct the audit and of auditors who are representatives at law of the auditing enterprises or persons authorized in writing by the representatives at law to sign and seal. Profession-practicing auditors and auditing enterprises shall be held responsible before law and the audited units for their own auditing opinions.

3. One of the two auditors giving their signatures in an audit report of a foreign auditing organization established and operating in Vietnam or not yet established in Vietnam must be Vietnamese, except for the cases prescribed in Clause 3, Article 30 of this Decree.

Article 30.- Foreign auditing organizations

Foreign auditing organizations which have not yet set up their branches in Vietnam shall be permitted to conduct audit in Vietnam in the following cases, except otherwise provided for in international agreements which Vietnam has signed or acceded to:

1. When a foreign auditing organization admits an auditing enterprise established and operating under Vietnamese laws as its member, it shall conduct audit under its name and its member organization's name.

2. When a foreign auditing organization cooperates with an auditing enterprise established and operating under Vietnamese laws in each separate audit, its audit report must have the signature of the Vietnamese auditing enterprise.

3. If a foreign auditing organization wishes to conduct independently an audit in Vietnam and circulate its audit reports in Vietnam, it must obtain the Finance Ministry's approval for each audit.

Article 31.- Termination of operation of auditing enterprises and branches of auditing enterprises

Auditing enterprises and branches of auditing enterprises shall terminate their operations in the following cases:

1. They voluntarily terminate their operations;

2. They have their investment licenses or business registration certificates withdrawn;

3. Other cases according to the law provisions on enterprises.

Article 32.- Auditing service charge and other service charges

1. Auditing enterprises are entitled to collect auditing service charge for services they provide. Auditing service charge shall be agreed upon by auditing enterprises and audited units in audit contracts on the following bases:

a/ Work contents, volumes and nature determined in audit contracts;

b/ Working duration and conditions for auditors to perform the services;

c/ Professional levels, experiences and prestige of auditors and auditing enterprises;

d/ Where State agencies prescribe audit charge rates, the auditing service charge to be collected shall be based on the audit charge rate prescribed for each type of auditing services.

2. Auditing enterprises and audited units may agree to apply one of the following methods of calculating the auditing service charge:

a/ Calculating according to working hours of practicing auditors and charge rate per hour;

b/ Calculating according to each auditing service with package charge;

c/ Calculating according to each auditing service at charge rates in percentage (%) of contract value or project value;

d/ Calculating under multi-period audit contracts with fixed charge rate for each period.

3. Basing themselves on the provisions in Clauses 1 and 2 of this Article, auditing enterprises and their clients shall agree on charge rates for other types of services.

Chapter IV

STATE MANAGEMENT OVER INDEPENDENT AUDITING ACTIVITIES

Article 33.- Contents of State management over independent auditing activities

1. Formulating and directing the materialization of the strategy, planning and plans on development of independent audit in Vietnam.

2. Promulgating, disseminating, directing and organizing the implementation of the audit standards and guidance for implementation of the audit standards and audit professional methods.

3. Promulgating and organizing the implementation of the Regulation on professional training and fostering in audit and annual knowledge updating; prescribing modes of examination and granting of auditor's certificates; setting up the State-level examination council, and organizing examinations and granting of auditor's certificates.

4. Uniformly managing the list of auditors and auditing enterprises currently practicing the indepen-dent audit nationwide. Once every two years, the Finance Ministry shall publicly announce the list of auditors and auditing enterprises registered for practice.

5. Inspecting the observance of the legislation on independent audit, audit standards and relevant regulations by auditing enterprises.

6. Suspending the implementation of, and requesting amendments to, regulations and decisions of auditing enterprises which are contrary to law provisions on organization of auditing enterprises and audit practice.

7. Applying measures to support the development of independent audit profession.

8. Managing activities of international cooperation on audit.

9. Settling complaints and denunciations, and handling violations of the legislation on independent audit.

Article 34- Responsibilities of the agencies in charge of State management over independent audit

1. The Government shall exercise the uniform State management over independent auditing activities.

2. The Finance Ministry shall be answerable to the Government for performing the function of State management over independent auditing activities.

3. The ministries and the ministerial-level agencies shall, within the ambit of their respective tasks and powers, have to exercise the State management over independent auditing activities and auditing enterprises in domains they are assigned to manage.

4. The People's Committees of the provinces and centrally-run cities shall, within the ambit of their respective tasks and powers, have to exercise the State management over independent auditing activities and auditing enterprises in their respective localities.

Article 35.- Settlement of differences or disputes

1. When a difference or dispute over audit results related auditing contracts arises, the concerned parties shall carry out the procedures for settling such difference or dispute according to law provisions.

2. In the course of settlement of disputes over audit results, financial agencies shall have to contribute their opinions assessing the observance of audit principles and standards as well as audit professional methods by auditing enterprises and auditors at requests of relevant law enforcement agencies.

Article 36.- Withdrawal of investment licenses, business registration certificates or auditor's certificates

1. The Finance Ministry and the functional agencies may propose the Ministry of Planning and Investment or the business registries to withdraw investment licenses, certificates of registration of audit service business or refuse to make audit practice registration when auditing enterprises violate Article 23, 24, 25, 26, 27, 28 or 29 of this Decree.

2. The Finance Ministry may withdraw auditor's certificates of practicing auditors who violate Article 17, 18 or 19 of this Decree.

Chapter V

COMMENDATION AND HANDLING OF VIOLATIONS

Article 37.- Commendation

Organizations and individuals that record achievements in independent auditing activities shall be commended and/or rewarded according to law provisions.

Article 38.- Handling of violations

Organizations and individuals that commit acts of violating the provisions of this Decree shall, depending on the nature and seriousness of their violations, be disciplined, administrative sanctioned or examined for penal liability. If causing any damage, they must pay compensations therefor according to law provisions.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 39.- This Decree takes effect 15 days after its publication in the Official Gazette and replaces the Government's Decree No. 07/CP of January 29, 1994 promulgating the Regulation on independent audit in the national economy. The Finance Minister shall have to guide the implementation of this Decree.

Article 40.- The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies, the presidents of the People's Committees of the provinces and centrally-run cities shall have to implement this Decree.

Article 41.- The previous stipulations contrary to this Decree shall all be hereby annulled.