Thông tư 157/2014/TT-BTC quy định về kiểm soát chất lượng dịch vụ kiểm toán do Bộ trưởng Bộ Tài chính ban hành

MINISTRY OF FINANCE	SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom - Happiness ---------------
No.: 157/2014/TT-BTC	Hanoi, October 23, 2014

 

CIRCULAR

REGULATIONS ON AUDIT SERVICE QUALITY CONTROL

Pursuant to the Law on Independent Audits No. 67/2011/QH12 dated March 29, 2011;

Pursuant to the Law on Securities No. 70/2006/QH11 dated June 29, 2006 and the Law on the amendment and supplementation of the laws on Securities No. 62/2010/QH12 dated November 24, 2010;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government defining functions, duties, authorities and organizational structures of the Ministry of Finance;

Pursuant to Decree No. 17/2012/NĐ-CP dated March 13, 2012 of the Government stipulating in details and guiding the implementation of some articles of the Law on Independent Audits;

At the proposal of the Director General of Accounting and Auditing Policies Department,

The Minister of Finance has promulgated the Circular stipulating audit service quality control.

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope

This Circular defines the organization and implementation of quality control of audit service, financial report and information examination service, and other assurance services as stipulated in Paragraph 1, Article 40 of the Law on Independent Audits (hereinafter referred to as the audit services) undertaken by certified auditors, auditing enterprises and branches of foreign auditing enterprises in Vietnam.

Article 2. Regulated entities

1. Auditing enterprises operating in Vietnam, branches of foreign auditing enterprises in Vietnam (hereinafter referred to as the auditing enterprises).

2. Certified auditors

3. Professional organizations operating in auditing.

4. Organizations, individuals carrying out the control over the auditing Services.

5. Other relevant agencies, organizations and individuals.

Article 3. Interpretation of terms

In this Circular, the following terms are interpreted as follows:

1. Laws and regulations mean legal documents issued by competent agencies; documents issued by professional organizations, enterprises and other entities without going against the law with which the auditing enterprises must comply.

2. Professional ethics encompass standards of behavior in auditing, examination and other assurance services, and relevant ethical codes.

3. Audit service quality control means inspection of audit service quality and monitoring of auditing activities undertaken by the auditing enterprises and certified auditors in accordance with regulations and procedures constructed and issued by competent agencies aimed at ensuring that auditing enterprises and certified auditors comply with professional ethics, laws and relevant regulations during the operation.

4. Audit service quality inspection means implementation of procedures to assess the audit service quality control system of the auditing enterprises and certified auditors to assess quality of auditing service contracts fulfilled by the auditing enterprises and certified auditors.

5. Monitoring of auditing activity means a process of regular management, examination and assessment of compliance with professional ethics, laws and relevant regulations by the auditing enterprises and certified auditors.

Chapter II

PARTICULAR PROVISIONS

Section 1. AUDIT SERVICE QUALITY CONTROL

Article 4. Purposes of audit service quality control

1. Assessing the construction, dissemination and implementation of policies and internal quality control procedures by the auditing enterprises.

2. Assessing compliance with professional procedures, laws and regulations by the Auditing enterprises and certified auditors with respect to provision of auditing services .

3. Detecting, correcting and tackling at the right time faults detected during the tasks of audit service quality control.

4. Making a contribution towards the amendment, supplement and completion of legal document system on independent auditing and at the same time enhancing quality of auditing services.

Article 5. Audit service quality control

1. Inspecting the construction, promulgation and implementation of policies and internal quality control procedures by the auditing enterprises.

2. Inspecting performance of auditing service contracts fulfilled by the Auditing enterprises and certified auditors.

3. Inspecting compliance with other regulations of the law on independent audit and relevant laws, including:

a) Registration and maintenance of auditing service business conditions by the auditing enterprises;

b) Registration and maintenance of auditing service business conditions by certified auditors.

c) Execution of independent audits on public-interest entities.

d) Fulfillment of obligations by the auditing enterprises, certified auditors and others.

4. Monitoring of the exercising of the regulations of the law on independent audits and other relevant laws as stipulated in Paragraph 3 of this Article.

Article 6. Forms of audit service quality control

1. Monitoring audit service quality and the compliance with the law on independent audits;

a) Assessing annual report on self-inspection of audit service quality submitted to the Ministry of Finance and State Securities Commission by the auditing enterprises

b) Assessing quality of the auditing enterprises’ audit report through financial reports of the entities being subject to audits submitted to the Ministry of Finance and State Securities Commission and relevant agencies according to the regulation;

c) Assessing compliance by certified auditors and the auditing enterprises with the regulations on registration and maintenance of audit practicing conditions and auditing service business conditions respectively;

d) Carrying out monitoring through reports annually submitted to the Ministry of Finance and State Securities Commission by the auditing enterprises and other information collected during the management.

2. Carrying out direct inspection of audit service quality

a) Competent agencies (the Ministry of Finance and State Securities Commission) shall establish an Inspectorate conducting regular or unexpected Inspection into the auditing enterprises.

b) Inspecting signs of violation of audit service quality by the auditing enterprises and certified auditors;

c) Inspecting and verifying complaints, accusations concerning independent audits.

Article 7. Entities subject to audit service quality control

Entities being subject to audit service quality control include:

1. The auditing enterprises

2. Certified auditors

Article 8. Assignment and coordination in audit service quality control

1. The auditing enterprises and certified auditors shall be responsible for controlling their own audit service quality.

2. The Ministry of Finance shall be responsible for managing and organizing the implementation of audit service quality control.

3. State Securities Commission shall be responsible for controlling audit service quality for the auditing enterprises and certified auditors approved of performing auditing for securities related public-interest entities.

4. Occupational organizations in auditing are responsible for coordinating with the Ministry of Finance and State Securities Commission to carry out the implementation of audit service quality control.

Article 9. Responsibilities of entities for audit service quality control

1. Responsibilities of the auditing enterprises

a) Constructing and organizing the execution of policies and procedures of audit service quality control to ensure contracts of audit services are executed in accordance with professional ethics, laws and relevant regulations;

b) Annually, the auditing enterprises, according to  the procedures of audit service quality control as stipulated in Article 19 of this Circular, professional ethics, laws and relevant regulations,  shall carry out the self-inspection of audit service quality, make plans and take measures for overcoming shortcomings and mistakes detected during the inspection. When the self-inspection is completed, the auditing enterprises shall establish the report of audit service quality self-inspection according to the form stipulated in Addendum No. 2 issued and enclosed herewith;

c) Annually on May 31 at the latest, the auditing enterprises must submit the Report of audit service quality self-inspection to the Ministry of Finance. In case the Auditing enterprises are approved to carry out auditing for securities related public-interest entities, the Report of audit service quality self-inspection must be submitted to State Securities Commission simultaneously;

d) In addition to the submission of the Report of audit service quality self-inspection as mentioned above, the auditing enterprises are responsible for reporting on independent audits at the request of the Ministry of Finance or State Securities Commission (hereinafter referred to as the Inspection agency)

2. Responsibilities of the Ministry of Finance

a) Reviewing and assessing the Report of audit service quality self-inspection to monitor the compliance with procedures of professional ethics, laws and relevant regulations by the auditing enterprise and certified auditors.

b) Notifying the list of auditing enterprises being subject to direct inspection of audit service quality annually to State Securities Commission and Occupational Organizations in auditing;

c) Appointing certified auditors and experienced specialists to join the Inspectorate and establishing the Inspectorate at the auditing enterprises subject to inspection by the Ministry of Finance;

d) Constructing, issuing and updating inspection instructions for serving audit service quality control at the auditing enterprises subject to inspection by the Ministry of Finance.

đ) Making a decision about the inspection and organization of direct inspection at the Auditing enterprises, except auditing enterprises directly inspected by State Securities Commission;

ee) Establishing general report of inspection and general report of violations detected through regular direct inspections at the auditing enterprises subject to inspection by the Ministry of Finance;

g) Handling violations detected through audit service quality control by authority or transferring them to competent authorities for handling according to the law;

d) Following up, inspecting and monitoring the execution of post-inspection petitions submitted by the auditing enterprises and certified auditors subject to inspection by the Ministry of Finance;

i) Organizing exchanging, disseminating and learning experience through annual audit service quality control for the certified auditors and auditing enterprises subject to control of audit service quality by the Ministry of Finance.

3. Responsibilities of State Securities Commission

a) Reviewing and assessing the Report of audit service quality self-inspection to monitor compliance with professional ethics, laws and relevant regulations by the auditing enterprises and certified auditors who have been approved of performing auditing for securities related public-interest entities.

b) Proposing and submitting to the Ministry of Finance for approval the list of auditing enterprises approved of performing auditing for securities related public-interest entities and directly inspected of audit service;

c) Mobilizing certified auditors and experienced specialist to joint the Inspectorate and establishing Inspectorate at the auditing enterprises subject to inspection by State Securities Commission.

d) Constructing and updating inspection instructions for serving audit service quality control at the auditing enterprises subject to inspection by State Securities Commission; Organizing training in inspection for members of the Inspectorate appointed by State Securities Commission;

dd) Making a decision about inspection and organization of direct inspection at the Auditing enterprises approved of performing auditing for securities related public-interest entities based on the list of inspected auditing enterprises approved by the Ministry of Finance;

e) Making a general report of inspection and general report of violations detected through regular direct inspections at the auditing enterprises subject to inspection by State Securities Commission and making submission of these reports to the Ministry of Finance 15 days at the latest from the completion of direct inspection at the Auditing enterprises;

g) Taking actions against violations detected through inspection under authorities defined by the law on securities and securities market. In case the handling is beyond the defined authorities, the Ministry of Finance must be reported for handling;

h) Following up, inspecting and monitoring the execution of post-inspection petitions submitted by the auditing enterprises subject to inspection by State Securities Commission;

i) Exchanging, disseminating and drawing experience through annual audit service quality control for the certified auditors and auditing enterprises subject to control of audit service quality by the State Securities Commission.

4. Responsibilities of the Occupational organization in auditing

a) Appointing an appropriate experienced specialist to join the Inspectorate at the request of the Ministry of Finance and State Securities Commission;

b) Coordinating with the Inspection agency to construct and update instructional materials for direct inspection of audit service quality;

c) Coordinating with the Inspection agency to organize training in inspection for members of the Inspectorate;

d) Coordinating with the Inspection agency to organize exchanging, disseminating and drawing experience through annual audit service quality inspection for certified auditors and auditing enterprises;

dd) Carrying out audit service quality control for its own members under functions, duties and authorities of the Occupational organization in auditing;

e) Directing, following up, inspecting and monitoring the execution of post-inspection petitions submitted by entities subject to inspection and being membership of the Occupational organization in auditing.

Article 10. Cost of audit service quality control

1. Cost of audit service quality control is ensured by state budget as regulated.

2. Expenditures relating to audit service quality control include:

a) Business trip expenses for individuals joining the Inspectorate as officials and public servants of the Ministry of Finance and State Securities Commission are applied under the regulated regime.

Expenses for members of the Inspectorate as officials appointed from the Occupational organization, certified auditors appointed from the Auditing enterprises and others shall be paid by the Ministry of Finance (or State Securities Commission) and applied according to the regime applied to state officials and public servants;

b) Relevant expenses for members of professional council to provide consultancy to the Minister of Finance on handling of petitions for auditing report and auditing quality, results from audit service quality inspection;

c) Other actually generated expenses relating to audit service quality controlling activities approved by competent authorities under the regulation.

3. Preparation of cost estimation, execution and final settlement on expenses for audit service quality control shall be carried out in accordance with the Law on State Budge and documents guiding the law on state budget.

Section 2. DIRECT INSPECTION OF AUDIT SERVICE QUALITY

Article 11. Scope and requirement of direct inspection

1. Scope of regular direct inspection of audit service quality

a) Summarizing factors that affect audit service quality and components of the audit service quality control system according to the regulations of Vietnamese Standard on Quality Control (VSQC1);

b) Summarizing audit services provided by the Auditing enterprises;

c) Contracts of audit services chosen for inspection must function as audit dossiers with auditing reports issued within a period from the establishment of the auditing enterprise (for auditing enterprises subject to initial inspection) or from closest inspection to the time of inspection and at the same time can be used to assess quality of audit services performed by the Auditing enterprises and certified auditors;

d) Materials subject to inspection include those concerning construction, organization and implementation of policies, procedures of audit service quality control performed by the Auditing enterprises; auditing materials, documents; accounting documents; personnel related policies, Meeting minutes of Member Council, plans by Board of directors of the Auditing enterprises, other relevant materials and documents;

đ) Scope of inspection excludes issues not related to audit service quality and compliance with the law on independent audits, the law on securities of the Auditing enterprises and certified auditors.

2. Requirements of direct inspection of audit service quality

a) Complying with the regulations on independent audits and securities;

b) Ensuring independence of rights and interests of head and members of the Inspectorate from those of the entities subject to inspection;

c) Ensuring objectivity from organization and execution of inspection tasks to conclusion of the inspection;

d) Being implemented based on compliance with requirements of confidentiality under the law on independent audits, professional ethics and codes of conduct related;

đ) After every direct inspection at each auditing enterprise, the Inspectorate must establish the report of inspection. Assessment and conclusion of audit service quality inspection must be based on review, assessment and professional judgement from the Inspectorate’s members and must be specified in the report of inspection. Shortcomings and faults committed by entities subject to inspection as concluded must be accompanied by adequate papers as evidence.

Article 12. Rights and obligations of entities subject to direct inspection

1. Rights:

a) Sending a written notice to the Inspection agency, head of the Inspectorate upon any evidence that head or member of the Inspectorate has violated the independence;

b) Submitting explanations and petitions to the Inspection agency for variously commented issues stated in the conclusion by the Inspectorate.

2. Obligations:

a) Coordinating and creating favorable conditions for the Inspection Squa to perform the inspection;

b) Providing necessary materials and information related to the inspection according to Point d, Paragraph 1, Article 11 hereof in an adequate, opportune, accurate and honest manner.

c) Appointing certified auditors and relevant people to work with the Inspectorate;

d) Discussing with the Inspectorate state of the enterprise and providing explanations and information of the issues to the Inspectorate on request;

đ) Signing the report of inspection right after the inspection is completed;

e) Executing conclusions by the Inspectorate as well as carrying out remedies for shortcomings and mistakes detected during the inspection.

Article 13. Period of direct inspection

1. Regular inspection:

a) At least every three years with respect to auditing enterprises subject to the list approved of performing auditing for securities related public-interest entities;

b) At least every four years with respect to auditing enterprises subject to the list approved of performing auditing for other public-interest entities (excluding those approved of performing auditing for securities related public-interest entities);

c) At least every five years with respect to auditing enterprises being not subject to the list mentioned in Point a, Point b of this Paragraph;

d) In case results from regular direct inspection of audit service quality are concluded as third grade “Unsatisfactory service quality” or forth grade “poor service quality or a serious mistake committed”, the Auditing Enterprise shall be re-inspected right from one to two years later.

2. Unexpected inspection:

The Auditing enterprises may be subject to unexpected inspection in case:

a) There are signs of violation of audit service result or signs of serious violation of professional ethics, laws and relevant regulations during the operation and provision of audit services;

b) They provide an audit service contract which may result in high risk of auditing, replacing the audit service contract provided to the same client by alternative auditing enterprise without a proper season.

c) There are major disputes between capital contributing members or there is a major change in certified auditors of the Auditing enterprises which may have a considerable effect on audit service quality.

d) There is information of reflection and accusation against behavior of unhealthy competition to attract clients or to cause damages to the interests of other auditing enterprises.

3. Any auditing enterprise which has undergone unexpected inspection may be exempt from regular inspection in the same year or regular inspection may be combined with unexpected inspection for verify issues specified in Paragraph 2 of this Article.

Article 14. Time of direct inspection

1. Regular direct inspection of audit service quality at the auditing enterprises is done in third or forth quarter annually. In case there is some change versus the time mentioned above, the Ministry of Finance may give specific notification.

2. Time for a direct inspection of audit service quality is 07 (seven) working days at most. When prolonging time is found neccessary for an inspection due to a complicated issue, Head of the Inspectorate shall submit a written notice to the decision making agency for reviewing and giving a decision.

Article 15. Organization of the Inspectorate

1. The Inspection agency must establish an Inspectorate for direct inspection at the Auditing enterprises subject to control of audit service quality by the agency itself.

2. The composition of the Inspectorate includes head and its members. Number of members joining the Inspectorate depends on scale of an inspection. Members of the Inspectorate are appointed from the Ministry of Finance, State Securities Commission, Occupational organization in auditing and the Auditing enterprises.

3. Members and head of the Inspectorate must be qualified and experienced under Article 16 hereof;

4. Members and head of the Inspectorate shall not be permitted to take part in direct inspection at the auditing enterprises when they are subject to either of the following cases:

a) Being a founding member or a capital contributing member of the auditing enterprise subject to inspection;

b) Being a member of the Board of Directors of the auditing enterprise subject to inspection;

c) Having a direct or indirect significant relationship of convenience with entities subject to inspection;

d) Father, mother, wife, husband, children, brother, sister...(of their own or of their spouse’s) having a direct or indirect significant relationship of convenience with entities subject to inspection or being a member of the Board of Directors of the auditing enterprise subject to inspection;

đ) Once working for the auditing enterprise subject to inspection and the period from resignation to the establishiment of the auditing enterprise is not up to 24 months.

Article 16. Standards of members and head of the Inspectorate

1. The Inspectorate (except officials from the Ministry of Finance and State Securities Commission) must ensure the following standards:

a) Having auditor certificate and at least thirty six months of practical experience in auditing or three years of experience in joining the Inspectorate from being awarded the auditor certificate to the establishment of the Inspectorate. The auditing enterprise appointing the auditor to join the Inspectorate must obtain the satisfactory or higher results from audit service quality inspection in the latest inspection;

In case inspection is done at auditing enterprises approved of performing auditing at public-interest entities, members joining the Inspectorate must be a person from the Board of Directors of the auditing enterprise taking overall charge of service contracts or a person of equivalent level, having practical experience of at least 24 months in auditing or audit quality examination for public-interest entities from approval for performing auditing for public-interest entities by competent agencies to the establishment of the Inspectorate; 

b) Having an understanding of professional ethics, laws and relevant regulations applied to kinds of inspected services and having practical experience in the areas, branches concerning service contracts of their inspection;

c) Having professional etiquette, independence, honesty, objectivity and a high sense of responsibility;

d) Having completed a training course in processes, procedures and inspection profession organized by the Inspection agency in which the compulsory period of training is 16 hours with respect to members joining the Inspectorate for the first time and 8 hours to members having years of experience joining the Inspectorate; Number of hours of training are added to the number of hours for annual updating of compulsory knowledge updating by certified auditors;

đ) Being free from any administrative penalties in accounting, independent audits, securities or disciplines of the Occupational organization in auditing for a period of most recent three years up to the establishment of the Inspectorate.

2. Head of the Inspectorate shall be arranged suitably for each inspection by the Inspection agency.

Article 17. Rights and obligations of the Inspectorate

1. Rights:

a) Asking entities subject to inspection to provide adequate, opportune materials, information, working time arrangement and explanations about the issues within assigned scope;

b) Examining, checking and verifying relevant information in and out of the auditing enterprise subject to inspection during the inspection as assigned by head of the Inspectorate;

c) Giving conclusions and petitions within assigned scope;

d) Sticking to its opinions about inspection results in case those opinions are contrary to conclusions and petitions stated in the Report of inspection;

đ) Establishing the minutes of administrative violations under authority of the law on administrative penalties.

2. Obligations:

a) Executing a written undertaking on independence and information confidentiality with the entities subject to inspection as stipulated in Addendum No. 03 issued and enclosed herewith, and at the same time ensuring full compliance with that undertaking.

b) Refusing inspection upon noticing that independence is not guaranteed, professional qualification and standard inadequate under Paragraph 1, Article 16 hereof;

c) Carrying out the tasks as assigned by head of the Inspectorate truthfully, objectively, impartially and maintaining professional prudence;

d) Collecting adequate and appropriate evidence as foundations to come to the conclusion on the tasks assigned by head of the Inspectorate; Reporting to head of the Inspectorate at the right time on shortcomings and faults detected through inspection;

đ) Having no permission to assign tasks to other people without the consent of head of the Inspectorate;

e) Taking part in meetings between the Inspectorate and entities subject to inspection on issues within assigned scope;

g) Signing the Report of inspection and other materials related to the performed tasks assigned by head of the Inspectorate;

h) Having no permission to disclose any information of the inspection dossier and materials except as stipulated in the regulations of the law;

i) Complying with regulations on audit service quality control set out in this Circular.

Article 18. Rights and obligations of head of the Inspectorate

1. Rights:

In addition to the rights as members of the Inspectorate as stipulated in Paragraph 1, Article 17 hereof, head of the Inspection has the following rights:

a) Assigning tasks and coordinating work among members of the Inspectorate to carry out the inspection plan;

b) Asking entities subject to inspection to arrange personnel for coordination according to the inspection plan;

c) Having permission to submit petition to the Inspection agency for handling violations detected through inspection;

2. Obligations:

In addition to the obligations as members of the Inspectorate as set out in Paragraph 2, Article 17 hereof, head of the Inspectorate has the following obligations:

a) Organizing the inspection in a way appropriate to the entities subject to inspection;

b) Directing collection, examination, inspection and handling of all relevant documents, ensuring collection and storage of adequate evidence of the tasks undertaken by the Inspection of squad as foundations to come to the conclusion on the inspection;

c) Monitoring the execution of the tasks assigned to members of the Inspectorate, acting as a contact for exchanging problems detected during the inspection with the entities subject to inspection;

d) Reporting to the Inspection agency at the right time upon notice from the auditing enterprise subject to inspection about the infringement of the independence by head or members of the Inspectorate or when there is a disagreement between members of the Inspectorate and entities subject to inspection during the inspection or upon request from the Inspection agency;

đ) Establishing and signing the Report of inspection and taking overall responsibility for honesty and objectivity of the inspection results.

Article 19. Procedures of direct inspection of audit service quality

1. Procedures of direct inspection include 4 stages:

a) Preparation;

b) Implementation;

c) Closing

d) Post-inspection

Procedures of direct inspection of audit service quality are specifically set out in Addendum No. 01 issued and enclosed herewith.

2. For unexpected inspections at the auditing enterprises as stipulated in Paragraph 2, Article 13 hereof, the procedures of inspection shall be applied as stipulated in Addendum No. 01 issued and enclosed herewith to suit the purposes and requirements of each inspection.

Article 20. Instructional materials for direct inspection

1. The Inspection agency shall be responsible for constructing, issuing and updating instructional materials used for direct inspection at the auditing enterprises within its authority of inspection.

2. Occupational organization and certified auditors shall coordinate with the Inspection agency to construct, issue and update instructional materials used for direct inspection.

Article 21. Choice of branch and service contract for direct inspection

1. Choice of branch

Direct inspection of audit service quality is normally carried out at headquarter of the auditing enterprises. However, with respect to auditing enterprises of multiple branches, inspection may be carried out at a branch of the Inspectorate’s choice.

Choice of branch for inspection must meet the target that the Inspectorate has adequate and appropriate foundations to conclude whether policies and procedures of audit service quality control have been constructed, disseminated and implemented unanimously across the enterprise by the auditing enterprise itself.

Choice of branch for inspection is particularly defined in the instructional materials for direct inspection issued by the Inspection agency.

2. Choice of dossiers of service contracts

a) Choice of dossiers of service contracts for inspection must meet the target whether the Inspectorate has adequate and appropriate foundations to conclude the quality of audit service performed by the auditing enterprise subject to inspection;

b) Dossiers of service contracts chosen for inspection must include audit services, audit examination services and other assurance services performed by the auditing enterprise subject to inspection in which contracts at high risks are focused. Factors for inspection of risks of the contract include: Scale, areas and branches; level of assurance of the services (auditing, financial report and information examination, and other assurance services); implementing group; disputes and lawsuits; clients provided with multiple services at the same period; clients charged considerable service fees; clients charged service fees, too high or too low, or inapproriate with the scale; risks related to clients and special clients; previous inspection results and contracts made in the first year; contracts with auditing reports being established too early or too late compared to the same accounting period in the year;

c) The auditing enterprise subject to inspection must provide the list of clients according to each type of contract of audit, contract of financial report and information examination, contract of assurance services. Dossiers of service contracts are chosen for inspection must be detailed in:

c) Clients’ operation areas (production, trading, banking, insurance);

c2) Forms of enterprises, organizations and scale of clients (Joint stock companies; liability limited companies, partnerships, private companies, cooperatives, civil service units, social associations, international project and other organizations);

c3) Forms of clients’ capital contribution (foreign-invested enterprises, state run enterprises and other enterprises and organizations);

c4) Clients being public-interest entities and other enterprises and organizations;

c5) Certified auditors who take responsibility for signing auditing report, examination service report and other assurance service report.

d) The Inspectorate may choose either of the dossiers of the service contract evaluated as good in quality by the auditing enterprise subject to inspection. In addition to the dossiers of the chosen service contracts that meet the requirements of the inspection, the Inspectorate may choose some dossiers of the service contract to inspect some issues in question;

đ) In a regular inspection, at least three dossiers of service contracts are chosen for inspection. For each dossier of the service contract chosen, the auditing enterprise must supply relevant documents such as audited financial report, auditing report, service contract according to regulations of professional ethics, laws and relevant regulations;

e) Dossiers of service contracts chosen for inspection are only notified to the auditing enterprise subject to inspection in the first day of inspection. During the inspection, the Inspectorate has the right to choose any dossier of service contract without prior notice to the auditing enterprise subject to inspection. Dossiers of the service contract chosen must be subject to scope of inspection.

Article 22. Inspection conclusions

1. Depending on level of compliance with professional ethics, laws and relevant regulations expressed in each dossier of service contract and general inspection of the entire auditing enterprise according to results from system, technical and professional inspections, the Inspectorate must bring about the following conclusions:

a) Conclusions on system inspection must be assessed according to either of the following comments:

a1) Comment 1: The system is good;

a2) Comment 2: The system is satisfactory;

a3) Comment 3: The system is unsatisfactory;

A4) Comment 4: The system is poor and has serious errors.

b) Conclusion on technical inspection must be assessed according to either of the following comments:

b1) Comment 1: Quality of dossier is good;

b2) Comment 2: Quality of dossier is satisfactory;

b3) Comment 3: Quality of dossier is unsatisfactory;

b4) Comment 4: Quality of dossier is poor, seriously mistaken.

c) General conclusion on audit quality service inspection must be assessed according to either of the following comments:

c1) Comment 1: Quality of service is good;

c2) Comment 2: Quality of service is satisfactory;

c3) Comment 3: Quality of service is unsatisfactory;

c4) Comment 4: Quality of service is poor, seriously mistaken.

2. In case the auditing enterprise subject to inspection fails to supply adequate documents and materials as required by the Inspectorate, the result from inspection shall be evaluated as Comment 3 or 4 as stipulated in Point c, Paragraph 1 of this Article.

3. Conclusions on service quality inspection shall not bring to the auditing enterprise any assurance about the audit service quality inspection system and quality of each service contract being inspected.

4. The Inspection agency is responsible for issuing and updating the assessment and grading criteria applied to auditing enterprises subject to its own inspection.

Article 23. Handling variously commented issues about inspection results

1. When there are variously commented issues about the inspection result, if neccessary, the Inspectin agency may consult specialists or establish a professional council to review the result.

2. A professional council consists of representatives from the Ministry of Finance and State Securities Commission, representatives from Occupational organization in auditing and certified auditors appointed from auditing enterprises. Chairman of a professional council must be a departmental level leader of the Ministry of Finance or leader of State Securities Commission. Certified auditors appointed from auditing enterprises must have experience similar to members of the Board of Directors taking overall charge of service contracts. Members of a professional council must ensure independence with entities subject to inspection, head and members of the Inspectorate.

3. Entities subject to inspection are entitled to explain and provide neccessary information as foundations for the professional council to come up with official conclusion on inspection result.

4. Based on the materials provided by the Inspectorate and auditing enterprises subject to inspection, members of the professional council shall carry out consideration, discussion and assessment to come up with the conclusion on each variously commented issue.

Article 24. Post-inspection actions

1. Within a period of 30 days since the signing of the Report of inspection, auditing enterprises subject to inspection must make a submission of the report on remedying of the faults and execution of the Inspectorate’s proposals to the Inspection agency. In case an auditing enterprise subject to inspection is a member of the Occupational organization in auditing, the report on remedying of the faults and execution of the Inspectorate’s proposals must be submitted simultaneously to the Occupational organization in auditing.

The report on remedying of the faults and execution of the Inspectorate’s proposals is a reference material used for the next inspection of audit service quality.

2. The Inspection agency is responsible for establishing a general report of inspection results and faults detected through regular direct inspection for the entities subject to its authority of inspection.

Forms of general report of inspection results and faults detected through inspection is specifically stipulated in instructional materials for direct inspection.

Article 25. Inspection dossier

1. Inspection dossier includes a list of auditing enterprises subject to inspection, a list of the Inspectorate’s members, inspection decision, dossiers provided by the Inspectorate, Professional council establishment decision, post-inspection punishment decision and other relevant documents.

2. The Inspectorate must input into its inspection dossier full information and appropriate evidence as foundations for the formation of inspection conclusion for each auditing enterprise including the report of inspection results, minutes of administrative violations (if any), audit service quality control system assessments, and assessements of individual dossier of service contracts chosen for inspection, work documents prepared by the Inspectorate, materials provided by entities subject to inspection and other relevant documents.

Head of the Inspectorate must hand the entire inspection dossier over to the Inspection agency right after the inspection at each auditing enterprise is completed.

3. Storage of inspection dossier

The Inspection agency shall be responsible for storing inspection dossier handed over by head of the Inspectorate. Time-limit of storage of inspection dossier is stipulated by the law on storage of materials and documents of state agencies.

Section 3. HANDLING VIOLATIONS IN AUDIT SERVICE QUALITY INSPECTION

Article 26. Handling violations in audit service quality inspection

1. For auditing enterprises:

Any auditing enterprise who makes a grave professional mistake or violates professional ethics as stipulated in Point c, Paragraph 1, Article 27 of the law on independent audits shall be suspended from audit service business from three to six months since the effective date of the punishment decision upon either of the following cases:

a) Result of service quality inspection is graded as Comment 3 “Quality of audit service is unsatisfactory” after two consecutive inspections;

b) Result of service quality inspection is graded as Comment 4 “ Quality of audit service is poor, seriously mistaken”.

2. For certified auditors

Any auditor who commits violations of service quality shall incur penalties according to the law on administrative penalties in independent audits.

Article 27. Handling violations committed by Inspectorate’s members

1. Head and members of the Inspectorate are not permitted to join the Inspectorate right after the behavior of violation is detected upon either of the following cases:

a) Having requests contrary to professional ethics or regulations of the law during the inspection at the auditing enterprises;

b) Failing to comply with obligations of members and head of the Inspectorate as stipulated in Paragraph 2, Article 17 and Paragraph 2, Article 18 hereof;

2. Head and members of the Inspectorate who violate the regulations of Paragraph 1 of this Article, depending on the seriousness of violations, shall incur penalties imposed by official management authorities according to relevant regulations.

Section 4. PUBLISHING RESULTS FROM REGULAR INSPECTION OF AUDIT SERVICE QUALITY

Article 28. Publishing results from regular inspection of audit service quality

Report of audit service inspection results being published within the auditing enterprise shall be inspected and summarized in general report of inspection results. Annual report of inspection results shall be published on the website of the Ministry of Finance, State Securities Commission and Occupational organization in auditing.

Chapter III

IMPLEMENTATION

Article 29. Implementation

1. This Circular takes effect from the signing and promulgation day.

2. Issues concerning audit service quality inspection at auditing enterprises according to the regulations on accounting and audit service quality control promulgated and enclosed with the Decision No.32/2007/QĐ-BTC dated May 15, 2007 by the Ministry of Finance shall become invalid since the effective date of this Circular.

3. Director General of Accounting and Auditing Policies Department, Chairman of State Securities Commission, Chief of Ministry Office, Chairman of Vietnam Association of Certified Certified auditors, Auditing enterprises, certified certified auditors and organizations, individuals related are responsible for exercising this Circular.

4. During the implementation, should there be any difficulty, send reflection to the Ministry of Finance for study and handling./.

 

PP THE MINISTER DEPUTY MINISTER Tran Xuan Ha

 

ADDENDUM No.01

(Issued and enclosed with the Circular No. 157/2014/TT-BTC dated October 23, 2014 by the Ministry of Finance)

PROCEDURES OF DIRECT INSPECTION OF AUDIT SERVICE QUALITY

I. Inspection preparation stage

1. Choice of auditing enterprises subject to inspection

Annually, the Inspection agency shall base itself on the time-limit of inspection as stipulated in Article 13 hereof to choose a list of auditing enterprises subject to direct inspection of audit service quality.

2. Establishment of Inspectorate

The Inspectorate shall establish direct Inspectorates and designate Head of the Inspectorate, ensuring principles of independence, objectivity and suitability for level and qualification of each member of the Inspectorate aimed at fulfilling the target and requirements of the inspection.

3. Notification to auditing enterprises subject to inspection

The Inspection agency shall notify the plan of audit service quality inspection in writing to individual auditing enterprises subject to its authority of inspection at least 10 working days before the day the inspection starts. The notification of inspection must include purposes, requirements, issues, scope, time of inspection, and a list of materials to be prepared by the auditing enterprise.

4. Establishment of detailed plan

Head of the Inspectorate must establish a detailed plan for the inspection suitable for entities subject to inspection.

5. Members of the Inspectorate must sign a written undertaking on independence and information confidentiality with the entities subject to inspection.

II. Inspection implementation stage

1. Head of the Inspectorate shall announce the Decision issued by the Inspection agency concerning direct inspection of audit service quality to the auditing enterprise and request the coordination from the auditing enterprise.

2. Inspection implementation

The Inspectorate shall carry out system and technical inspection to assess quality of audit service performed by the auditing enterprise. Steps of inspection implementation include:

Step 1: System inspection

Inspection of the system is aimed at determining whether the auditing enterprise has established and organized the execution of policies and procedures of audit service quality control in accordance with VSQC1.

Procedures of inspection of the system include:

a) Learning about the nature and scale of operation of the auditing enterprise subject to inspection in order to examine factors affecting audit service quality through conducting interviews with the Board of Directors and relevant people of the auditing enterprise or studying documents concerning organization of management and operation of the auditing enterprise;

b) Learning about the construction, dissemination and execution of policies and procedures of audit service quality control by the auding enterprise; comparing the designing and implementation of these policies and procedures by the auditing enterprise with the requirements of professional ethics, laws and relevant regulations; remarking on the way of determining and minimizing risks of failing to comply with professional ethics, laws and relevant regulations of the system.

Procedures to be carried out upon review of this information is examining the materials, observing, analysing and interviewing the Board of Directors and relevant people of the auditing enterprise or reviewing the Report of self-inspection results by the auditing enterprise.

c) Assessment of risks of the system

During the inspection, members of the Inspectorate must use their own understandings through examination of the nature, scale of operation and quality control system of the auditing enterprise subject to inspection to assess the risks of the system. If level of risk is evaluated as high, the number of branches and dossiers of service contracts to be chosen for inspection shall be considerable and vice versa.

d) Choosing dossiers of audit service contracts of high risk to examine and assess the compliance with professional ethics, laws and relevant regulations and policies, procedures of audit service quality by the auditing enterprise;

đ) Conducting interviews with professional staff of various levels and responsible people in the auditing enterprise to assess levels of understanding and compliance with policies and procedures of quality control by the auditing enterprise;

c) Inspecting and collecting appropriate evidence to assess whether the auditing enterprise has fully established and complied with policies and procedures of service quality control;

g) Inspecting and collecting other appropriate evidences such as administrative dossier, personnel dossier, documents and materials concerning exchanges with consulting experts in technical issues and professional ethics training;

h) Assessing the construction, dissemination and execution of policies and procedures of audit service quality by the auditing enterprise subject to inspection.

i) Establishing the assessment of audit service quality control system of the auditing enterprise and carrying out exchanges to be in agreement with the auditing enterprise. Based on the assessment of audit service quality control system and professional judgement to conclude and grade audit service quality control system of the auditing enterprise.

Technique of system inspection is stipulated and specifically instructed in the instructional materials for direct inspection of audit service quality issued by the Inspection agency.

Step 2: Technical inspection

Technical inspection is aimed at assessing whether the execution of those service contracts is planned and organized in accordance with the professional ethics, laws and relevant regulations.

Procedures of technical inspection include:

a) Inspecting methodology of auditing applied by the auditing enterprise; Inspecting sample audit dossier instructed by the auditing enterprise;

b) Choosing dossier of service contract and inspecting, assessing whether certified auditors and auditing enterprise comply with professional ethics, laws and relevant regulations during the provision of audit services. Choice of audit service contracts for inspection is stipulated and specifically instructed in the instructional materials for direct inspection of audit service quality issued by the Inspection agency;

c) Executing the procedures to determine whether the auditing enterprise subject to inspection has assessed the risks of each service contract chosen; whether it has executed neccessary procedures of inspection related to the determination of high risk zone and input into the dossier the procedures of inspection executed for this high risk zone;

d) Assessing the appropriateness of inspection scope based on accomplished results to determine if it is neccesary to execute additional procedures;

đ) Inspecting collection of adequate appropriate evidence as foundations to examine and assess each procedure expressed in the dossier of each service contract. Special attention must be paid to such procedures seen as important as risk assessment, inventory, dispatch of confirmation letter, preparation of provisions, suitability of auditing opinions;

e) Inspecting and collecting adequate appropriate evidence as foundations to examine and assess whether certified auditors and auditing enterprise have collected adequate appropriate evidence as foundations to come up with auditing opinions;

g) Establishing the assessment for each dossier of the service contracts chosen for inspection; Exchanging and reaching agreement on the result with certified auditors as members of the Board of Directors in charge of the audit service contrac; Relying on the result from the assessment for each dossier of the service contract as well as professional judgement to conclude and grade quality of the dossier.

III. Inspection closing stage

After the direct inspection is completed, the Inspectorate must establish the Report of inspection, discuss the draft report of inspection with the Board of Directors of the auditing enterprise subject to inspection. The auditing enterprise, head and members of the Inspectorate are responsible for signing the Report of inspection right after the inspection is completed. In case there is any issue being not unanimously agreed on, the auditing enterprise subject to inspection must specify it in the Report of inspection.

In case any entity subject to inspection is detected as having committed administrative violation, the Inspectorate must establish and send the minutes of administrative violations to competent authorities for penalties according to the law.

IV. Post-inspection stage

1. Handling variously commented issues of inspection results (if any)

2. The auditing enterprise must make a submission of the report on remedying of the faults and execution of the Inspectorate’s proposals to the Inspection agency according to the regulation.

3. The Inspection agency shall establish a general report of inspection results and general report of violations detected through inspection.