DECREE

ON INDEPENDENT AUDITING IN THE NATIONAL ECONOMY

THE GOVERNMENT

Pursuant to the Law on the Organization of the Government dated 30 September 1992;
In order to meet the demand for the development and uniform management of independent auditing activities within the national economy;
Following the recommendations of the Ministry of Finance;

DECREES:

Article 1. To issue with this Decree the Regulations on Independent Auditing in the National Economy .

Article 2

This Decree shall be of full force and effect as of the date of its signing. The Minister of Finance shall be responsible for providing guidelines on the implementation of the Regulations issued with this Decree.

Article 3

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ON BEHALF OF THE GOVERNMENT
ON BEHALF OF THE PRIME MINISTER
DEPUTY PRIME MINISTER





Phan Van Khai

REGULATIONS

ON INDEPENDENT AUDITING IN THE NATIONAL ECONOMY
(Issued with Decree 07-CP of the Government dated 29 January 1994)

Chapter I

GENERAL PROVISIONS

Article 1

Independent auditing means the inspection and confirmation by professional auditors in independent auditing organizations of the accuracy and appropriateness of accounting documents, data and the balance sheet of business enterprises, institutions, organizations and social associations (hereinafter referred to as accounting entities) when requested by such entities.

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Independent auditing activities also assist accounting entities to identify and correct in a timely manner intentional or unintentional mistakes, and to prevent breaches and damages which may occur while carrying on business and incurring expenses.

Article 2

Independent auditing shall be carried out at the request of the following entities:

1. Enterprises with foreign owned capital operating under the foreign investment law of Vietnam;

2. Limited liability and shareholding companies;

3. Private companies;

4. Co-operatives;

5. State enterprises;

6. Non-profit organizations and social associations;

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Article 3

Independent auditing activities shall be carried out by professional auditors (hereinafter refe rred to as auditor). An auditor shall be a person who satisfies all conditions stipulated in this Regulations, is recognized by an authorized State body, and is permitted to practise in independent auditing organizations.

Article 4

An independent auditing organization shall be a business enterprise (an auditing company or office) established in accordance with the provisions currently in force on the establishment of business enterprises and the provisions of these Regulations.

Article 5

The Ministry o f Finance shall be the State administrative body responsible for independent auditing activities.

Article 6

Having obtained written approval from the Ministry of Finance, all foreign auditing organizations carrying out auditing activities and financial accounting consultancy services in the territory of Vietnam must be issued with a licence from the State Committee for Co -operation and Investment. The activities of foreign auditors and auditing organizations must comply with the Law on Foreign Investment of the Socialist Republic of Vietnam, the provisions of these Regulations, and international auditing practices which are recognized by the State of Vietnam.

Article 7

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Entities requesting audits shall provide in a timely manner all accurate and relevant information and documents which are necessary in order to create favourable conditions for auditors to carry out auditing activities and to pay all auditing fees in full and on time in accordance with the agreed contract.

Article 8

Auditing activities must be carried out in accordance with the procedure and specialized professional method stipulated by the Ministry of Finance. Upon completing the audit, an auditor must prepare an audit report, state his opinion in the report, and be fully responsible for his opinion.

The auditing report must be objective, true and fair, signed by the auditor, and certified, signed and sealed by a senior member of the auditing organization.

Chapter II

THE AUDITOR

Article 9

An auditor must be a Vietnamese citizen or a foreign person permitted to reside in Vietnam and registered to practise the profession with an independent auditing organization operating legally in the territory of Vietnam.

Article 10

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1. A clear history: must be of true character and honest, and have a thorough knowledge of law and the policies and regimes of the State in relation to finance, economics, accounting and statistics; and must not have any previous sentences or convictions.

2. Must hold an university degree or similar qualification of a secondary college which specializes in finance and accounting, and have experience in finance or accounting of at least five years (in respect of an university graduate) or ten (10) years (in respect of graduates of a secondary college).

3. Must have passed the auditor exam set by the State Qualification Board and have been issued with a certificate by the Ministry o f Finance.

Article 11

Current employees of the State shall not be permitted to register to practise as auditors in independent auditing organizations. Auditors who have their practising certificates withdrawn shall not be permitted to re -register to practise the profession.

Article 12

A foreign person shall be permitted to register to practise the profession with an independent auditing organization in Vietnam if such person is issued with an auditor certificate by the Minister of Finance of Vietnam or by an international auditing organization which the Ministry of Finance of Vietnam recognises.

Article 13

An auditor shall be permitted to carry out the following auditing services:

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2. Inspection and certification of the extent of truthfulness, fairness, and reasonableness of the balance sheet prepared by accounting entities.

3. Inspection and certification of the value of the capital contributed by joint venture parties and shareholders; inspection and certification of whether the accounting data and balance sheet prepared by entities involved in a joint venture, dissolution, merger, division, privatization, bankruptcy, and other cases are true and fair and complete and accurate in accordance with the law.

4. Carrying out financial and accountancy valuation, and consultancy services in respect of financial, accountancy, and taxation management at the request of the client.

Article 14

An auditor has a duty to perform an audit in accordance with the following principles:

1. Compliance with the law of the State of Vietnam.

2. To ensure that data is true, independent, objective, fair and confidential.

3. Compliance with all Vietnamese accounting and auditing standards which are currently in force and all internationally recognized accounting and auditing standards which the State of Vietnam accepts.

4. The auditor shall only be permitted to carry out auditing services for a client entity which is not in any way economically related to the auditor, and the head of such entity must not be a relative of the auditor.

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An auditor shall have the following responsibilities:

1. To comply strictly with all auditing principles stipulated in article 14 of these Regulations; to perform faithfully all terms of the auditing contract; to be responsible before the law and responsible to the independent auditing organization and client for all auditing results and opinions stated in the audit report.

2. Whilst carrying out his duty, an auditor must not hinder or interfere with the management activities of the entity which is the subject of the audit and shall only be permitted to receive the audit fee which has been agreed to in the auditing contract.

3. Where an auditor breaches the provisions of these Regulations or the law, the auditor may have his practising certificate withdrawn, be dealt with in accordance with the law, and be liable for payment of compensation if the client suffers material damages.

Article 16

An auditor shall have the right to:

1. Be professionally independent in carrying out his work;

2. Request the client to supply all accounting and financial documents and other documents which are relevant to the performance of an audit;

3. Compare and verify all economic information relating to the entity which is being audited, within and outside the entity (if required);

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5. Refuse an audit request of a client if the auditor considers that there are insufficient conditions, o r that he lacks the capacity to perform the audit.

Chapter III

AUDITING ORGANIZATION

Article 17

To establish an independent auditing organization (an auditing company or office) the following conditions must be satisfied:

1. All conditions stipulated by the provisions of the law on the establishment of businesses which are currently in force must be satisfied.

2. There must be at least five personnel who are issued with auditor certificates. The head of the auditing organization must be an auditor.

3. There must be written approval of the Ministry of Finance and a licence to establish issued by an authorized State body in accordance with the provisions of the law.

Article 18

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Article 19

The independent auditing organization shall, within the scope of its management authority, be responsible for managing the professional activities of its auditors, be responsible before the law and to its clients for any breaches of practising standards committed by the organization or its auditors, and compensate clients for damages caused.

Article 20

An independent audit ing organization shall be an independent economic accounting entity permitted to collect fees from the provision of services in order to cover its expenses. The level of fees charged as stated in the auditing contract agreed to between the two parties shall be based on the volume and degree of complexity of the audit work and the list of audit fees determined by the Ministry of Finance.

The independent auditing organization must carry out all obligations to the State Budget in accordance with the law and purchase insurance cover from insurance companies in order to provide for the risk of having to pay compensation to clients for damages caused.

Chapter IV

STATE ADMINISTRATION OF AUDITING ACTIVITIES

Article 21

Independent auditing organizations shall be considered as businesses and be subject to inspection and supervision by State administrative bodies.

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Article 22

The Ministry of Finance shall carry out the State administrative function in respect of auditing activities. State administration consists of:

1. Promulgation of auditing standards and principles, and other guidance documents on auditing methods and the profession.

2. Promulgation of provisions on and guidelines for the implementation of regulations on training for, and fostering of the auditing profession, regulations on the type of exam and the issuing of the auditor practising certificate, and regulations on the establishment of a State Examination Board for the purpose of organizing exams and issuing auditor practising certificates in accordance with the provisions of the State.

3. Evaluation of application files for the establishment of an auditing organization, and organization of the registration and the implementation of a uniform administrative system of auditors.

4. Stipulation of a list of auditing fees which shall apply uniformly in the auditing profession.

5. Inspection of the compliance of auditing organizations with the law and auditing regulations in carrying out auditing activities and dealing with any dissatisfaction or dispute which may arise from an audit report.

The decision of the Minister of Finance in respect of any dissatisfaction or dispute relating to an audit report shall be final.

Chapter V

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Article 23

These Regulations shall be of full force and effect as of the date of signing and shall apply to all independent Vietnamese auditing organizations and all foreign auditing organizations operating in Vietnam.

Article 24

All previous provisions which are inconsistent with these Regulations are hereby repealed.

ON BEHALF OF THE GOVERNMENT
ON BEHALF OF THE PRIME MINISTER
DEPUTY PRIME MINISTER





Phan Van Khai