The Ministry of Finance (MoF) is seeking public opinions on the draft of the first ever Independent Audit Law which is expected to address limitations of current audit practices.
The draft Law, with 85 articles arranged in eight chapters, provides for principles, conditions, scope and forms of independent audit; criteria, rights, obligations and responsibilities of independent auditors, audit assistants, auditing firms and audited units; independent auditing activities and management of these activities.
Article 10 of the draft Law says that the MoF would hold responsibility before the Government for performing the state management of independent auditing activities. Specifically, the MoF would decide on the issuance, suspension and withdrawal of establishment and operation licenses of auditing enterprises as well as their branches, representative offices and overseas affiliates, settle complaints and denunciations and handle violations in independent audit. The MoF may authorize some of its tasks to professional auditing associations.
Compared to the current regulation on independent audit issued together with Government Decree No. 105/2005/ND-CP of March 30, 2005, the draft Law broadens the scope of entities whose financial statements must be audited to cover also joint-venture companies, limited-liability companies and auditing firms.
Under Article 17 of the draft Law, practicing auditors must be members of a professional auditing association, which conforms to international practices. While in most developed countries, auditors are allowed to practice in their personal capacity, the draft Law underlines that auditors would only be permitted to practice under the name of an auditing firm.
Article 23 of the draft Law stipulates that auditing firms may be set up and operate in the form of limited-liability company with two or more members, partnership or private enterprise.
To be granted an establishment and operation license, an auditing firm must satisfy conditions prescribed by law, have a charter capital at least equal to the level prescribed by the Government and have at least five members, including the director and the chairperson of the Members’ Council, who must possess an auditor certificate.
The draft law is to be submitted to the National Assembly for debate at its seventh session in May.-