In which cases is it mandatory to enter into contracts for audit of annual financial statements in Vietnam?
- In which cases is it mandatory to enter into contracts for audit of annual financial statements in Vietnam?
- If the parties do not sign the contracts for audit of annual financial statements, how will the parties be penalized?
- How much fine is the penalty for entering into contracts for audit of annual financial statements later than the prescribed date?
In which cases is it mandatory to enter into contracts for audit of annual financial statements in Vietnam?
Pursuant to Clause 1, Article 42 of the 2011 Law on Independent Audit in Vietnam stipulating as follows:
Audit contracts
1. Auditing firms, branches of foreign auditing firms in Vietnam implement the audit services under the audit contract.
Thus, audit services can only be performed in the form of an audit contract.
Specifically, based on Article 9 of the 2011 Law on Independent Audit in Vietnam stipulating as follows:
Compulsory audit
1. Compulsory audit is the audit for the annual financial statements, the settlement statements of completed projects and other financial information of the audited units specified in clause 1 and clause 2 Article 37 of this Law and other provisions of concerned law.
2. Contracts for audit of annual financial statements of the enterprises, organizations that are required to audit the financial statements must be concluded no later than thirty days before the date of ending the year accounting period.
3. Enterprises and organizations that are required to audit as submitting financial statements to the competent State agencies and as publicizing financial statements audit are required to attach the audit statements; in case when the State agencies receive financial statements of the enterprises, organizations which are required to audit without the attached audit statements, the State agencies are responsible for sending notice to the competent state agencies for handling in accordance with the law regulations.
Thus, for cases where it is mandatory to audit the financial statements, contracts for audit of annual financial statements of the enterprises, organizations that are required to audit the financial statements must be concluded no later than thirty days before the date of ending the year accounting period.
In cases where auditing is encouraged, the entities must also enter into an audit contract to perform this service.
In which cases is it mandatory to enter into contracts for audit of annual financial statements in Vietnam?
If the parties do not sign the contracts for audit of annual financial statements, how will the parties be penalized?
- For auditing firms:
Pursuant to Article 46 of Decree No. 41/2018/ND-CP stipulating as follows:
Penalties for violations against regulations on audit contracts
1. A warning shall be imposed on the auditing firm making audit contracts which do not have sufficient contents with its clients or audited units.
2. A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed on the auditing firm making audit contracts with their clients or audited unit after auditing.
3. A fine ranging from VND 10,000,000 to VND 20,000,000 shall be imposed on the auditing firm that fails to make audit contracts with their clients or audited unit when auditing.
Thus, because the audit service is performed through a contract, the auditing firm that fails to make audit contracts with their clients or audited unit when auditing may be fined from VND 10,000,000 to VND 20,000,000.
- For entities required to have their annual financial statements audited:
Pursuant to Article 54 of Decree No. 41/2018/ND-CP stipulating as follows:
Penalties for violations against regulations on contracts for audit of annual financial statements in Vietnam
1. A warning shall be imposed on enterprises and organizations which are required to have their annual financial statements audited entering into contracts for such audit without sufficient contents.
2. A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed on enterprises and organizations which are required to have their annual financial statements audited entering into contracts for such audit later than the specified deadline.
3. A fine ranging from VND 10,000,000 to VND 20,000,000 shall be imposed on enterprises and organizations which are required to have their annual financial statements audited entering into contracts for such audit after the audit is done.
4. A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed on enterprises and organizations which are required to have their annual financial statements audited failing to enter into contracts for such audit when auditing.
Thus, if failing to enter into contracts for audit of annual financial statements when performing an audit, an enterprise or organization that is required to have their annual financial statements audited may be fined from VND 20,000,000 to VND 30,000,000.
How much fine is the penalty for entering into contracts for audit of annual financial statements later than the prescribed date?
Pursuant to Article 54 of Decree No. 41/2018/ND-CP stipulating as follows:
Penalties for violations against regulations on contracts for audit of annual financial statements in Vietnam
1. A warning shall be imposed on enterprises and organizations which are required to have their annual financial statements audited entering into contracts for such audit without sufficient contents.
2. A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed on enterprises and organizations which are required to have their annual financial statements audited entering into contracts for such audit later than the specified deadline.
3. A fine ranging from VND 10,000,000 to VND 20,000,000 shall be imposed on enterprises and organizations which are required to have their annual financial statements audited entering into contracts for such audit after the audit is done.
4. A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed on enterprises and organizations which are required to have their annual financial statements audited failing to enter into contracts for such audit when auditing.
Thus, for the act of entering into a financial statement audit contract later than the prescribed time limit, the violator may be fined from VND 5,000,000 to VND 10,000,000.
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