For how long can auditing firms in Vietnam suspend their business?
What are the rights and obligations of auditing firms in Vietnam?
According to Article 28 of the 2011 Law on Independent Audit in Vietnam, auditing firms have the following rights:
- To provide the services stipulated in Article 40 of this Law;
- To receive fee;
- To establish branches carrying on business of audit service;
- To locate its establishment to carry on business of audit service in foreign countries;
- To participate in the international audit organizations, professional organizations on audit;
- To request the audited units to provide sufficiently and timely the necessary information, documents and explain issues related to the contents of audit; To request inventory of assets, debt comparison of audited unit related the contents of audit; to inspect all records and documents related to economic and financial operation of the audited unit inside and outside of the unit during the course of audit;
- To inspect, confirm the economic and financial information related to the audited unit inside and outside of the unit during the course of audit;
- To request the concerned organizations and individuals to provide necessary documents and information related to the contents of the audit through the audited unit;
- Other rights in accordance with the law regulations.
The responsibilities of the auditing firm are specified in Article 17 of Circular No. 203/2012/TT-BTC (amended by Clauses 1 and 2, Article 5 of Circular No. 39/2020/TT-BTC) as follows:
- Maintain the fulfillment of the conditions for being issued with the Certificate of eligibility for providing audit services throughout the operation.
- Do not falsify the contents of the Certificate of eligibility for providing audit services.
- Do not lend, lease out, mortgage, trade, and transfer the Certificate of eligibility for providing audit services.
- Send a report to the Ministry of Finance within 10 days from the day on which Certificate of eligibility for providing audit services is lost or damaged.
- Send a written notification (enclosed with evidence) to the Ministry of Finance within 10 days from the day on which the changes prescribed in Article 26 of the Law on Independent audit occur.
- Facilitate the inspection and measures taken by competent state agencies to ensure the fulfillment of the conditions for providing audit services and the proper use of the Certificate of eligibility for providing audit services.
- Send reports on the fulfillment of the conditions for providing audit services.
- Send annual reports on their operation in the year.
For how long can auditing firms in Vietnam suspend their business?
For how long can auditing firms in Vietnam suspend their business?
According to Article 33 of the 2011 Law on Independent Audit in Vietnam and Article 14 of Circular No. 203/2012/TT-BTC stipulating the temporary suspension of carrying on business of auditing firms as follows:
- Auditing firms in Vietnam are entitled to temporarily suspend the audit services business; however the time limit for temporary suspension does not exceed twelve consecutive months. An audit firm wishing to suspend the provision of audit services must send a notification of the suspension (according to the template in Annex XI) to the Ministry of Finance at least 15 days before the suspension date.
- Auditing firms, branches of foreign auditing firms in Vietnam suspend temporarily to carry on business its audit services but have not completed yet the audit contracts signed with clients; they must deal with clients on the performance of such contracts.
- The list of suspended audit firms shall be posted on the website of the Ministry of Finance.
- Auditing firms suspend temporarily to carry on business its audit services, its branches must also suspend temporarily to carry on business its audit services.
- When resuming the operation, the audit firm must ensure that all conditions are satisfied, and send a written notification to the Ministry of Finance within 10 days from the resuming day.
Thus, according to the above provisions, auditing firms are allowed to temporarily suspend their business but must notify the Ministry of Finance within the prescribed time limit.
What should be done if an auditing firm suspending its business resumes operations without notice?
According to Clause 3, Article 14 of Circular No. 203/2012/TT-BTC stipulating the responsibilities of an auditing firm to suspend its business as follows:
When resuming the operation, the audit firm must ensure that all conditions are satisfied, and send a written notification to the Ministry of Finance within 10 days from the resuming day.
Pursuant to the above provisions, the audit firm must ensure that all conditions are satisfied, and send a written notification to the Ministry of Finance within the prescribed time limit. In case the firm resumes operation without notice, it will be handled according to Point g, Clause 3, Article 66 of Decree No. 41/2018/ND-CP as follows:
Penalties for violations against regulations on notification and report obligations of auditing firms
…
3. A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed on the auditing firm committing one of the following violations:
…
g) Failure to notify the Ministry of Finance in writing when the provision of audit services resumes after being put on hold;
Thus, this fine is imposed upon organizations under Article 6 of Decree No. 41/2018/ND-CP as amended by Clause 2, Article 5 of Decree No. 102/2021/ND-CP.
Thus, an auditing firm has the right to suspend its business but must send a notice to the Ministry of Finance as prescribed. In case the firm resumes operation, a notice must also be sent to the Ministry of Finance within 10 days at the latest before the date of resumption of operation.
Firms that resume operation without notice will be penalized according to the provisions of Point g, Clause 3, Article 66 of Decree No. 41/2018/ND-CP.
LawNet