Vietnam: Does a joint stock company need to audit its financial statements? Is it possible to select the audit firm that audited the Company of the previous year?
- Is a joint stock company a public company in Vietnam?
- Does a joint stock company need to audit its financial statements in Vietnam?
- In case the joint stock company still chooses the auditing unit that has audited the financial statements for the Company of the previous year, is it possible in Vietnam?
Is a joint stock company a public company in Vietnam?
Pursuant to Article 32 of the Law on Securities in Vietnam 2019 stipulates as follows:
Article 32. Public companies
1. A joint-stock company will become a public company in one of the following cases:
a) The company has a contributed charter capital of at least 30 billion VND and at least 10% of the voting shares are being held by at least 100 non-major shareholders;
b) The company has successfully made its IPO by registration with SSC as prescribed in Clause 1 Article 16 of this Law.
2. The joint-stock company mentioned in Point a Clause 1 of this Article shall submit the application for public company registration as prescribed in Clause 1 Article 33 of this Law to SSC within 90 days from the day on which the requirements specified in Point a Clause 1 of this Article are fully satisfied.
3. Within 15 days from the receipt of the valid application from the joint-stock company in Vietnam mentioned in Point a Clause 1 of this Article, or from the receipt of the report on completion of the offering prescribed in Point b Clause 1 of this Article, SSC shall confirm the registration of the public company, publish the company’s name, operations and other information on SSC’s media.
Thus, a joint-stock company in Vietnam is a public company when it falls into one of the following cases:
- The company has a contributed charter capital of at least 30 billion VND and at least 10% of the voting shares are being held by at least 100 non-major shareholders;
- The company has successfully made its IPO by registration with SSC as prescribed in Clause 1 Article 16 of this Law.
Vietnam: Does a joint stock company need to audit its financial statements? Is it possible to select the audit firm that audited the Company of the previous year?
Does a joint stock company need to audit its financial statements in Vietnam?
Pursuant to Clause 1, Article 15 of Decree 17/2012/ND-CP stipulating audited units as follows:
Article 15. Audited entities
1. Enterprises and organizations whose annual financial statements, as prescribed by law, must be audited by the audit firm, branches of the foreign audit firm in Vietnam, include:
a) Enterprises with foreign owned capital;
b) Credit institutions which are established and operating under the Law on credit institutions, including branches of foreign banks in Vietnam;
c) Financial organizations, insurance companies, reinsurance companies, insurance brokerage companies, branches of foreign non life insurance companies.
d) Public companies, securities issuing organizations and securities trading organizations.
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Thus, according to the above regulations, only if a joint-stock company in Vietnam meets the conditions for being a public company, at this time the joint-stock company in Vietnam is subject to audited financial statements.
In case the joint stock company still chooses the auditing unit that has audited the financial statements for the Company of the previous year, is it possible in Vietnam?
Pursuant to Clause 6 Article 9 of Decree 17/2012/ND-CP stipulates as follows:
Article 9. Cases where the audit firms and branches of foreign audit firms in Vietnam are not entitled to audit
Cases, where audit firms and branches of foreign audit firms in Vietnam are not entitled to perform audit as stipulated in Article 30 of the Law on independent audit, shall be guided in detail as follows:
1. Audit firms, branches of foreign audit firms in Vietnam who are performing or performed in the preceding year one of the following services for audited entities:
a) Recording in Accounting Book, making financial statements;
b) Performance of internal audit service;
c) Designing and implementation procedures of internal control;
d) Other services which affect the independence of practicing auditors and audit firms, branches of foreign audit firms in Vietnam in accordance with provisions of professional ethics standards of accounting and auditing.
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6. The audited entity performed in the preceding year or is performing audit of financial statements or other auditing services for the audit firms, branches of the foreign audit firms in Vietnam.
7. The audited entity is organization contributing capital to the audit firm; the audited entity is the parent company, subsidiary company, associated company, joint venture company, superior unit, subordinate unit, company in the same conglomerate of organization contributing capital to the audit firm.
8. The audit firm directly or indirectly participates in management, control and capital contribution in all forms into the audited entity.
9. Other cases in accordance with provisions of professional ethics standards of accounting and auditing and provisions of law.
Thus, according to the above provisions, the company is not allowed to select the audit unit that audited the Company in the preceding year.
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