Can listed companies hire independent audit bodies for internal audit in Vietnam?
Can listed companies hire independent audit bodies for internal audit in Vietnam? What are eligibility standards of internal auditors in Vietnam? Who has authority to promulgate internal audit rules in listed companies in Vietnam?
Hello, my company has recently registered and listed on the stock exchange, now it's time for the internal audit of the company, can we hire independent audit bodies to do it? ? Please advise.
1. Can listed companies hire independent audit bodies for internal audit in Vietnam?
Pursuant to Article 10 of Decree 05/2019/ND-CP stipulating internal audit duties of enterprises as follows:
1. Enterprises that have to perform the internal audit shall include the followings:
a) Listed companies;
b) Enterprises with 50% of their charter capital is held by the State, which are parent companies operating in a parent - subsidiary business model;
c) State enterprises which are parent companies operating in a parent - subsidiary business model.
2. Other enterprises not covered in clause 1 of this Article shall be encouraged to perform the internal audit.
3. Enterprises referred to in this Article may hire independent audit bodies legally accredited to render their audit services. In case where enterprises hire accredited independent auditing bodies to provide internal audit services, they must ensure conformance to fundamental internal audit principles and other requirements for assuring conformance to fundamental internal audit principles as prescribed in Article 5 and Article 6 herein.
Hiring of independent bodies providing internal audit services for enterprises controlled by the Ministry of National Defense and the Ministry of Public Security shall be subject to regulations approved by the Minister of National Defense and the Minister of Public Security.
As such, your company as a listed company can hire independent audit bodies that is qualified to perform audit activities in accordance with the law to provide internal audit services in Vietnam.
2. What are eligibility standards of internal auditors in Vietnam?
According to Article 11 of Decree 05/2019/ND-CP stipulating eligibility standards of internal auditors as follows:
1. Hold undergraduate degrees in majors meeting audit requirements, acquire sufficient and updated knowledge about assigned internal audit sectors.
2. Have at least 5 years’ working experience in the industries relevant to their training majors or at least 3 years’ experience in working for their current employer or at least 3 years' experience in working in the audit, accounting or inspection field.
3. Acquire general knowledge and understanding about laws and business operations of audited units; have competence in collecting, analyzing, assessing and consolidating information; have knowledge and skills related to the internal audit.
4. Have not yet been subject to any discipline in a warning or severer form that is likely to be imposed on any violation arising from economic or financial administration or accounting activities or, at present, be not subject to disciplinary actions.
5. Meet other standards prescribed by audited units.
According to this Article, internal auditors of the enterprise in Vietnam must have the standards specified above.
3. Who has authority to promulgate internal audit rules in listed companies in Vietnam?
According to Article 12 of Decree 05/2019/ND-CP stipulating internal audit rules and processes as follows:
1. Internal audit rules must set out regulations on objectives, scope of operation, position, duties, powers and responsibilities of an internal audit department in an audited unit, and relationship of that department with others; requirements concerning independence, objectivity, fundamental principles, requirements concerning professional qualification and assurance of internal audit quality and other contents.
2. Internal audit processes shall include the followings: providing regulations and specific instructions on methods of assessment of risks, preparing annual internal audit plans, planning each internal audit, methods for carrying out internal audits, preparing and submitting audit reports, monitoring and supervising post-audit corrections, keeping track of implementation of post-audit recommendations, filing records and documents related to internal audits.
3. After consulting provisions laid down herein, units performing internal audits must formulate their internal audit rules and processes relevant to their particular business characteristics. These units shall be encouraged to adopt international internal audit rules if these practices are not contradictory to provisions of this Decree and other legislative documents.
4. Authority to promulgate internal audit rules shall be delegated to:
a) Ministers, Heads of Ministry-level agencies, Heads of Governmental bodies over Ministries, Ministry-level agencies and Governmental bodies;
b) People’s Committees of centrally-affiliated cities and provinces over People’s Committees of centrally-affiliated cities and provinces;
c) Heads of state-owned public service units over state-owned public service units;
d) Management Boards over listed companies;
dd) Management Boards over enterprises with 50% of their charter capital is held by the State, which are parent companies operating in a parent - subsidiary business model;
e) Members’ Boards and Presidents of enterprises over state enterprises which are parent companies operating in a parent - subsidiary business model.
Thus, management Boards of listed companies has the authority to promulgate internal audit rules in Vietnam.
Best Regards!
