How many years in accounting for accountants to do internal audit in Vietnam?

How many years in accounting for accountants to do internal audit in Vietnam?

Pursuant 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.

Thus, you can choose a person who fully meets the above criteria to do internal audit, in which, if you are an accountant doing internal audit in Vietnam, you must have worked for 3 years or more as an accountant.

In listed joint stock companies, who has right to grant approval of audit plans 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.  

According to this article, when your company is converted into a joint stock company and listed on the stock market, the Management Boards will have the authority to issue the Internal Audit plans in Vietnam.

If I prepare annual internal audit plans in Vietnam, which department in a listed joint-stock company should I send it to?

Article 14 of Decree 05/2019/ND-CP stipulates annual internal audit plans as follows:

1. Based on objectives, policies, scale and level of risks of activities and available resources, internal audit departments shall develop annual internal audit plans containing information about the extent of internal audit, audited subjects, audit objectives and audit time and distribution of resources.

2. Annual internal audit plans of units performing internal audits shall have to meet the following requirements:

a) Risk-orientedness: Operations/management and operations departments at high level of risk must be audited at least once a year;

b) The audit plan must save adequate time for performing unscheduled audits right after receipt of an audit request or upon receipt of information about signs of offences or high risks of audited subjects.

3. Annual internal audit plans of audited units may be revised when there is any basic change in the scale of operations, risk variations or existing resources.

4. Following years’ internal audit plans shall be submitted to:

a) Ministers, Heads of Ministry-level agencies, Heads of Governmental bodies in case of auditing of Ministries, Ministry-level agencies and Governmental bodies;

b) People’s Committees of centrally-affiliated cities and provinces in case of auditing of People’s Committees of centrally-affiliated cities and provinces;

c) Heads of state-owned public service units in case of auditing of state-owned public service units;

d) Management Boards or Control Boards in case of auditing of listed companies;          

dd) Management Boards or Control Boards in case of auditing of 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, Presidents of enterprises or Control Boards in case of auditing of state enterprises which are parent companies operating in a parent - subsidiary business model;   

g) Other departments under internal audit rules of each audited unit.

5. Authority to grant approval of audit plans 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.  

As such, the internal audit department, after developing the annual internal audit plan, will have to send it to the Board of Directors and the Management Boards for listed companies in Vietnam.

Best Regards!