What is the allocated capital of the branch of foreign audit firms in Vietnam?

What is the allocated capital of the branch of foreign audit firms in Vietnam?

Pursuant to Article 8 of the Decree 17/2012/NĐ-CP stipulating the minimum capital for foreign audit firms establishing branches in Vietnam and the allocated capital of branches of foreign audit firms in Vietnam as follows:

1. The foreign audit firm which requesting for granting of the Certificate of satisfaction of auditing business conditions to its branches in Vietnam must have the equity in balance sheet being at least equal to 500,000 (five hundred thousand) US dollars at the time point of ending the fiscal year nearest time point of requesting.

2. Allocated capital of the branch of foreign audit firms in Vietnam must not be less than the legal capital applicable to the limited liability company stated in Article 5 of this Decree.

3. During its operation, the foreign audit firm must keep the equity in the balance sheet and the allocated capital of its branch in Vietnam not less than the capital stipulated in Clause 1 of this Article. The foreign audit firm, branches of the foreign audit firm must supplement their capital if their equity in balance sheet is lower than the capital levels stipulated in Clause 1 and Clause 2 of this Article in the period of 03 (three) month as from the end date of the fiscal year.

Pursuant to Article 5 of the Decree 17/2012/NĐ-CP stipulating legal capital for the Limited Liability Company in Vietnam as follows:

1. Legal capital for the Limited liability company shall be 3 (three) billion Vietnamese dong; as from January 01, 2015, the legal capital shall be 5 (five) billion Vietnamese dong.

2. During its operation, the limited liability company must keep the equity in balance sheet not less than the legal capital as stipulated in Clause 1 of this Article. The audit firm must supplement its capital if the equity in balance sheet is less than the legal capital as stipulated in Clause 1 of this Article in the period of 03 (three) months as from the end date of the fiscal year.

As regulations above, the minimum allocated capital of the branch of foreign audit firms in Vietnam shall be 5 (five) billion Vietnamese dong.

Is it permissible for the branch of foreign audit firms in Vietnam to audit enterprises, with which they are having contractual business cooperation agreement?

Pursuant to Article 9 of the Decree 17/2012/NĐ-CP stipulating cases where the audit firms and branches of foreign audit firms in Vietnam are not entitled to audit as follows:

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.

2. Members participating in the audit, persons in charge of management and administration, members of the Control Board, chief accountants (or person in charge of accounting) of the audit firms and branches of the foreign audit firms in Vietnam are members, founding shareholders or holding shares, contributing capital into the audited entities or having other economic, financial relations with the audited entities in accordance with provisions of professional ethical standards of accounting and auditing.

3. Persons in charge of management and administration, members of the Control Board, chief accountants (or person in charge of accounting) of the audit firm, branches of the foreign audit firm in Vietnam have parents, spouse, children, siblings being members, founding shareholders or holding shares, contributing capital and holding from 20% or more of voting rights of the audited entity or being persons in charge of management, administration, members of the Control Board, inspectors, chief accounts (or person in charge of accounting) in the audited unit.

4. Persons in charge of management, administration, members of the Control Board, inspectors, chief accounts (or person in charge of accounting) of the audited entity are also persons who contribute capital and hold from 20% or more of voting rights toward the audit firms, branches of the foreign audit firms in Vietnam.

5. The audit firms, branches of the foreign audit firms in Vietnam and audited entities have the following relationships:

a) Having the same an individual or enterprise, organization, who are founding members or involve in the foundation;

b) Together being directly or indirectly administered, controlled, contributed capital in all forms by a third party;

c) Being administered or controlled personnel, finance and business activities by by the individuals belong to the following relationships: husband and wife, parents and children (regardless of natural or adopted children, daughter-in-law or son-in-law); brothers and sisters of the same father and mother (regardless of natural or adoptive father or mother); paternal grandparents and grandchildren; maternal grandparents and grandchildren; natural uncle, aunt and nephew or niece;

d) Having contractual business cooperation agreement;

e) Being companies or legal entities in the same network in accordance with provisions of auditing standards.

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.

As regulations above, it is permissible for the branch of foreign audit firms in Vietnam to audit enterprises, with which they are having contractual business cooperation agreement.

What is the minimum capital contributed by limited partners who are auditors having registered for their auditing practice in the company in Vietnam?

Pursuant to Article 7 of the Decree 17/2012/NĐ-CP stipulating the level of capital contribution of a practicing auditor as follows:

1. The auditing limited liability company must have at least 02 (two) limited partners who are auditors having registered for their auditing practice in the company. Capital contributed by practicing auditors must account for over 50% of the company’s charter capital.

2. The practicing auditor shall not permited to be the member of two or more audit firms at the same time.

As regulations above, capital contributed by practicing auditors must account for over 50% of the company’s charter capital.

Best regards!