Will a branch of a company be suspended if it does not ensure the sufficient number of auditors in Vietnam?

Will a branch of a company be suspended if it does not ensure the sufficient number of auditors in Vietnam?

Pursuant to Article 31 of the Law on Independent Audit in 2011 stipulating branches of auditing firms as follows:

1. Conditions for the branches of auditing firms entitled to carry on business of audit services:

a) Auditing firms have sufficient conditions to carry on business of audit services as stipulated in Article 21 of this Law;

b) A branch has at least two practicing auditors, including the branch director. Two practicing auditors are not at the same time as auditor registering to practice in the head office or other branches of auditing firms.

c) Being approved in writing by the Ministry of Finance.

2. Branch of the auditing firm not ensuring conditions specified in clause 1 of this Article after three consecutive months shall be suspended from trading the audit services.

3. Where the auditing firm is suspended from trading the audit services, the branches of such auditing firm also suspended from trading the audit services.

According to this provision, a branch must have at least two practicing auditors, including the branch manager, to be qualified to conduct auditing services. If the branch does not meet the requirements for auditors for three consecutive months, it will be suspended from conducting auditing services.

What is the fine for an individual who signs an audit report when they are not a practicing auditor in Vietnam?

According to Clause 2 Article 48 of Decree 41/2018/ND-CP, the following penalties apply to auditors:

2. A fine of VND 10,000,000 to VND 20,000,000 for following acts:

a) Signing an audit report when not a practicing auditor.

b) Signing an audit report for the same audited entity for more than three consecutive years.

Pursuant to Clause 2 Article 5 of Decree 102/2021/ND-CP stipulatingas follows:

2. The penalties listed in Chapters II and III of the Decree apply to organizations, except for the following cases, which apply to individuals: Article 7, Clause 1; Article 8; Article 9; Article 10; Article 11; Article 13; Article 14; Article 15; Article 16; Article 17; Article 19; Clause 1, Clause 3 of Article 21; Article 22; Article 23; Article 24; Article 26; Article 33; Article 34; Clause 1, Clause 3 of Article 36; Clause 1 of Article 38; Clause 2, Clause 3 of Article 39; Clause 1, Clause 2 of Article 48; Clause 1 of Article 57; Clause 1, Clause 2 of Article 61; Article 67. In these cases, the penalties apply to individuals, and the penalty for an organization for the same violation is twice the penalty for an individual.

Therefore, an individual who signs an audit report when not a practicing auditor will be fined VND 10,000,000 to VND 20,000,000.

In what cases will an auditing firm cease to do business with auditing services in Vietnam?

Pursuant to Article 34 of the Law on Independent Audit in 2011 stipulating termination of carrying on business of audit services as follows:

1. Auditing firms terminate the business of audit services in the following cases:

a) To terminate by themselves;

b) To be divided, separated, merged, consolidated, dissolved;

c) To be withdrawn business registration certificate, certificate of enterprise registration, investment certificate or certificate of sufficient conditions to carry on business of audit services;

d) Director of the private enterprise is deceased;

đ) Other cases in accordance with regulations of the law on enterprises.

2. Branches of foreign auditing firms in Vietnam terminate the business of audit services in the following cases:

a) As decided by the foreign auditing firm that has established its branch;

b) According to provisions in point c and point đ clause 1 of this Article.

3. In case of termination of the business of audit services as stipulated in point a clause 1 of this Article, the auditing firm must notify in writing to the Ministry of Finance no later than thirty days prior to the termination date.

4. The Ministry of Finance shall specify the procedures for termination of the business of audit services.

Above are cases an auditing firm will cease to do business with auditing services in Vietnam.

Best regards!