Selection of Audit Service Files for Direct Inspection of Audit Service Quality

Choosing Service Contract Files for Direct Audit Quality Inspection (illustrative image)

According to Circular 157/2014/TT-BTC on the selection of service contract files for direct audit quality inspection as follows:

- The selection of audit service contract files for inspection must meet the objective that the Inspection Team has sufficient reasonable grounds to conclude on the audit service quality of the audited audit firm;

- The selected service contract files for inspection must include audit services, review services, and other assurance services of the audited audit firm, particularly focusing on high-risk contracts. Elements to assess the risk level of a contract include:

- Scale, field, industry;- Degree of assurance of the service (audit, review of financial reports, financial information, and other assurance services); performing group; disputes, litigation;- Customers provided with multiple services in the same period; customers with significant service fees;- Customers with service fees that are too high or too low or inappropriate for the scale; risks related to customers and special customers;- Results of previous inspections and first-year contracts;- Contracts with audit reports that are issued too quickly or too slowly compared to the annual accounting period;

- The audited audit firm must provide a list of customers by type of audit contract, financial report review contract, financial information contract, other assurance service contract. The selected service contract files for inspection must detail:

- According to the customer's field of operation (such as manufacturing, commerce, banking, insurance);- According to the type of enterprise, organization, and customer scale (Joint Stock Company; Limited Liability Company, Partnership Company, Private Enterprise, Cooperative, administrative units, social organizations, international projects, and other organizations);- According to the form of ownership of customer capital (Foreign-invested enterprises, state-owned enterprises, and other enterprises or organizations);- Customers as public interest entities and other enterprises or organizations;- The practicing auditor responsible for signing the audit report, review service report, or other assurance service report.

- The Inspection Team can choose one of the service contract files that the audited audit firm evaluates as high quality. Besides the service contract files selected for a full inspection, the Inspection Team can select some service contract files to inspect questionable issues;

- In a periodic inspection, at least three service contract files must be selected for inspection. For each selected service contract file, the audit firm must provide relevant documents such as audited financial reports, audit reports, and service contracts as per professional standards, laws, and related regulations;

- The selected service contract files for inspection are only notified to the audited audit firm at the beginning of the inspection. During the inspection, the Inspection Team has the right to select any service contract file for inspection without prior notice to the audited audit firm. The selected service contract files must be within the inspection scope.

For details, see Circular 157/2014/TT-BTC effective from October 23, 2014.

Ty Na

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