Which Projects Require Hiring an Independent Auditor Before Approving Final Settlement?

The project’s total investment includes costs for: compensation clearance, design consultancy, infrastructure construction, sales expenses, house construction for sale, etc. However, the Company only proceeded to the infrastructure construction stage and did not execute the house construction for sale.

Through the Business Feedback and Response System, Long An IDICO Construction Investment Joint Stock Company queried, based on Circular No. 09/2016/TT-BTC, if the company's board of directors (comprising both State capital and private capital) selects the audit option per each item and independently prepares the project completion report without auditing the completed finalization report according to the approved total investment, is that permissible?

Regarding this issue, the Ministry of Finance provides the following opinion:

Clause 8, Article 4 of the Law on Enterprises 2014 dated November 26, 2014, stipulates: "A state enterprise is an enterprise in which the State holds 100% of the charter capital."

Article 1 of Circular No. 09/2016/TT-BTC dated January 18, 2016, by the Ministry of Finance, which provides regulations on finalization of completed projects funded by state capital, specifies:

"1. Scope of adjustment:

a) This Circular regulates the finalization for investment projects utilizing state capital, after completion or permanent cessation of implementation.

State capital includes: public investment capital, credit capital guaranteed by the Government of Vietnam, loans secured by state assets, development investment capital of state enterprises, etc.

2. Applicable subjects:

This Circular applies to agencies, organizations, and individuals involved in the finalization of completed projects funded by state capital, etc."

The Company's query did not specify the source of project execution; therefore, based on the above regulations, in the case of a project using state capital, the finalization of the completed project shall comply with the regulations in Circular No. 09/2016/TT-BTC.

In the case where the project does not use state capital as stipulated in Clause 3, Article 1 of Circular No. 09/2016/TT-BTC, the enterprise may apply the regulations in this Circular to prepare the finalization report and verify the finalization of the completed project.

Article 10 of Circular No. 09/2016/TT-BTC stipulates: “In the case where the person approving the finalization requests an audit of the finalization report for the completed project before verification and approval, the investor shall organize the selection of an audit contractor in accordance with the law on bidding, sign the contract for auditing the finalized completed project in accordance with the law on contracts. The investor, independent audit contractor, and related units shall comply with the stipulations in Clauses 2, 3 of this Article.”

Based on the above regulations, for projects specified in Points b, c, Clause 2, Article 37 of the Law on Independent Audit, an independent audit must be hired to audit the finalization report for the completed project before submission to the competent authority for verification and approval.

For the remaining projects, the hiring of audits and the determination of the scope and content for hiring independent audits to audit the finalization of completed projects falls under the authority of the person approving the finalization.

According to the Government of Vietnam

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE