Auditing knowledge for directors

The law stipulates that enterprises and organizations whose annual financial statements must be audited by an audit firm include:

a) Foreign-invested enterprises;

b) Credit institutions established and operating under the Law on Credit Institutions, including foreign bank branches in Vietnam;

c) Financial institutions, insurance enterprises, reinsurance enterprises, insurance brokerage enterprises and foreign non-life insurance enterprises' branches.

d) Public companies, issuing organizations and securities trading organizations.

If your business is one of the above-mentioned types of businesses, you must audit your financial statements every year.

Time before date 01 / 07 / 2015

Pursuant to Clause 6, Article 3 of the Law on Investment dated November 29, 11 and effective on July 2005, 01

Foreign-invested enterprise means an enterprise established by a foreign investor to carry out investment activities in Vietnam or a Vietnamese enterprise where shares purchased, merged or acquired by foreign investors. .

Time from date of 01 / 07 / 2015

Article 3 Investment Law dated 26 month 11 year 2014 takes effect from the date of 01 / 07 / 2015 specified:

“17. Foreign-invested economic organization means an economic organization whose foreign investor is a member or shareholder. ”

Time from date of 01 / 01 / 2021

Article 3 of the Law on Investment dated June 17, 06 taking effect from January 2020, 01 stipulates:

“22. Foreign-invested economic organization means an economic organization in which foreign investors are members or shareholders. ”

Regarding investment conditions, there is a difference between the case where the percentage of foreign investment capital is 51% or more and 50% or less. However, regarding the determination of foreign-invested enterprises, the percentage of foreign capital is not specified, but only "with foreign investors as members/shareholders".

Based on the above provisions, foreign-invested enterprises (or foreign-invested economic organizations) are enterprises with capital-contributing investors being foreign individuals and organizations subject to compulsory audited financial statements.

The time limit for performing an audit of financial statements is normally about 10-15 working days from the date of completion of the financial statements as the basis for the audit.

According to regulations, the deadline for submitting audited financial statements is 90 days, so the deadline for completing the audit report must be 90 days before the deadline from December 31 every year.

So, for a year where February has 2 days, the deadline is March 28, and for a year where February has 31 days, the deadline is March 03.

If your business is required to audit financial statements, with the fiscal year ending on December 31, the deadline for signing the audit contract is December 12 of that year. If the fiscal year ends on June 01, the implementation deadline for signing audit contract is May 12 of that year.

This is based on the provisions of Clause 2, Article 9 of the 2011 Law on Independent Audit which clearly states:

The contract to audit the annual financial statements of an enterprise or organization that is required to audit the financial statements must be concluded at least thirty days before the end of the annual accounting period.

Businesses have many practical benefits from early contract signing as follows:

1. Reviewing reports before closing year-end data;
2. To update the implementation of financial statements in accordance with current regulations;
3. To be updated with current regulations and new documents affecting business activities and financial statements of enterprises;
4. To guide enterprises to carry out the compulsory inventory at the end of the year according to current regulations;
5. Save time completing financial statements from correcting errors;
6. Timely detect errors and inappropriate issues when presenting information on financial statements;
7. Early completion of financial statements to submit to parties in accordance with current law.

According to the provisions of Clause 2, Article 54 of Decree 41/2018/ND-CP guiding regulations on sanctioning of administrative violations in the field of accounting and independent audit, effective from May 01, 05. , the act of entering into an audit contract late in comparison with regulations will be subject to a maximum fine of 2018 million VND, specifically: 

A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed on enterprises and organizations that are required to audit annual financial statements and conclude contracts to audit financial statements later than specified period”.

In fact, businesses have not been penalized for this late sign. The consequence is often that the opinion is excluded when issuing the audit report because the time limit for carrying out some procedures has passed and cannot be supplemented.

Each audit firm has a different way of charging service fees, based on different parameters.

However, what businesses using auditing services are most interested in is "the reasonableness of service fees".

“The fee for audit services of financial statements is Unreasonable” usually occurs in 2 cases:

+ Not reasonable in the LOWER direction will reduce the quality of the audit, and the audit objectives may not be achieved.

+ Unreasonably in the HIGHER direction will lead to losses for businesses using the service.

Expertis's service fee is calculated very reasonably based on the professional factors necessary to perform the audit work to achieve the business's objectives and in accordance with the regulations on auditing.

Expertis's financial statement audit service fee is calculated scientifically and very reasonably based on the number of wasted hours of the expert team.