Updated at 19/07/2022 - 04:59 pm
Who are the compulsory audit subjects? #
According to the provisions of Article 37 of the Law on Independent Audit dated March 29, 03 and Article 2011 of the Decree No. 15/17/ND-CP dated February 2012, 13 guiding the Law on Independent Audit stipulating the subjects Compulsory audits are as follows:
- Financial report Annually of foreign-invested enterprises.
- Annual financial statements of public companies, securities issuers and securities trading organizations.
- Annual financial statements of enterprises and organizations in which groups and corporations in which the State holds 20% or more of voting rights at the end of the fiscal year.
- The enterprise's annual financial statements that listed organizations, securities issuers and trading organizations hold 20% or more of voting rights at the end of the fiscal year.
- And some other objects.
Foreign-invested enterprises #
According to the definition in Clause 17 Article 3 of the Law on Investment 2014, a foreign invested enterprise is understood as an enterprise with a member foreign investor or shareholder. Accordingly, foreign investors are also clearly explained in Clause 14 of this Article as follows:
"Foreign investor means an individual with a foreign nationality or an organization established under foreign law that conducts business investment activities in Vietnam."
Why do businesses forget to audit #
Foreign investors investing or establishing enterprises in Vietnam (hereinafter referred to as enterprise A) and through this enterprise continue to make their investments in other Vietnamese enterprises (hereinafter called enterprise B).
Enterprise B only pays attention to the form of enterprise A, which is a Vietnamese company, and does not consider the capital structure factor of enterprise A to determine that it must be subject to a compulsory financial statement audit. In the capital structure of enterprise A, with foreign investment capital, when enterprise A contributes capital to enterprise B, enterprise B also becomes a foreign-invested enterprise and at the same time becomes subject to audit according to current regulations.
Administrative penalties if not conducted #
According to Clause 3, Article 53 of the Government's Decree No. 41/2018 / ND-CP dated March 12, 03, providing for the sanctioning of administrative violations in the field of accounting and independent audit:
“A fine of from VND 40.000.000 to VND 50.000.000 shall be imposed on the audited entity that fails to conduct the compulsory audit of the financial statements, the settlement report of the completed project, the consolidated financial statements, general financial statements and other auditing jobs in accordance with the law on independent audit and other relevant laws ".
Therefore, to avoid being penalized for not auditing the financial statements according to regulations, businesses need to carefully review the subjects required to be audited as well as review the capital contribution structure of the first enterprises. invest in your business.