Rights and Obligations of Audited Entities under Vietnamese Law

Which enterprises are audited by audit firms? What are the rights and obligations of the audited enterprise?

1. Which enterprises are audited by audit firms?

Under Article 37 of the Law on Independent Audit 2011:

Audited units

1. Enterprises and organizations whose annual financial statements are required by law to be audited by audit firms or branches of foreign audit firms in Vietnam, including:

a) Foreign-invested enterprises;

b) Credit institutions established and operating under the Law on Credit Institutions;

c) Financial organizations, insurance business enterprises, insurance brokerage enterprises;

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

2. Enterprises and organizations that must be audited by audit firms or branches of foreign audit firms in Vietnam, including:

a) State enterprises, except state enterprises operating in state-secret fields as prescribed, which must be audited for their annual financial statements;

b) Enterprises and organizations implementing national important projects or Group A projects using state capital, except projects in state-secret fields as prescribed, which must be audited for their completed project settlement reports;

c) Enterprises and organizations with state capital contributions and other state-capital projects as prescribed by the Government, which must be audited for their annual financial statements or completed project settlement reports;

d) Audit firms and branches of foreign audit firms in Vietnam, which must be audited for their annual financial statements.

3. Auditing of financial statements and completed project settlement reports for enterprises and organizations at points a, b and c, clause 2 of this Article does not replace State Audit auditing.

4. Other enterprises and organizations may voluntarily be audited.

Accordingly, the following enterprises prepare annual financial statements and are audited by audit firms:

• Foreign-invested enterprises;
• Credit institutions established and operating under the Law on Credit Institutions;
• Financial organizations, insurance business enterprises, insurance brokerage enterprises;
• Public companies, issuing organizations and securities business organizations.

2. What are the rights of the audited entity?

Under Article 38 of the Law on Independent Audit 2011 on the rights of the audited entity:

• Choosing a qualified audit firm, branch of a foreign audit firm in Vietnam or practicing auditor as prescribed to enter into an audit contract, unless the law provides otherwise.
• Requesting the audit firm or branch of the foreign audit firm in Vietnam to provide information from the audit practice registration dossier and information about the practicing auditor and the audit firm or branch performing the audit.
• Refusing to provide information and documents unrelated to the audit contents.
• Requesting replacement of a member of the audit team when there is a basis to believe the member violated independent audit operating principles during the audit.
• Discussing and providing written explanations of issues raised in the draft audit report if deemed inappropriate.
• Complaining about the acts of a member of the audit team during the audit when there is a basis to believe such acts are unlawful.
• Requesting compensation where the audit firm or branch of the foreign audit firm in Vietnam caused damage.
• Other rights as prescribed by law.

3. What are the obligations of the audited entity?

Under Article 39 of the Law on Independent Audit 2011:

• Providing complete, accurate, truthful, timely and objective information and documents as required by the practicing auditor and the audit firm or branch of the foreign audit firm in Vietnam, and being legally responsible for the information and documents provided.
• Complying with the requests of the practicing auditor and the audit firm or branch of the foreign audit firm in Vietnam regarding the collection of audit evidence under audit standards, and adjusting errors so the audit report contains no qualifications on contents not qualified under clauses 2 and 3, Article 48 of this Law. Where errors are not adjusted as suggested by the audit firm or branch of the foreign audit firm in Vietnam, the audited unit must provide written explanations as required by the competent state authority or the owner representative of the audited unit.
• Coordinating and facilitating the practicing auditor in performing the audit.
• Not engaging in acts limiting the scope of matters to be audited.
• Considering the proposals of the audit firm or branch of the foreign audit firm in Vietnam on existing issues and errors in the financial statements and in legal compliance, to take timely remedial measures.
• Promptly and fully notifying the competent state authority of violations of law and violations of the audit contract in the audit activities of the practicing auditor and the audit firm or branch of the foreign audit firm in Vietnam.
• Paying audit service fees as agreed in the contract.
• Where an audit contract has been signed with an audit firm or branch of a foreign audit firm in Vietnam for three consecutive years or more, requesting the audit firm or branch to change the practicing auditor signing the audit report.
• Other obligations as prescribed by law.

Notes on applying current legal provisions

This article belongs to the Enterprise & M&A Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Preparing incomplete dossiers, documents or evidence.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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