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Auditing quality remains problematic
The auditing services of auditing firms and certified accountants remain problematic, and it is because of problems in the current regulations.
According to the Ministry of Finance, there are 140 operational auditing firms. These employ 4,600 staffs and 1,500 certified accountants. In 2007, the firms provided more than 20 services for 18,000 clients, gaining the turnover of VND1,200bil.
Under the current regulations, an auditing firm needs to have three certified accountants, while no special requirement on firms’ capital has been set up. Thus it has been happening that three certified accountants join forces to set up an auditing firm, which can give them legal status to work separately. Every member of the company looks for clients, signs contracts himself, and carries out auditing separately without supervision. In many cases, the auditors are also the directors who must sign the audited reports.
According to Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), this may lead auditors entering into collusion with enterprises to approve audited reports.
Hai said that the current regulations stipulate easy conditions on setting up auditing firms, but the firms that audit listed and public companies must meet strict requirements as dishonest financial reports will cause immeasurable consequences for investors.
Analysts say that the most important characteristics of an auditor are independence and qualifications. However, in many auditing firms, especially ones operating like the said ‘cooperatives’, most auditors have neither of the two.
Experts have pointed out that this is because of loopholes in the legal framework that stipulates the operations of auditing firms.
An official from the Ministry of Finance admitted that the currently applied Decrees 105 and 133 do not clearly stipulate the standards, requirements and responsibilities of auditors and auditing firms. In some cases, auditors have been found as working for both auditing firms and non-auditing firms at the same time. Some other auditors have been found leasing their certificates to get money. However, these subjects have never been punished as there is no regulation stipulating the regulations on punishing these behaviours.
Bui Van Mai, Director of the Accounting and Auditing Department under the Ministry of Finance, said that the ministry has gathered a committee to compile an independent auditing bill. It is expected that the law will be ratified by the National Assembly in May 2010.
VNN
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