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VACPA giving warnings about low auditing fees
As auditing firms have to compete fiercely with each other, auditing fees have been forced down to surprisingly low levels, which has raised concerns about service quality.
One of the problems VACPA mentions in its report on the operations of auditing firms are the surprisingly low auditing fees.
According to VACPA, the average fee of VND30-40mil per auditing contract and the average turnover of less than VND150mil/head/year prove to be too low. This has led to the problem that auditing firms cannot meet all the requirements of auditing procedures, thus affecting the quality of auditing reports.
The director of a well-known auditing firm in Hanoi said that the minimum auditing fee should be several hundred million VND for a production company with the chartered capital of over VND40bil. However, he said, some auditing firms will still lower the required fee to get clients and ignore some procedures in the auditing process.
The same director said that not only newly-established firms, but foreign-invested ones are also trying to slash fees to win clients. Small domestic auditing firms need to lower fees in order to get jobs, while big foreign firms are trying to offer fees to lure clients and conquer the market before Vietnam fully opens its financial service market.
Raising auditing fees? Not so easy
It’s clear that overly low auditing fees cannot ensure a high quality of auditing reports. However, it is not easy for auditing firms to raise fees at this moment.
Analysts say that a lot of companies have to have their financial reports audited because they have to obey the current laws, while they really don’t have a demand for this. Therefore, the companies only care about auditing fees, not the quality of the service.
When asked why no floor auditing fee level is set to prevent auditing firms from engaging in unhealthy competition, Tran Dinh Cuong, General Director of Ernst & Young Vietnam, also Deputy Chairman of VACPA, said it is impossible to define ceiling or floor fees as the capital scales of businesses prove to be quite different.
The Ministry of Finance does not set a floor auditing fee level, and VACPA’s members also cannot release a document stipulating a floor fee as they fear that this will violate the competition law.
A similar thing occurred with insurance companies in 2008, when they reached an agreement about minimum insurance premiums, which was then denounced as a violation of the competition law.
Sources say that the Ministry of Finance and relevant ministries are compiling a bill on independent auditing, considering provisions related to auditing fees.
VietNamNet/DTCK
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