Cross-border auditing services would challenge Vietnamese auditing firms

Cross-border auditing services would challenge Vietnamese auditing firms

Vietnam has recognized the cross-border auditing services, which means that there would be more auditing service providers on the market. This is believed to be a great challenge to Vietnamese auditors.

Cross-border auditing refers to the services provided by the overseas legal entities which do not have presence in Vietnam. The finance reports to be audited by the overseas institutions could be the ones of Vietnamese enterprises or the foreign enterprises operating in Vietnam and issuing audit reports in Vietnam.

By promulgating the Decree No. 17/2012 guiding the implementation of some articles of the independent auditing law, which sets some requirements on the services provided across the border, Vietnam has legalized this mode of service providing.

The decree stipulates that the overseas auditors must satisfy some requirements to be able to provide cross-border auditing services. They must have the stockholder equity of over 500,000 dollars, take professional liability insurance policies for the auditors practicing in Vietnam and pay a deposit equal to the legal capital at Vietnamese commercial banks.

Especially, the auditing firms must show the documents granted by the watchdog agencies of their host countries, certifying that the firms do not have legal violations in the three consecutive years before they provide cross-border auditing services to Vietnam. The auditing firms must also have five accountants getting practice licenses from the Ministry of Finance of Vietnam.

The recognition of the cross-border auditing services is the fulfillment of the commitments Vietnam made within the framework of the AFAS (ASEAN Framework Agreement on Services), the Vietnam-US Bilateral Trade Agreement (BTA), and GATS (General Agreement on Trade in Services).

While Vietnam allows overseas auditing firms to provide auditing services to the enterprises in Vietnam, its auditing firms still cannot provide cross-border services to the businesses overseas, because the training certificates and degrees have not been recognized overseas. These, of course, do not include the four international auditing firms present in Vietnam.

Phan Thanh Hai, MA, from the Da Nang-based Duy Tan University said on Cong Thuong newspaper that the recognition of cross-border auditing services would be a big challenge to Vietnamese auditing firms.

He said that in order to provide cross-border auditing services, auditing firms need to have deep knowledge about the business culture in many other countries in the world, and deep knowledge about the international legal system. Meanwhile, this remains a big problem to Vietnamese auditing firms.

Therefore, Hai believe that many workshops would need to be held for Vietnamese auditors to realize the challenges and opportunities in the context of the deep integration into the world.

He has also urged to lay down a perfect legal framework stipulating the practice of auditing which comprises of the provisions coming in line with the international auditing standards.

In the long term, Hai believes that it is necessary to improve the process of training and granting certificates and degrees relating to the auditing services, take necessary steps towards the mutual recognition of training degrees and legal documents.

In related news, Doanh Nhan Saigon has quoted the reports by international institutions as saying that it is difficult for Vietnam to attract foreign capital partially because of its current accountancy regime which does not fit the international standards.

Le Thi Hong Len, Chief Representative of ACCA, said on the newspaper that many foreign investors do not want to pour their capital into Vietnam, when they see the financial reports shown by businesses are quite different from the reports provided by independent institutions.

The difference would lead to the high risks for the investors’ deals, especially

when most of the international investors manage their global investment portfolios.

vietnamnet