Vietnam Daily News

New circular to enforce independent audits

Written by Dailynews.vn Tuesday, 20 December 2011 02:16

All credit institutions and branches of foreign banks in Vietnam will have to obey rules on independent audit beginning January 1, according to a new circular issued on December 15 by the State Bank of Vietnam (SBV).

Circular 39/2011/TT-NHNN is aimed to replace Decision No 121/2005/QD-NHNN in 2005 to conform to the law, and contribute to the reform of administrative procedures.

Under the new rules, four main groups will have to follow the circular:

– Credit institutions (including commercial banks, cooperative banks, non-bank credit institutions, micro-finance organisations, people's credit funds that have total assets of 50 billion VND (2.38 million USD) or more each at the time of September 30 of the year preceding the auditing year);

– Branches of foreign banks; and

– Independent audit organisations, CPAs (certificate of professional auditor), auditors and other organisations and individuals related to the independent audit of credit institutions, and foreign bank branches; and

– Central People's Credit Fund pending transformation in accordance with the Law on Credit Institutions that conduct independent audits in accordance with provisions on banks.

The circular details the scope of the audit. It says that credit institutions and foreign bank branches each year must select an independent auditing organisation under the provisions of the circular to independently audit both financial statements and performance of internal control systems.

The SBV also requires banks to use one or more independent auditing services as deemed necessary in the following cases: vulnerable credit institutions that could be placed under special control; credit institutions put under special control for a certain time whose term has ended; credit institutions reorganised under the provisions of Article 153 of the Law on Credit Institutions; and other cases prescribed by law.

In addition, the audit of semi-annual financial reports, settlement reports of completed projects and other audited work of credit institutions and foreign bank branches must comply with the provisions of the law.

The central bank encourages banks and foreign bank branches to use independent audit services to audit restrictions in order to ensure safe operations of credit institutions and foreign bank branches.

Credit institutions and foreign bank branches are also required to select independent organisations in line with the circular's rules, before their fiscal year ends, to audit their financial statements and their internal control systems in the following fiscal year.

If the selected audit organisations are not on a list of audit organisations approved by the SBV to do audits in the following year, credit institutions and foreign bank branches must take other audit organisations that meet enough standards required in the circular's articles 11 and 12.

The time needed for the replacement of new audit organisations must be within 30 days.

If there are independent audits of financial statements of credit institutions and branches of foreign banks, they must include balance sheets, business result reports, cash flow statements and explanation of financial statements.

For independent audit of internal control systems of credit institutions and foreign bank branches, audits must be in compliance with the provisions of current law and regulations of the central bank on internal control systems of credit institutions and foreign bank branches, to ensure that all requirements defined in the circular are met.

The circular also specifies conditions for an independent auditing organisations, standards of auditors involved in auditing credit institutions and foreign bank branches, and responsibilities of individuals and organisations related to independent audits of credit organisations and branches of foreign banks./.

Source: en.vietnamplus.vn/Home/New-circular-to-enforce-independent-audits/201112/23050.vnplus