19 Oct DOING BUSINESS IN VIETNAM – STATUTORY AUDIT OF FINANCIAL STATEMENTS(Last Updated On: August 27, 2021)
Annual independently audited financial statements are mandatory for any FDI, the listed and some other forms of company in Vietnam. How to comply with, how to manage the procedure, how to minimize the cost, how to maximize the benefit from statutory audit of financial statements?
WHAT IS AN AUDIT OF FINANCIAL STATEMENTS
- Daily operations of a business are conducted in the form of business transactions.
- Each transaction requires a set of documents as records and evidence.
- Documents are gathered and recorded in the accounting book system.
- Data from accounting books are aggregated into items in financial statements.
- Financial statements provide information on the situation of assets, equity, profits and losses, cash flows, liabilities and inventories, etc., development prospects and many important indicators for stakeholders such as shareholders, investors, tax authorities, banks and many others.
- An audit involves a process during which an auditor gathers and evaluates the evidence before giving an opinion on a true and fair view of the amounts presented in the financial statements. During the audit, the auditor considers whether these amounts are substantiated in writing, properly recorded under accounting and financial regulations and standards, and give a true and fair view of the business’ financial position.
WHAT ARE INDEPENDENT AUDITOR’S OPINIONS
- An Unqualified Opinion indicates that a company’s financial statements are fairly and appropriately presented, in all material respects, without any identified exceptions, and in compliance with general Vietnamese accounting principles and system.
- A Qualified Opinion indicates that a company’s financial statements are fairly and appropriately presented, in all material respects, in case of being under no impact of stated dependent elements (or exceptions).
- A Disclaimer Opinion indicates that the auditor could not obtain sufficient and appropriate evidence and supporting documents to give opinions on the financial statements.
- An Adverse Opinion indicates that there have been material misstatements in the company’s financial statements on which an agreement with the Management Board could not be reached.
WHICH BUSINESSES ARE REQUIRED TO HAVE THEIR FINANCIAL STATEMENTS AUDITED
Under Article 15 of Decree No. 17/2012/ND-CP dated March 13, 2012, guiding the implementation of the Independent Auditing Law, the following entities are required to have their annual financial statements audited:
- Foreign-invested businesses;
- Credit institutions incorporated and operating under the Law on Credit Institutions, including foreign bank branches in Vietnam;
- Financial institutions and insurance businesses;
- Public companies, issuers and securities traders;
- Other businesses and organizations subject to audits in accordance with relevant laws.
- Audits are also conducted at the request of customers, partners in bidding and business cooperation, etc.
WHAT ARE THE BENEFITS OF THE AUDIT OF FINANCIAL STATEMENTS
- Satisfying and complying with requirements of state authorities;
- Assisting in identifying risks and ineffectiveness in operation and use of resources.
- Creating confidence for information users, including tax authorities, banks, partners, investors, etc. For example, with audited financial statements with an unqualified opinion, a business can be categorized as a highly credited customer and entitled to more preferential credit services and significantly reduced interest.
- Completing the business valuation documents and the business credit documents.
HOW MUCH DOES AN AUDIT OF FINANCIAL STATEMENTS COST
The fees of financial statements audit vary by:
- Business field, business scale, transaction complexity, goal and requirement of the Management.
- Capabilities of the internal accounting team.
- Ability to select and negotiate with auditing units.
HOW TO SAVE AUDITOR FEES
- It is necessary to early identify audit objectives and workloads and select a suitable audit unit.
- The audit engagement and audit schedule should be concluded in the last quarter of the fiscal year (usually the fourth quarter every year) to avoid the high season.
- Business records should be prepared clearly (Business records management).
- A system of accounting books and financial statements should be maintained. Qualified staff to provide information and explanation is also a need.
Businesses should prepare to enter an audit engagement from October 2020 for better assurance of the service quality and avoidance of a lot of work to be done in the first 3 months of the following year. The workload is also considered in the selection and negotiation of the most affordable rate.
VIVA BCS’s SOLUTIONS ON THE AUDIT OF FINANCIAL STATEMENTS
- Providing you with comprehensive advice on matters of concern.
- Acting on your behalf and managing the entire process and related procedures until an auditor’s report is issued.
- Saving costs directly and indirectly related to the audit procedures, optimizing the benefits of the audit procedures.
- Giving instructions on how to manage, present, explain and provide information on the financial statements, especially in working with credit institutions and investors.
- Formulating strategies to create and complete items and financial statements for the procedures of acquisition, merger, consolidation and privatization of businesses.
- Establishing strategies to build corporate credibility and conduct a business valuation.
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