Internal auditing is a crucial department within a company, and foreign investors always highly value businesses that have this department within the company they are considering investing in.
Having an internal audit department demonstrates financial transparency and professionalism, which are essential in today's economic climate.
One of the crucial departments for any business is internal auditing; however, this department has not received sufficient attention from Vietnamese companies.
Richard F. Chamber, Chairman and CEO of the Institute of Internal Auditors (IIA), stated at the seminar "How to Build and Operate an Effective Internal Audit Function in Vietnam and International Practices" that foreign direct investment (FDI) investors always highly value businesses with internal audit departments. This is because, through the establishment of such a department, businesses can manage risks and consider and implement solutions for potential future situations.
The importance of this department in mitigating risks.
Mr. Chamrber also stated that modern internal audit departments will focus on pressing issues such as identifying risks, reviewing them regularly and continuously, and responding quickly and promptly to emerging risks for FDI. This department will implement a "surveillance radar" to identify upcoming "storms," then take the lead in innovation and guide the business directly into the eye of the storm without shying away from highly sensitive issues such as executive compensation, legal compliance, or company culture. In addition, this department will also participate in talent acquisition efforts.
Mr. Tram Tuan Vu, Deputy General Director of the Ho Chi Minh City Stock Exchange (HOSE), affirmed that the role of internal auditing is indispensable in the operations of businesses. He also emphasized that HOSE will continue to support member securities companies and listed companies in applying advanced governance and corporate governance models.
At the workshop, Ms. Le Thi Tuyet Nhung, Deputy Director of the Accounting and Auditing Supervision Department, Ministry of Finance, stated that listed companies and state-owned enterprises have not yet implemented internal audit functions, despite certain attention being paid to this department in line with international practices.
Internal auditing in Vietnam is not yet truly professional.
Data from the ASEAN Governance Scorecard Report 2015-2016 shows that only 40% of the 55 listed Vietnamese companies participating in the assessment had an independent internal audit department. Furthermore, only 20% of those 40% publicly disclosed the identity of the Head of Internal Audit. However, no cases of appointments or dismissals of internal auditors requiring approval from the Supervisory Board were publicly announced.
Assessing the causes of this situation, Ms. Nhung believes that Vietnam lacks legal frameworks and guidelines on internal accounting to standardize the profession. Furthermore, businesses have not yet properly understood the role and effectiveness of internal audit departments.
Ms. Nhung believes that the reasons for this situation are that Vietnam lacks a legal framework and guidelines on internal auditing, businesses have not fully understood the role and benefits of internal auditing, and the profession of internal auditing has not been standardized in Vietnam. www.expertis.vn
