According to Article 37 of the Law on Independent Auditing dated March 29, 2011, and Article 15 of Decree No. 17/2012/ND-CP dated February 13, 2012, guiding the Law on Independent Auditing, the following entities are required to... audit:
1. Businesses are required to undergo audits.
Businesses and organizations that are legally required to have their annual financial statements audited by an auditing firm or a branch of a foreign auditing firm in Vietnam:
- Foreign-invested enterprises;
- Credit institutions are established and operate in accordance with the Law on Credit Institutions, including branches of foreign banks in Vietnam;
- Financial institutions, insurance companies, reinsurance companies, insurance brokerage companies, and branches of foreign non-life insurance companies.
- Public companies, securities issuers, and securities trading organizations.
Other businesses and organizations are required to undergo audits in accordance with relevant laws.
Businesses and organizations must be audited by auditing firms or branches of foreign auditing firms in Vietnam.
- State-owned enterprises, except those operating in fields subject to state secrets as stipulated by law, must have their annual financial statements audited.
- Enterprises and organizations implementing nationally important projects and Group A projects using state capital, except for projects in fields classified as state secrets according to the law, must have their final project settlement reports audited.
- Businesses and organizations in which state-owned corporations and conglomerates hold 20% or more of the voting rights at the end of the fiscal year must have their annual financial statements audited.
- Businesses in which listed companies, issuers, and securities trading organizations hold 20% or more of the voting rights at the end of the fiscal year must have their annual financial statements audited.
- Audit firms and branches of foreign audit firms in Vietnam must have their annual financial statements audited.
Businesses and organizations subject to annual financial statement audits as stipulated in Clauses 1 and 2 of this Article, if required by law to prepare consolidated financial statements or aggregate financial statements, must have their consolidated financial statements or aggregate financial statements audited.
The auditing of financial statements and final project settlement reports for enterprises and organizations specified in Points a and b of Clause 2 of this Article does not replace the auditing by the State Audit Office.
Businesses and other organizations may voluntarily undergo audits.
2. What is a foreign-invested enterprise?
Prior to July 1, 2015
According to Clause 6, Article 3 of the Investment Law dated November 29, 2005, effective July 1, 2006
Foreign-invested enterprises are enterprises established by foreign investors to carry out investment activities in Vietnam, or Vietnamese enterprises whose shares are acquired, merged with, or purchased by foreign investors.
From July 1, 2015
Article 3 of the Investment Law dated November 26, 2014, effective from July 1, 2015, stipulates:
“17. An economic organization with foreign investment capital is an economic organization in which foreign investors are members or shareholders.”
Regarding investment conditions, there are differences depending on the foreign capital contribution ratio as stipulated in: Article 23. Implementation of investment activities by economic organizations with foreign investment capital.
Based on the above regulations, foreign-invested enterprises (or economic organizations with foreign investment capital) are enterprises whose investors are foreign individuals or organizations and are required to have their financial statements audited.
3. Administrative penalties for businesses that fail to conduct mandatory audits.
According to Article 12 of Decree No. 41/2018/ND-CP, the penalties for violations of regulations on submitting and disclosing financial reports are as follows:
Article 12. Penalties for violations of regulations on submission and disclosure of financial reports.
1. A fine of VND 5.000.000 to VND 10.000.000 for one of the following acts:
a) Submitting financial reports to the competent state agency less than 03 months late compared to the prescribed deadline;
b) Publicly disclosing financial statements less than 03 months after the prescribed deadline.
2. A fine of VND 10.000.000 to VND 20.000.000 for one of the following acts:
a) Publicly disclosing financial statements that do not contain all the required information;
b) Submitting financial statements to the competent state agency without attaching an audit report in cases where the law requires financial statements to be audited;
c) Submitting financial reports to the competent state agency more than 03 months late compared to the prescribed deadline;
d) Publicly disclosing financial statements without accompanying audit reports in cases where the law requires financial statements to be audited;
e) Publicly disclosing financial statements more than 03 months late compared to the prescribed deadline.
3. A fine of VND 20.000.000 to VND 30.000.000 for one of the following acts:
a) Information and data publicly disclosed in financial reports are false;
b) Providing and publishing financial reports for use in Vietnam that contain inconsistent data within a single accounting period.
4. A fine of VND 40.000.000 to VND 50.000.000 for one of the following acts:
a) Failure to submit financial reports to the competent state authority;
b) Failure to publicly disclose financial reports as required by regulations.
5. Remedies:
"The submission and public disclosure of the audit report attached to the financial statements is mandatory for violations of the regulations specified in points b and d of Clause 2 of this Article."