Standard No. 3420 on service contracts ensuring the aggregation of financial information as conventionally stated in the prospectus, issued together with Circular 66/2015/TT-BTC

1. Scope of application

01. Standard 3420 specifies and guides the responsibilities of auditors and audit firms (hereinafter referred to as “auditors”) in performing the service contract to provide reasonable assurance for reporting purposes regarding the aggregation of financial information as conventionally presented in the prospectus of the responsible party.See paragraph 12(v) of Vietnamese Standard No. 3000 on Assurance Contracts – Assurance Contracts Other Than Auditing and Reviewing of Historic Financial Information, which explains the term “responsible party”.This standard applies to:

(1) A report on the aggregation of financial information in the prospectus as required by securities law or relevant laws and regulations; or

(2) Report on the compilation of other financial information as prescribed by law (See guidance in paragraph A1 of Standard 3420.).

2. Responsibilities of auditors and audit firms

02. In assurance contracts performed under this Standard, the auditor and the audit firm are not responsible for compiling conventional financial information for the entity; that responsibility rests with the responsible party. The auditor and the audit firm's sole responsibility is to report whether the responsible party has compiled conventional financial information, in all material respects, based on the applicable criteria.

03. This standard does not apply to unsecured service contracts in which auditors and audit firms are hired to compile the financial statements of an entity.

3. The purpose of conventional financial information in a prospectus.

04. The purpose of conventional financial information in the prospectus is to illustrate the impact of a material event or transaction on the entity's unadjusted financial information if it were assumed that the event occurred or the transaction was executed on a prior date chosen for illustrative purposes. This is achieved by recording conventional adjustments to the unadjusted financial information. Therefore, conventional financial information does not reflect the entity's actual financial position, operating results, or cash flows.See guidance in paragraphs A2-A3 of Standard 3420.).

4. Consolidate financial information according to established conventions.

05. Conventional financial information aggregation is the process by which a responsible party collects, categorizes, aggregates, and presents financial information to illustrate the impact of a material event or transaction on the entity's unadjusted financial information, assuming the event occurred or the transaction was executed at the chosen time. This process includes the following steps:

(1) Identify the source of unadjusted financial information used to synthesize conventional financial information, and the method of extracting unadjusted financial information from that source (See guidance in paragraphs A4-A5 of Standard 3420.);

(2) Record conventional adjustments to unadjusted financial information for the purpose of conventional financial information presentation;

(3) Present the results of the financial information according to convention and accompanying explanations.

5. The nature of a reasonable assurance service contract

06. A reasonable assurance service contract for reporting on the aggregation of conventional financial information includes performing the procedures set out in this Standard to assess whether the criteria applied by the party responsible for aggregating conventional financial information provide a reasonable basis for presenting significant direct effects from the event or transaction, and to obtain adequate appropriate evidence as to whether (see guidance in paragraph A6 of Standard 3420):

(1) Do the relevant conventional adjustments reflect an appropriate effect on those criteria?

(2) The “Conventional Results” column (see the provisions in paragraph 11(c) of this Standard) reflects whether such adjustments were correctly applied to the unadjusted financial information.

This service contract also includes an assessment of the overall presentation of conventional financial information. However, this service contract does not include the audit firm modifying, supplementing, or reissuing reports or opinions on any past financial information used in compiling conventional financial information, or performing audit or review procedures on the financial information used in compiling conventional financial information.

6. Relationship with Vietnamese Standard 3000 on Assurance Contracts, with other standards and other requirements

07. Auditors must comply with Vietnamese Standard 3000 on Assurance Contracts – Assurance Contracts Other Than Auditing and Review of Historic Financial Information (hereinafter referred to as “Vietnamese Standard 3000 on Assurance Contracts” or “Standard 3000”) and this Standard when performing reasonable assurance contracts for reporting purposes concerning the aggregation of conventional financial information in the prospectus. This Standard supplements, but does not replace, Standard 3000, and provides expanded guidance on the application of Standard 3000 to reasonable assurance contracts for reporting purposes concerning the aggregation of conventional financial information in the prospectus.

08. In addition to the other requirements of Standard 3000, auditors must comply with the provisions in Parts A and B of the Code of Professional Ethics for Accountants and Auditors relating to assurance contracts, or other professional requirements, or requirements of relevant laws and regulations that are at least equivalent to the requirements of the Code of Professional Ethics for Accountants and Auditors.See the provisions in paragraphs 3(a), 20 and 34 of Standard 3000.This standard also requires that the member of the Board of Directors responsible for the overall service contract must be an employee of the auditing firm and must comply with Quality Control Standard No. 1 – Quality Control of Auditing Firms Performing Financial Statements, Assurance Services and Other Related Services (hereinafter referred to as “Quality Control Standard No. 1”), or other professional requirements, or requirements of law and regulations relating to the audit firm’s responsibility for a quality control system that is at least equivalent to Quality Control Standard No. 1.See provisions in 3(b) and 31(a) of Standard 3000.).

09. Auditors and audit firms must comply with the provisions and guidelines of this Standard in agreeing upon and performing assurance services for consolidated financial information reporting as stipulated in the prospectus.

The entity receiving the assurance service (client) and the parties using the consolidated financial information report as specified in the prospectus must have the necessary understanding of the provisions and guidance of this Standard to coordinate work and manage relationships related to the agreement and performance of the assurance service contract for the consolidated financial information report as specified in the prospectus and to properly utilize the results.

7. Objectives

10. The objectives of auditors and audit firms are:

(a) To obtain reasonable assurance that the conventional financial information compiled by the responsible party, in all material respects, is based on applicable criteria;

(b) The report is consistent with the auditor's findings.