Regular Audits Expected to Prevent Mistakes

To develop the Vietnamese auditing market and improve stock investment environment, the Vietnam Association of Financial Investors (VAFI) and the Vietnam Association of Certified Public Auditors have (VACPA) submitted six issues related to financial reports and financial audit reports of listed firms to the Ministry of Finance and State Securities Commission of Vietnam.

 

According to Director of VACPA Bui Van Mai, listed firms audit mid-term financial reports before they announce the information. Mai said, this can be done every six months and then every three months. Listed companies’ financial reports have to be audited under audit standard 910 (Interim audit of financial reports). Besides, the audit will help intensify stock investors’ confidence as financial reports are certified by auditing firms. Financial frauds will also be prevented in the short term.

 

Mai added that the every-six-month audit should be implemented this year. Therefore, financial reports of the first and second quarters of all listed firms must be audited. The every-three-month audit will be applied to firms listed on the Ho Chi Minh City Stock Exchange in 2011 and ones on the Hanoi Stock Trading Centre in 2013.

 

Nguyen Hoang Hai, General Secretary of VAFI said, to carry out mid-term audits, listed companies have to sign auditing contracts before starting the fiscal year. They should even ink the contracts for the two or three consecutive years. This will help the companies work out a proper personnel plan, avoiding labour shortage for auditing firms in case of overload of auditing contracts. In addition, after an audit, auditors often ask enterprises for financial adjustment in the following year.

Hai said financial reports and audit reports must be written in English. “Since the stock market became operational, foreign investors have gained access to less information than domestic investors. Most listed firms do not pay much attention to disseminating information for foreign investors, excluding some. Foreign investors should know specific and detailed information of Vietnamese companies, which will help improve the local stock market,” the director noted. The English financial reports will save time for translation. Listed firms can ask auditing companies to pay little extra fees. On the other hand, Hai said, listed enterprises should also build English information announcements that are the same as the Vietnamese language version.

 

In reality, many financial reports, particularly financial statements, do not fully specify detailed and comprehensive information under the country’s current regulations. This leads to investors’ misunderstanding and cancellation of the reports’ mistakes. He suggested that listed firm’s financial reports needed to be fully announced in line with the current laws. “Information announcement agencies should send more qualified auditing and accounting cadres to check financial and audit reports. Stock trading centres and the State Securities Commission of Vietnam have to often supervise the information announcement.

 

Besides, when announcing financial reports, companies are required to make public enclosed audit reports. He emphasised that “Only reading audit reports along with financial reports, investors can understand the information accurately.”