The draft Law on Independent Auditing, prepared by the Finance Ministry, is planned to be discussed by lawmakers at the eighth plenary meeting of the 12th National Assembly held in the capital city of Hanoi. According to the working agenda of the lawmaking body, this bill will be approved in 2011 and take effect on January 1, 2012. The draft law is highly appreciated by economic specialists and auditors.
To learn more about the advantages of the new draft law, Vietnam Business Forum has an exclusive interview with Mr Bui Van Mai, Vice President and Secretary General of the Vietnam Association of Certified Public Accountants.
Would you mind commenting on the draft Law on Independent Accounting submitted to the National Assembly?
In the spirit of inheriting, upholding and learning, the draft Law on Independent Accounting compiled by the Ministry of Finance will eradicate limitations of the Decree 105/2004/ND-CP on independent auditing and facilitate auditing services to develop in both scale and quality.
Firstly, the draft Law on Independent Accounting has more closely-defined regulations on conditions for practising auditing, conditions for establishment and operation of auditing companies. This regulation helps certified auditors and licensed auditing companies to substantiate and prove qualifications and competence and limits the formation of poor-quality auditing companies or the inactivity of certified auditors, etc. Then, the quality of independent auditing services in general will be surely enhanced.
Secondly, the draft Law on Independent Accounting also provides detailed regulations on auditing process, auditing reports, auditing records, auditing financial statement auditing of public utility companies, violations of independent auditing, inspections, violator treatments, dispute settlements, complaints, denunciations and compensation, etc. These contents are essential to orient and regulate behaviours of the auditors and auditing companies when they are working. These are also criteria and conditions for state management agencies to monitor the quality of this industry.
Thirdly, the draft Law on Independent Accounting lays special emphasis on strengthening state management over auditing. Accordingly, the Ministry of Finance is responsible to the Government for exercising the state management over independent auditing; directly compiling legal documents on independent auditing; granting business establishment certificates to companies, revoking certifications from auditors and issuing auditing standards; exercising inspection and controlling of quality and auditing practicing registration; reviewing and assessing operating situations, managing international cooperation, settling complaints and denunciations, etc. Moreover, the draft law also mentions the transfer of some functions and professional management to accounting - auditing associations. This is a direction in line with international practices and a solution to boost the independence and objectivity of independent auditing.
Could you tell new standards of the law aiming at improving the quality of auditing and auditors?
Along with development needs, especially after the stock market was set up, the transparency of financial information is essential. Markedly, Vietnamese companies must have much higher degree of transparency to list on international stock exchanges.
Therefore, the draft law is oriented to support international integration; thus, international conditions and practices Vietnam is suitable and will be suitable in coming years will be added to the law. Particularly, conditions for practicing auditing will be uplifted. For example, an independent auditor must have worked at least three years in auditing companies and must be members of professional auditing organizations of Vietnam. Independent auditing is highly practical; therefore, the practical experience must be set stores by.
What should companies and investors look at when they read auditing information and notes?
Independent auditors only raise their opinions but audited companies hold the right to hear or correct. When an investor reads an audited financial statement, he normally thinks that figures are accurate. Indeed, this is not the case. In auditing reports, auditor's notes are important. In short, investors should understand what auditors say in audited reports. The deeper knowledge and perception of investors will result to better auditing reports.
Reported by Dieu Linh
Vietnamese
