Promoting Power of State Audit of Vietnam in Public Financial Management

 

In the past 5 years, the SAV has boosted the frequency and scale of auditing. The auditing always occurs at least twice per year in the ministries, the central agencies, the provinces and the cities directly under the Central Government and the national economic groups. Ho Chi Minh City and Hanoi are audited every year; the budget of the two cities alone accounted for 21.3% of the total revenue and 24% of the total spending amounts. In addition to the audits of the budget and properties of the ministries, the provinces and the cities and the national economic groups, the SAV also conducts the auditing report on the state budget, which is considered the basis for the National Assembly's annual consideration and approval.

 

According to the auditing summary in the recent 5 years (2009-2013), the SAV has proposed the financial settlement of VND 91,168 billion, accounting for 62% of the total recommendations on the financial issues in 20 years. Since then, the SAV has inspected and recommended to fix the financial issues of VND 147,580 billion, of which the increasing amount of the state budget revenues are VND 14,290 billion, the decreasing amount of the state budget expenditure are VND 14,527 billion and the revenues-expenditure records are VND 5,177 billion.

 

The SAV also proposed to cancel, amend, and supplement hundreds of either improper or impractical legal documents. From 2009 to present, through the auditing results, the SAV has proposed an additional 206 revised texts including one law, 10 decrees and 9 resolutions, 36 circulars, one directives, 78 decisions and 71 other documents, and cancelled 134 petitions including 7 Decrees, 7 circulars, 3 resolutions, 44 decisions, and 73 other documents.

 

In addition, the SAV also proposed many valuable comments to improve the important legal documents such as the State Budget Law 2002, the Law on Social Insurance, the Law on Waste Prevention, and the Law on Anti-Corruption.

 

According to policy makers and economists, the value of the audit report in the management of the public finances is not really inclusive, failing to meet the monitoring requirements and the comprehensive public financial management at multiple levels from macro to micro scale and from medium to long term.

 

According to Dr. Tran Dinh Thien, the Director of the Institute for Economic Vietnam, to operate the state auditing effectively requires the unification of public economic and financial activities. The accounting classification system of the current budget balance of Vietnam is not fully compatible with international organizations. For example, many of the budget expenditures come from the government's bonds for such programs as health, education, loans for on-lending, and reserves for debts, which are not counted in the full balance budget and public debts, as under international practice. This limits the scale of auditing.

 

In addition, the SAV in recent times has focused on post-audit activities including the correctness and validity of the budget settlement reports, rather than the pre-audit activities. While the auditing reports, particularly the special annual auditing reports, are often released within 18 months after the end of the budget year, which results in the latency and limited value of the audit report to public financial management.

 

According to the SA, the management and administration of the state budget and public financial management need comprehensive solutions.

 

Accordingly, to improve and fulfil the legal system of the budget management and public finances in accordance with the direction of the State Budget Law of 2002, the SAV needs to innovate the processes, allocation, execution and finalization of the budget, which focus on outputs and the implementation of the medium-term financial budget plan and the strategic objectives with the national priorities. At the same time, the control mechanism should be tightened to enhance transparency and accountability of the state budget and public finance.

 

Supporting this view, Dr. Tran Van Ta, Chairman of Vietnam Association of Certified Public Accountants (VACPA), said that the scope of the activities of the SAV should be expanded to fields that are focused on not only auditing the state budget, but also drafting and finalizing the state budget.

 

"In terms of the auditing techniques, the SAV should switch its focus from compliance auditing to auditing of the activities. The SAV should focus on applying business accounting methods, which require more accurate and adequate estimates of the input costs and evaluates based on the outputs,” Ta said.