The number of auditing firms in Vietnam has increased considerably in the past 15 years. However, the quality still seems failing to meet the expectations.
Number Rises but Quality Remains Low
In 1991, the Ministry of Finance set up two auditing companies, namely Vietnam Auditing Co. (VACO) and Accounting and Auditing Financial Consultancy Services Co. (AASC). After the enactment of the Enterprise Law in 1999, the number auditing firms soared sharply, and to date, 108 firms have been licensed with nearly 4,000 employees. Eleven of them, including VACO, AASS, AISC, AFC, Thuy Chung, A&C, M&H, Tien Phong, DTL, U&I and STT, have been recognised by international auditing giant firms.
According to the statistics from the Ministry of Finance, the total revenues of auditing firms in 2000 were only VND281 billion (US$17.56 million) but the earnings jumped to over VND622 billion (US$38.88 million) in 2005, a 135 per cent increase against 2004. Of the sum, the State-owned firms reported over VND174 billion (US$10.88 million), up 22 per cent against 2004, the limited liability, joint stock and partnership firms VND137 billion (US$8.56 million), up 85 per cent and foreign-invested firms VND311 billion (US$19.44 million), up 27 per cent.
According to Mr. Bui Van Mai, Director of the Accounting and Auditing Policy Department and Chairman of the Vietnam Association of Certified Public Accountants and Auditors (VACPA), said the professional level of Vietnamese auditors have been significantly improved. Their professional knowledge, legal perception, professional standards, computer use skills and English fluency reached the regional level.
Together with the increasing in the number of companies and operational scopes, provided services have also been diversified and detailed. Many new services have been introduced such as financial report audit, performance audit, compliance auditing. Consulting services have also been expanded into accounting and financial consultancy, management, tax, investment, legal, merger and dissolution consultancies. Auditing firms also provide appraisal, asset evaluation and recruitment.
However, according to Mr. Mai, the quality of employees and services are various. Newly established companies cannot guarantee their service quality and they lack experienced and qualified leaders and employees. Limited liability companies have low competitive capacity, small turnover and small market share. The quality service control of the Ministry of Finance has been maintained in 5-6 years but still failed to make professional scrutiny.
Dr Dang Van Thanh, Vice Chairman of the Vietnam Accounting Association (VAA), the competition between auditing firms still bases on localised economic benefits. In recent years, auditing firms have competed with each other by reducing service fees. As a result, the auditing quality is unsatisfactory and the company performance information is insufficiently reflected. The staff movement from this company to another is frequent and the merger or split of auditing firms tends to be on the rise.
Service Quality Needs Improving
According to the Ministry of Finance, the number of auditing firms will increase to some 150 in the next five years with a combined workforce of 8,000 employees, an annual revenue of VND1,000 billion (US$52.5 million) and a higher contribution proportion to the GDP. To realise these targets, according to Thanh, auditing companies need ceaselessly improve professional levels and capacities of auditors through their recruitment, training, commending and disciplining activities. As to State management organs, the legal framework about the liability of auditing firms toward their audit quality, clearer regulations on compulsory professional insurance and sanctions on practice immorality of auditors should be completed soon.
Mr Mai said, Vietnam should open its auditing and accounting market for all types of business of all economic sectors, especially foreign-invested, State-run, listed and joint stock companies. The joint venture between domestic and foreign firms should be expanded to improve and promote strong points of both sides to provide audits for large international projects.
Followings are ideas of experts about this issue:
The auditing standard system needs further improving
Mr. Dinh Quang Tri, General Director of the Electricity of Vietnam
During the transformation process of the Electricity of Vietnam (EVN) into a group and its affiliates into one-member limited liability, joint stock and joint venture companies, independent auditing plays a more important role as financial reports of the EVN Group must be unified. Thanks to the publicity and transparency of annual financial reports of the holding company as well as member companies, foreign and domestic credit organisations are more concerned about our firms.
However, through auditing processes, we propose the Ministry of Finance to further complete the Vietnamese accounting standard system to ensure its compatibility to the international standard. The Ministry of Finance also needs to support the Vietnam Association of Certified Public Accountants and Auditors (VACPA) and Vietnam’s auditing biggies in order to receive the recognition of the world and foreign investors.
Becoming members of international auditing firms is to improve service quality
Ms Vu Thi Tho, Director of Auditing & Accounting Financial Consulting Company (AFC)
After five years being a member of the global BDO group in Vietnam, we accepted and unified to implement and develop auditing approaches and processes of the BDO Group. Then, we built up a strong international professional and standardised workforce. The strict annual check by BDO offices is also a good chance for our staff to follow career regulations of the group to minimise career risks.
Small and medium auditing companies are also necessary
Tran Thi Minh Tan, Director of An Phat Auditing and Accounting Partnership Co. (APS)
Although receipts and auditing works mainly belong to several large auditing firms which are members of international giants, a majority of Vietnamese auditing firms are of small sizes (about 70companies) and medium sizes (about 30 companies) and most clients are small and medium enterprises in Vietnam. Normally, enterprises always try to minimise costs, especially in the accounting department. One person can keep several positions in the accounting department. Hence, small and medium auditing firms usually find it hard to make audits in these firms. We wish the Ministry of Finance, State bodies and VACPA understand the importance of small and medium auditing companies.
Lan Anh
Vietnamese
