Independent audit: quantity has not been linked with quality

International economic integration helps independent audit in Vietnam to develop but also makes it more difficult – Photo: Internet

The issue has been thoroughly discussed by experts at the Scientific Conference "Development of independent audit in Vietnam and Establishment of a relationship between the State Audit and Independent Audit" held by State Audit on 25/8/2016 in Hanoi.

An upward trend

Statistics at the seminar shows that in Vietnam, to June 2016, there were 142 companies eligible to provide independent audit services, with 6 of them with foreign investment, with more than 3,800 personnel and specialized certificates related to audit.

These companies not only provide services in audit and review financial statements but also provide accounting services, tax consulting, valuation, financial advisory services to meet the growing needs of the market and economy.

According to the experts, the legal framework for auditing activities in Vietnam so far has complied with international rules and standards such as Independent Audit Law, Decree on guidelines, Audit standards system, and ethics standards.

In this regard, Dr. Le Quang Binh, Deputy Director of Model and Audit Quality Control, State Auditor’s office, said the market economy and international integration of our country are seen as the fundamental factors that impact and dominate all aspects of services provided by independent auditing organizations, State audit activities and internal audit.

After the Law on Independent Audit was issued, organisations required to be audited the prepare annual financial statements are broader, including public companies, insurance companies, banks, FDI enterprises, State-owned enterprises and enterprises with more than 20% State capital. This helps open up development opportunities for independent auditing firms.

In this context, independent auditors are in charge of clarifying financial information, information on cash flow, and the formation and removal of benefits, - the most sensitive and important information of the market economy.

Limitations

However, with the business environment containing much complexity, audit activities still have limitations, said Mr. Nguyen Dinh Huu, Deputy Director of the School of Education and Professional Training on Audit.

Specifically, the audit market size is still small, is not commensurate with the potential and speed of economic growth. The increase in quantity has not been linked with quality. Compliance with auditing standards by the auditors still has several issues worth noting. The phenomenon of unfair competition in cost has lasted over many years making the quality of audit decline, failing to meet the expectations of the public as well as authorities.

Agreeing with this view, Dr. Le Quang Binh gives further analysis, the unexpected loss of businesses, even the previous accounting period rate is still high and are accepted in audited statements as "honest and reasonable", as in the case of banks that were acquired with "0 VND" by the Ocean group... that makes people question about the reliability of auditing reports.

Besides, according to Dr. Bui Thi Minh Hai, Institute of Chartered Accountants - Audits, National Economics University, economic integration opens up opportunities for international trade operations and free cash flows in foreign currency. The complexity of the rules for foreign trade operations, fluctuations in foreign exchange rates, and derivative financial instruments is an opportunity for fraud.

"This raises the requirements for audit services quality control from the Ministry of Finance and the Vietnam audit profession in the upcoming time." Dr. Le Quang Binh said.

Besides, Mr. Nguyen Dinh Huu said that audit firms must improve their capabilities. To do so, the independent audits themselves must have legal knowledge, understanding of economic science, accountancy tools ... independent auditors must be trained to become professional, truthful and objective.