Member Organization Associate
Legal and Regulatory Environment
Overview of Statutory Framework for Accounting and Auditing
The Accounting Law (2015) and the Law on Independent Audit (2011) form the statutory framework for accounting, auditing, and corporate financial reporting in Vietnam.
The Accounting Law requires all entities, public and private, to apply the Vietnamese Accounting Standards (VAS) when preparing financial statements. Under the Government Decree No. 87/2017/ND-CP, the Accounting and Auditing Supervisory Department (AASD) operating within the Ministry of Finance (MOF), is responsible for setting accounting standards. The AASD established the Vietnamese Accounting Standards Board (VASB), which has been given responsibility to develop VAS. The application of International Financial Reporting Standards (IFRS) only applies to companies that report to foreign investors; however, these statements are considered supplementary to what is required in the jurisdiction, which is to prepare financial statements that are aligned with the VAS. The VASB takes IFRS into consideration when developing VAS; however, differences remain. IFRS for SMEs have not been adopted in Vietnam, and SMEs in Vietnam follow an Accounting Regime for SMEs that has been developed by the MOF. This Accounting Regime is considered a simplified version of the VAS. The Vietnam Association of Certified Public Accountants (VACPA) reports that the MOF has planned a draft timeline of 2023-2025 to fully adopt IFRS.
The Law on Independent Audit regulates the principles, conditions, scope, and form of independent audit activities as well as the rights and obligations of practicing auditors, auditing firms, branches of foreign auditing firms in Vietnam and the units that are audited. The Law requires application of Vietnamese Standards on Auditing (VSA) by all public interest entities (public companies, banks and credit institutions, insurance businesses, insurance brokerage businesses, and security trading and underwriting businesses), enterprises with foreign-owned capital, and finance organizations. The Government Decree No. 17 of 2012 authorizes VACPA to develop VSA in line with International Standards on Auditing (ISA). VACPA reports that the current version of VSA is based on the 2009 version of ISA with modifications.
Regulation of Accountancy Profession
- In Vietnam, under Decree No. 87 of 2017, the Ministry of Finance (MOF) is given authority to regulate the accountancy profession. The MOF’s responsibilities include establishing qualification requirements, administering examinations, and issuing practicing certificates for auditors. The MOF is also responsible for setting auditing standards, establishing ethical requirements, and administering mechanisms such as quality assurance (QA) and investigative and disciplinary (I&D) systems.
- The Law on Accounting (2015) sets out qualification requirements for professionals providing non-audit services (such as Chief Accountants and independent accounting practitioners). For an individual to become an accountant or Chief Accountant, the person is required to hold a university degree in accounting and complete two years of work experience before applying for a license to practice. In addition, those who wish to become Chief Accountants are required to hold a Chief Accountant training certificate which is developed and administered by the MOF and involves completing an approved program that can last three to six months covering five subjects. No other exam exists for these two categories; however, there are many professionals who complete a foreign qualification from a foreign professional accountancy organization (PAO).
- The Law on Independent Audit (2011) sets out the qualification requirements for auditors. MOF- issued Circular 91 of 2017 establishes that individuals who choose to become auditors must hold a university degree in either accounting, auditing, finance, banking, economics, or business administration (a subject where seven percent of attained credits must be in finance, accounting, auditing, analysis, and tax), be employed full-time by an audit firm, complete 36 months of work experience, and pass seven components of the Certified Public Accountant examination, which is developed and administered by the MOF. Those who have completed a qualification from a foreign PAO are required to complete a conversion examination in Vietnamese language offered by the MOF.
- All professional accountants in Vietnam who attain certificates to practice by the MOF may choose to join the two local professional accountancy organizations (PAOs) in Vietnam: the Vietnam Association of Certified Public Accountants (VACPA) and Vietnam Association of Accountants and Auditors (VAA); however, membership with both organizations is voluntary.
- All professional accountants in Vietnam are required to complete annual continuing professional development (CPD) requirements to maintain their respective license and certificates to practice. CPD is offered by various bodies and the MOF is responsible for accrediting all CPD providers and programs. Both VACPA and VAA are approved by the MOF to monitor their members’ completion of CPD requirements. Individuals who do not complete mandatory CPD requirements are reported to the MOF for disciplinary actions, including the removal of licenses. Given the overarching authority of the MOF, both PAOs act as advisors to the MOF on matters related to the accountancy profession. Both PAOs also collaborate with the MOF in administering examinations, translating international standards, and the overall standard-setting process.
- Although the MOF is responsible for regulating the profession and has the majority of responsibility, VACPA offers its support to the MOF and maintains an effective and collaborative relationship with local officials to advocate for progress in the development of the profession. VACPA also maintains relationships with international PAOs to offer their educational content to members and to act as liaisons between them and the MOF. And though VACPA is not in a position to directly adopt a number of international accountancy standards, it supports the adoption and implementation of those standards.
Audit Oversight Arrangements
- The independent audit oversight authority in Vietnam is the Accounting and Auditing Supervisory Department (AASD) of the MOF and the State Securities Commission (SSC).
- As prescribed under MOF Circular 157/2014/TT-BTC, the MOF established and delegated the AASD and the SSC to conduct the QA reviews. There are no members of the International Forum of Independent Audit Regulators in Vietnam.
Professional Accountancy Organizations
Vietnam Accounting Association (VAA)
VAA was established in 1994 as the first professional accountancy organization in Vietnam under Decision 12-TTg by the Prime Minister of Vietnam and formally named as the Vietnam Association of Accountants and Auditors under Decision 35/2004/BNV as authorized by the Minister of Home Affairs. VAA’s objectives are to unite organizations and individuals involved in the accountancy practice to develop the profession; upgrade professional skills; uphold ethics for Vietnam’s management of economic and financial issues, and integration into the community of accountancy bodies around the world. Membership with VAA is voluntary. In addition to being a member of IFAC, VAA is a member of the ASEAN Federation of Accountants (AFA).
Vietnam Association of Certified Public Accountants (VACPA)
- VACPA was established in 2005 under Decision 15/2005/QD-BNV by the Ministry of Home Affairs. Originally established as a professional association under the umbrella of VAA, in 2014, VACPA became a second PAO operating in Vietnam. VACPA is recognized as the national PAO for auditors and audit firms and while membership is voluntary, all members must hold a CPA certificate issued by the MOF. There are some members of VACPA that are also members of VAA. Under Article II of VACPA’s charter, the objectives of VACPA are: to develop the quality of accounting and auditing services; to preserve professional ethics; to enhance member value to be recognized by regional and international organizations; and contribute to transparency of economic and financial information in Vietnam in accordance with laws and regulations. VACPA also administers training and development for its members; works with the MOF to draft technical standards for the profession, including the national Code of Ethics; and participates in both quality assurance, and investigative and disciplinary activities, which are overseen by the MOF. In addition to being an IFAC Member, VACPA is a member of the Confederation of Asian and Pacific Accountants.
Projects or Other Information
Adoption of International Standards
- Under Article 11 of the Law on Independent Audit (2011) and MOF Circular No. 157 of 2014, the MOF is responsible for establishing QA review systems for audit firms and auditors in Vietnam. The process for QA reviews includes a self-assessment by audit firms of the system of quality control relating to audits of financial statements; a review of the quality control policies and procedures; a review of audit working papers; and an assessment of compliance with local accounting and auditing standards. This self-assessment is developed by the MOF, and it provides the criteria for determining if the overall outcome of a QA review can be considered satisfactory or unsatisfactory.
- The MOF reviews the self-assessments to monitor compliance with established auditing standards and regulations for audit firms and auditors. The MOF may enlist the assistance of the VACPA if it determines the need to conduct an on-site inspection of the audit firms. VACPA reports that the QA system adopted by the MOF is mostly aligned with the requirements of SMO 1. Audit firms in Vietnam that provide audit and assurance services to the public are to be reviewed every three years or whenever there are instances of violations. ISQC 1 has been adopted in Vietnam as the Vietnam Standard on Quality Control (VSQC 1).
- In 2017, VACPA developed and presented to the MOF a proposed new QA review program which is aligned with the requirements of SMO 1. This proposal is still under evaluation by the MOF and there is no timeline for approval.
Current Status: Partially Adopted
International Education Standards
- As mentioned in the regulation section, the Law of Accounting 2015 establishes qualification requirements for chief accountants and other accountancy professionals, while the Law on Independent Audit (2011) sets out qualification requirements for auditors.
- The Law on Independent Audit, the Circular No. 150 of 2012, and Circular No. 56 of 2015 establishes the obligations of Vietnam practicing auditors in regard to CPD, which VACPA indicates is fundamentally consistent with IES 7 but the version of IES 7 is not specifically referenced. The MOF accredits different providers to offer CPD courses in Vietnam, to which VACPA and VAA are accredited providers of CPD courses.
- Based on information from the World Bank Report on the Observance of Standards and Codes (ROSC): Accounting and Auditing module and as reported by VACPA, the IES are not incorporated into accountancy education requirements in Vietnam. VACPA reports of conversations with the MOF and the Ministry of Education and Training around the adoption of IES, but no concrete plans are in place for this to move forward in 2021. Further conversations are being planned for 2022 to continue discussing this topic.
Current Status: Not Adopted
International Standards on Auditing
- Under Article 6 of the Law on Independent Audit, the MOF is responsible for setting auditing standards in Vietnam. On developing VSA, Decree No. 17/2012/NÐ-CP dated March 13, 2012, of the Government delegates VACPA to research, draft, update auditing standards in the jurisdiction under the oversight of the MOF. VACPA reports that the current version of VSA is based on the 2009 version of ISA with modifications.
- As of January 2021, there are 37 VSAs and 10 related professional standards (review standards, assurance standards and other related standards) in Vietnam.
Current Status: Partially Adopted
Code of Ethics for Professional Accountants
- Under the Law on Accounting 2015 the MOF is responsible for establishing ethical requirements for all professional accountants in Vietnam. Professional accountancy organizations in Vietnam are not required and have not established their own separate ethical codes.
- The MOF has adopted the 2014 IESBA Code of Ethics which is applicable to all professional accountants in the jurisdiction. Members of both the Vietnam Association of Accountants and Auditors (VAA) and Vietnam Association of Certified Public Accountants (VACPA) are required to adhere to the Code as set by the MOF.
- VACPA has translated the 2018 Code for publication in mid-2021, which is pending approval of the MOF.
Current Status: Partially Adopted
International Public Sector Accounting Standards
- The MOF is responsible for setting public sector accounting standards. Under Government Decree No.25/2017/ND-CP, No.174/2016/ND-CP, Circular No.107/2017/TT-BTC, public sector entities follow a specialized Accounting Regime designed for the public sector, but it is unclear what standards were referenced during its development. There have been efforts by local and international stakeholders to promote the adoption of IPSAS to the MOF; however, it is unclear if there are plans for the MOF to do so.
- The Law on Accounting, revised in 2015, also provides regulations on government financial reporting. VACPA has indicated that the MOF, as part of the National Accounting General Project, in 2020, has initiative a project whereby a government financial reporting template will be completed by the Vietnam State Treasury (VST). It is envisioned that the VST, as a part of this project template, will develop a Treasury and Budget Management Information System to serve the needs of accounting in the public sector. This will include the development of the Vietnam Public Sector Accounting Standards (VPSAS) based on IPSAS and the national context.
Current Status: Not Adopted
Investigation and Discipline
- Under Decree No. 41 of 2018, the MOF is responsible for establishing and administering an I&D mechanism for all professional accountants in the jurisdiction. PAOs are not in a position to investigate and discipline their members.
- The Law on Independent Audit sets out the types of violations that would warrant an investigation and lists the sanctions that would be imposed on individuals guilty of misconduct. The I&D mechanism as designed by the MOF does incorporate some requirements of SMO 6; however, it is not being implemented.
Current Status: Not Adopted
International Financial Reporting Standards
- The Law on Accounting, which was revised in 2015, requires the MOF to develop accounting standards on the basis of international accounting standards but taking the national context into consideration.
- Under Government Decree No. 87/2017/ND-CP, the AASD operates within the MOF, is responsible for setting accounting standards for all entities in Vietnam. The AASD established the Vietnam Accounting Standards Board (VASB), which has been given responsibility to develop Vietnamese Accounting Standards (VAS). The Accounting Law of 2003 establishes the legal framework of the VAS for the public and private sectors. The MOF takes IFRS into account when developing VAS, which are modified to comply with national laws. IFRS for SMEs is not adopted in Vietnam. SMEs in Vietnam use an Accounting Regime for SMEs developed by the MOF. These SME standards are a simplified version of the VAS.
- Under the MOF Decision No 345/2020/QÐ-BTC dated on March 16, 2020., Vietnam plans to translate and eventually adopt IFRS beginning in 2022. Some companies including parent companies of state-owned companies, companies that have loans from international financial institutions or are foreign owned, listed companies, large-sized private companies will voluntary apply IFRS between 2022 and 2025. Mandatory application will begin around 2025. Starting in 2020 and into 2021, the MOF, VACPA and others will begin translating IFRS into Vietnamese with a view of completion by end of 2021.
Current Status: Not Adopted
- Ministry of Finance of the Socialist Republic of Vietnam
- Vietnam Accounting Association (VAA)
- Vietnam Association of Certified Public Accountants (VACPA)
- Code of Ethics for Accountancy and Auditing Profession
- Vietnam Independent Audit Law, 2011
- Vietnam Accounting Law, 2015
- Vietnam Accounting Standards (VAS)
- Vietnamese Standards on Auditing (VSA)
- APEC Economy: Viet Nam
- IFRS Foundation, IFRS Application Around the World?Jurisdictional Profile: Vietnam, June 2016.
- Hanoi Times, Vietnam to Apply International Financial Reporting Standards by 2020, May 2018.
- Russell Bedford International, Overview on the Audit Practice in Vietnam.
- State Audit Office of Vietnam
- The Ministry of Finance of the Socialist Republic of Vietnam—Task and Powers
- VAA, SMO Action Plan, September 2018
- VACPA, SMO Action Plan, December 2021
- World Bank, Current Status of the Accounting and Auditing Profession in ASEAN Countries, September 2014.
- World Bank, Report on the Observance of Standards and Codes: Accounting and Auditing Module, Vietnam, 2016
- World Bank, Vietnam: Country Financial Accountability Assessment
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