According to the 2007 Ernst & Young Doing Business Guide, as of September 30, 2006, the Ministry of Finance (MoF) issued a total of 37 Vietnamese Standards on Auditing (VSAs). These standards were issued in batches starting in 1999. According to a 2006 World Bank assessment of Corporate Governance practices in Vietnam, VSAs are a "direct translation" of the International Standards on Auditing (ISAs) promulgated by the International Auditing and Assurance Standards Board (IAASB). However, the report clarified that while consistent with international standards, there is a "wide gap" between these standards and their implementation. Moreover, the IAASB has been continuously revising and updating ISAs and it is unclear whether the MoF has adopted all the changes introduced in the corresponding international standards. According to a 2008 Asian Development Bank (ADB) Technical Assistance Report, under the Third Financial Sector Program, the ADB will support the strengthening of accounting and auditing standards in Vietnam. The report adds that the ADB will also assist in drafting a new law on independent audits and enhancing the standards for small and medium-size enterprises.

General Overview

According to the 2007 Ernst & Young Doing Business in Vietnam guide, under local regulations, the annual financial statements of foreign invested enterprises (FIEs), listed entities, business cooperation contracts (BCCs), insurance companies, banks and state-owned enterprises require an independent audit. The Law on Foreign Investment requires the financial statements of all enterprises established under this Law to be audited by a recognized auditing company. A 2006 World Bank assessment of corporate governance practices in Vietnam recommends that the Vietnamese government make statutory audit compulsory for all large companies and for companies whose net asset value or the number of shareholders exceeds a specific threshold. Further, the World Bank adds that in the short term, all joint stock companies (JSCs), which are quoted on the regulated or unregulated markets with a certain minimum number of shareholders, should also be required to be audited. In this regard, the 2007 Ernst & Young report notes that the Ministry of Finance (MoF) is considering introducing audit requirements for those private companies that exceed a certain threshold in contributed legal capital.

Per the description of the regulatory and legal framework provided in a 2006 Vietnam Association of Accountants and Auditors (VAA) self-assessment, auditing practices in Vietnam are governed by the Governmental Enterprise Act, Law on Enterprises, Law on Foreign Investment and the Commercial Law. The State Securities Committee - a governmental agency under the control of the MoF- is in charge of controlling quality and compliance with requirements for preparing and auditing financial statements. The MoF reviews financial statements prepared by the listed entities and monitors compliance with the accounting and disclosure requirements. Banks and similar financial institutions are regulated by the State Bank of Vietnam (SBV), governed by the State Bank Law No.6/1997QH10 and the Credit Institution Law No.7/1997/QH10 of 1997. The Financial and Banking Department of the MoF is responsible for monitoring compliance and enforcement of auditing requirements for non-banking institutions as well as insurance companies.

The 2006 VAA assessment notes that the MoF is responsible for submitting drafts for regulating the audit profession and setting auditing standards. As of September 30, 2006, the MoF issued a total of 37 Vietnamese Standards on Auditing (VSAs). These standards were issued in phases starting in 1999. According to the 2006 World Bank assessment, VSAs are a "direct translation of applicable International Standards on Auditing (ISAs)" (p. 24) promulgated by the International Auditing and Assurance Standards Board (IAASB). However, ISAs have been revised by the IAASB and there is insufficient information publicly available whether these revisions have been incorporated into VASs. As far as the compliance with the existing auditing requirements is concerned, the World Bank report states that "there is a wide gap between [the] standards and their implementation" (p. 6). In addition, the World Bank points out that the existing institutional arrangement for ensuring quality control of auditors is not adequate. According to a 2008 Asian Development Bank (ADB) Technical Assistance (TA) Report, "the TA will support strengthening of financial infrastructure through enhanced accounting and auditing standards and practice" (p. 4). The report elaborates that support will be provided to the MoF in drafting a new law on independent audit and also in improving the auditing practices and standards for smaller and medium-size enterprises. In general the ADB assistance will help in updating and strengthening existing auditing standards.

The 2007 VAA self-assessment points out that the VAA sets the ethical requirements which are based on the 2004 International Federation of Accountants (IFAC) Code of Ethics. The VAA is listed as a member on the IFAC website.

The Principles

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

II

According to a 2000 Narayan & Godden report, VSA 200: Objective and General Principles Governing an Audit of Financial Statements was issued under Decision No.120/1999/QD-BTC of the Minister of Finance. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 210 Terms of Audit Engagements (effective 2006)

II

According to a 2000 Narayan & Godden report, VSA 210: Terms of Audit Engagements was issued under Decision No.120/1999/QD-BTC of the Minister of Finance. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 220 Auditing for Quality Control for Audit Work. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 230R Documentation (effective 2006)

II

According to a 2000 Narayan & Godden report, VSA 230: Documentation was issued under Decision No.120/1999/QD-BTC of the Minister of Finance. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 240 on Fraud and Error; however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 250 Consideration of Laws and Regulations in an Audit of Financial Statements, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

II

According to the 2006 MoF Policy Highlights, the MoF issued VSA No. 260 Exchange with Leaders of Audited Entity on Important Issues Arising During the Audit on December 29, 2005 under the Decision No. 101/2005/QD-BTC on promulgation and announcement of the 7th batch of Vietnamese Standards on Auditing. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 300 Planning an Audit of Financial Statements, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

II

There is insufficient publicly available information as to Vietnam's compliance with this principle.

ISA 320 Audit Materiality (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 320 on Audit Materiality, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

II

According to the 2006 MoF Policy Highlights, the MoF issued VSA No. 330 Auditing Procedures Based on Risk Assessment on December 29, 2005 under the Decision No. 101/2005/QD-BTC on promulgation and announcement of the 7th batch of Vietnamese Standards on Auditing. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 402 Audit Considerations Relating to Entities Using Service Organizations, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 500 Audit Evidence (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 500 Audit Evidence, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 501 Audit Evidence - Additional Considerations for Specific Items, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 505 External Confirmations (effective 2004)

II

According to the 2006 MoF Policy Highlights, the MoF issued VSA No. 505 External Certified Informations on December 29, 2005 under the Decision No. 101/2005/QD-BTC on promulgation and announcement of the 7th batch of Vietnamese Standards on Auditing. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 510 Initial Engagements - Opening Balances, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 520 Analytical Procedures (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 520 Audit Evidence, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 530 Audit Sampling and Other Selective Testing Procedures, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 540 Audit of Accounting Estimates (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 540 Audit of Accounting Estimates, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

II

According to the 2006 MoF Policy Highlights, the MoF issued VSA No. 545 Audit on Determination and Representation of Appropriate Valuation on December 29, 2005 under the Decision No. 101/2005/QD-BTC on promulgation and announcement of the 7th batch of Vietnamese Standards on Auditing. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 550 Related Parties (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 550 Related Parties, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 560 Subsequent Events (effective 2006)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 560 Subsequent Events, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 570 Going Concern (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 570 Going Concern, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 580 Management Representations (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 580 Management Representation, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 600 Using the Work of Another Auditor (effective)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 600 Using the Work of Another Auditor, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 610 Considering the Work of Internal Auditing, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 620 Using the Work of an Expert (effective 2005)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 620 Using the Work of an Expert, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

II

According to a 2000 Narayan & Godden report, VSA 700: Audit Report on Financial Statements was issued under Decision No.120/1999/QD-BTC of the MoF. However, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

II

There is insufficient publicly available information as to Vietnam's compliance with this principle.

ISA 710 Comparatives (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 710 Comparatives, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 720 Other Information in Documents Containing Audited Financial Statements, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

II

According to the 2007 Ernst & Young Doing Business Report, the MoF adopted VSA 800 Auditing Report on Special Purpose Audit Engagements, however, there is insufficient information regarding compliance of the Vietnamese standard with the corresponding ISA.