The demand for independent audits in Vietnam is predicted to surge in the near future, but the country’s auditing sector is currently struggling with insufficient human resources.
Auditing services emerged in Vietnam in 1991, but currently the whole country only has 84 auditing firms, most of which are limited companies. There are also just 800 licensed auditors throughout the country.
Yet a new government decision ruled that as of this year six types of businesses are required to have their financial reports audited annually. They are foreign-invested firms; credit institutions; financial organisations, insurance service suppliers and state-owned enterprises; joint-ventures and liability limited companies in the stock market; and businesses with bank loans.
“The number of auditors is currently failing to meet rising demand,” commented Tran Van Buu, BHP accounting and consulting firm director. “Human resources in auditing are extremely insufficient,” said Ta Quang Tao, deputy chief of state-owned Auditing and Accounting Financial Consultancy Service Co, expressing the same opinion.
The desperate staff shortage has led some companies to start offering auditing services without having at least three auditors, in accordance with state regulations.
In each accounting firm, usually one auditor and five to six personnel carry out an audit of a customer’s financial reports, according to observers.
With this shortage, from now to 2010 domestic auditing companies will struggle to compete with foreign-invested competitors, predicted Buu. But his comment was rejected by Dang Xuan Canh, director of DTL Auditing Co Domestic auditing firms are strong enough to compete as they understand the domestic market better, Canh said. His company, DTL, is an affiliate of an international auditing group.
The auditing sector’s lack of human resources is not a serious problem, according to a high-ranking financial official.
“The number of auditors is inadequate, but we have one year to improve the situation,” said Bui Van Mai, chief of the finance ministry’s Department of Accounting Regulations. “By the end of this year, about 100 to 150 people will receive auditor certificates,” he informed.
Over the past few years, around one third of state-owned enterprises (SOEs) have had their financial accounts audited, therefore the number of SOEs which get independent evaluations will increase just slightly, Mai said.
Mai also noted that the quality of auditing services does not depend only on the auditors, but also on the professional qualifications of accountants and business management of the companies getting audited.
Audits are an indispensable requirement of businesses, particularly state-owned companies, and in the near future independent auditors instead of the government will perform the task. “Most enterprises hit by corruption or fraud did not have their financial reports audited every year,” stressed. Mai.
“It is a little bit late that we haven’t forced state-owned corporations to get audited until now, but better late than never,” he said.