Current Practices of Auditing and Using Audit Reports in Vietnam.

- The implementation of accounting work in the unit and compliance with accounting regulations and rules.

- Recommendations.

However, it was not until 1999 that the Ministry of Finance issued the first Vietnamese auditing standards under Decision No. 120/1999/QD-BTC dated September 27, 1999. Thus, it can be seen that before the effective date of Decision No. 120/1999/QD-BTC (after 15 days from the date of signing the Decision), the legal documents regulating auditing activities only included Decree 07/CP and Circular 22/TT mentioned above. However, the Circular mentioned auditing activities in accordance with current Vietnamese auditing standards or recognized international auditing standards. In fact, there are no Vietnamese documents recognizing international standards, but practical activities are basically based on these documents. Audit reports prepared by foreign auditing companies' branches in Vietnam were prepared according to the guidance form of the foreign company and were basically prepared based on international auditing standards in effect at that time. For Vietnamese auditing companies, because they were newly established and had no official guidance documents, their auditing activities bore many marks of accounting inspection work. The contents of the regulations on reporting in Circular No. 22TC/CDKT also showed that the awareness of auditing activities at that time paid much attention to the implementation of accounting at the audited unit. During this period, the audit reports prepared by Vietnamese auditing companies were basically similar in structure and based on the reference to the guidance on audit reports of international auditing standards. However, in the content of the reports in each section, there were different ways of presenting and explaining the bases and bases for giving opinions. In particular, determining in what situations and on what basis to give what type of opinion is inconsistent and there is no specific guidance. Therefore, the audit opinion given depends largely on the auditor's personal judgment.

An important legal milestone for auditing activities was the first time the Ministry of Finance issued the Vietnamese auditing standards system in 1999. The first four (4) Vietnamese auditing standards were issued together with Decision No. 120/1999/QD-BTC dated September 27, 1999 of the Minister of Finance, including:

+ Standard No. 200 – Objectives and basic principles governing financial statement audits

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+ Standard 210 – Audit contract

+ Standard No. 230 – Audit documentation

+ Standard No. 700 – Audit report on financial statements

Following the above decision, the Ministry of Finance continued to issue Decision No. 219/2000/QD-BTC dated December 29, 2000 on the issuance of 06 auditing standards for the first batch and Decision No. 143/2001/QD-BTC dated December 21, 2001 on the issuance of 06 auditing standards for the third batch. ….

Thus, since the issuance of Auditing Standard No. 700 - Audit Report on Financial Statements, the formation of audit opinions and the preparation of audit reports have truly achieved unity and legal basis for relevant parties to understand in giving opinions and using audit opinions. Auditing Standard No. 700 provides basic principles, procedures and guidelines for the application of basic principles and procedures to the content and form of audit reports issued by auditors and audit firms after performing the audit. This standard requires the audited entity/client and parties using the audit results to have the necessary understanding of the principles and procedures for preparing audit reports prescribed in the standard in order to properly use the audit results. Thus, the promulgation of Auditing Standard No. 700 has created an extremely important legal basis for auditing activities in general as well as the formation of audit opinions and preparation of audit reports in particular. The provisions in previous legal documents only require that audit reports must be honest and objective, and require audit opinions to be on the honesty and reasonableness of accounting data. However, these documents do not specify when accounting data are considered honest and reasonable. In Auditing Standard No. 700, for the first time, a legal document states the content of the concept of honesty and reasonableness of financial statements - the subject of auditing, and also provides regulations and guidance in the process of forming audit opinions for each type of opinion.

Along with the promulgation of the 2003 Accounting Law and changes in the economic practice, there was a need to adjust regulations on auditing activities. In that context, the government issued Decree No. 105/2004/ND-CP dated March 30, 2004 on independent auditing, replacing the previous Decree 07-CP. Decree 105/2004/ND-CP has the same scope and subjects of regulation as Decree 07-CP, including general provisions and regulations on: auditors, auditing enterprises and state management of auditing activities. In addition, Decree 105/2004/ND-CP added provisions on rewards and discipline. Although the scope and subjects of regulation of Decree 105/2004/ND-CP are not different from Decree 07-CP, there are many detailed contents in the chapters that have been adjusted and supplemented. The regulations on audit reports are also separated into a separate article (Article 29) in the chapter on auditing enterprises. The regulations on audit reports only stipulate requirements for audit reports to be independent, objective, honest, signed by practicing auditors and by legal representatives or authorized persons of auditing enterprises, and at the same time stipulate specific requirements for the person signing the audit report in cases where auditing services are provided by foreign auditing organizations. Although Decree 105/2004/ND-CP as well as Circular 64/2004/TT-BTC dated June 29, 2004 guiding Decree 105/2004/ND-CP were issued later than the set of auditing standards, however, in the section on audit reports, there is no guidance on the compliance of audit reports with auditing standards. However, Circular 64/2004/TT-BTC has a new provision that professional auditors are not allowed to sign audit reports for more than 3 consecutive years for a single client. This provision is intended to further ensure the independence of auditors.

In order to create the highest legal framework for auditing activities as well as overcome the limitations of Decree 105/2004/ND-CP on independent auditing, create consistency in the application of professional and standard regulations with legal and administrative regulations, and create conditions for auditing services to develop in both scale and quality of services, the Audit Law was passed by the 12th National Assembly, 9th session on March 29, 2011. The Audit Law has a much broader scope and content of regulation for auditing activities than previous decrees. Regime

Regulations on audit reports are stipulated separately in Section 2 of the Auditing Law, which stipulates the contents of audit reports and also stipulates that audit reports on financial statements are prepared in accordance with auditing standards. Regulations on professional auditors not being allowed to sign audit reports for 3 consecutive years for the same client are directly stipulated in Decree No. 17/2012/ND-CP dated March 13, 2012 detailing and guiding the implementation of a number of articles of the Law on Independent Auditing. In short, the Law on Independent Auditing and sub-law documents regulating independent auditing activities have currently created an important and complete legal corridor for independent auditing activities. Moreover, the legalization of regulations on compliance with auditing standards during the auditing process has contributed to increasing the reliability of audited financial information, or in other words, increasing the value of use of audit reports.

Currently, according to the integration requirements along with the increase in types of services and the diversity and complexity of transactions in economic activities, in 2012 the Ministry of Finance issued Circular No. 214/2012/TT-BTC on the promulgation of a system of auditing standards including 37 standards replacing the previous system of auditing standards. Up to the year These new auditing standards are drafted based on the general principles in the development of accounting and auditing standards. Accordingly, the issued standards ensure the conformity and latest updates of international auditing standards issued by IFAC. These standards are numbered from CMKT No. 200 to CMKT No. 810. By 2015, the Ministry of Finance continued to issue 6 Circulars on the same day of May 8, 2015, issuing 10 new auditing standards: including Circular No. 65/2015/TT-BT on promulgating Vietnamese standards on audit service contracts; Circular No. 66/2015/TT-BTC on promulgating Vietnamese standards on other assurance service contracts; Circular No. 67/2015/TT-BTC on promulgating Vietnamese auditing standards on auditing of completed project settlement reports; Circular No. 68/2015/TT-BTC on promulgating Vietnamese auditing standards on related services; Circular No. 69/2015/TT-BTC on promulgating the Vietnamese Framework on assurance service contracts; Circular No. 70/2015/TT-BTC on promulgating professional ethics standards for accounting and auditing

Thus, up to now, the legal regulations for auditing activities in general and audit reports in particular in Vietnam have been issued at the highest legal level, the Law on Auditing, followed by decrees, circulars, detailed regulations and instructions for law implementation; especially the system of issued auditing standards has updated changes and is consistent with international auditing standards, comprehensively meeting all aspects and requirements of current auditing activities.

2.2 Current practice of operating and using audit reports in Vietnam.

2.2.1 Independent audit performance to date

In 1991, the auditing service market was formed, with the establishment of the first two auditing companies under the Ministry of Finance, VACO (Deloitte today) and AASC, in response to the demands of innovation and attracting foreign investment capital. The auditing market in Vietnam today has the full participation of the world's leading auditing firms (Deloitte, KPMG, E&Y, PwC). According to statistics from the Vietnam Association of Certified Public Accountants, the independent auditing market currently has 140 companies operating, of which 6 are foreign-invested. The number of auditing firms today is lower than the number of auditing firms in the period of 2007-2008 due to the market's purification process. Weakly operating or small-scale companies have been forced to restructure through mergers to meet the increasingly high requirements of the market in both legal and operational aspects. Updated data from the auditing professional organization also shows that in 2014, the total revenue of the whole market reached 4,583 billion VND; in which, the main service segment of the auditing companies is auditing and reviewing financial statements at 2,329.76 billion VND, accounting for about 50% of the total revenue structure of the industry.

In the field of financial statement auditing, since the Law on Independent Auditing was issued, the subjects required to audit annual financial statements have been expanded, including public companies, issuing organizations, securities companies, insurance companies, banks, FDI enterprises, state-owned enterprises and enterprises with over 20% state capital contribution... not only opening up development opportunities for the independent auditing industry, but also meeting new requirements of the economy.

As a specialized field of activity, it requires professional rules and standards.

With extremely strict regulations, up to now, the legal corridor for auditing activities in Vietnam has complied with international practices and standards, including the Law on Independent Auditing, guiding decrees, the system of auditing standards and professional ethics standards.

Regarding audit quality and audit quality control, it can be assessed that Vietnam's auditing activities have made great progress, audit quality has been improved along with the transparency of the economy. Audit quality control has now been partially authorized by the Ministry of Finance to the Vietnam Association of Certified Public Accountants, and the Securities Commission implements it according to a coordination mechanism when it is necessary to check the quality of the audit according to management requirements. Since 2014, with the Regulation on approval of auditing companies on the stock market according to Circular 183/2013/TT

- BTC, the quality control of auditing companies operating in the securities sector is under the authority of the State Securities Commission. Every year, the Ministry of Finance organizes service quality inspection teams, but the inspection is only carried out on a number of companies and mainly on small-scale companies in the market. However, organizing periodic inspections every three years with an auditing company according to current regulations is also very difficult. The reason for this limitation is that the human resources of the Ministry of Finance are still very thin, unable to meet the requirements of management and supervision when the workload of drafting policies and regimes for the accounting and auditing sector is too large. On the side of the State Securities Commission, since the time of transferring the function of controlling the service quality of listed auditing companies and public companies, in 2014, this agency inspected 5 companies, in 2015 inspected 6 companies and is expected to inspect 17 companies in 2016.

The occurrence of unexpected information about the business results of previously audited companies as well as recently for a number of companies and corporations (Vinanshin; DVD, Vietnam-Japan Medical Joint Stock Company, Dai Duong Group, Truong Thanh Wood and some 0-dong banks...) shows that there is still a big question mark about the quality and joint responsibility of auditing enterprises, and legal issues and management work need to continue to be considered and clarified in the quality control activities of auditing activities in the coming time.

2.2.2 Assessment of the current legal environment of auditing activities

Vietnam is one of the few countries in the world that has a law on auditing, and the auditing standards issued by the Ministry of Finance show that the State and society pay great attention to auditing activities to ensure a legal environment for auditing activities, thereby contributing to the publicity and transparency of economic and financial information of audited entities and other enterprises and organizations; creating a healthy investment environment; practicing thrift, combating waste, preventing and combating corruption; detecting and preventing violations of the law; improving the effectiveness and efficiency of economic and financial management and administration of the State and business activities of enterprises. The promulgation of the Law on Auditing is an important step forward, raising the level and significance of auditing activities in the economy. On the other hand, the system of Vietnamese auditing standards is built, issued and updated based on the system of international auditing standards, showing that the system of bases and foundations, both in terms of law and professional aspects, for current auditing activities is comprehensive and highly synchronous. The legal environment ensuring auditing activities is also the basic environment and foundation for ensuring the legal value of audit reports. The legal documents currently in effect governing auditing activities include:

- The Law on Auditing is the document with the highest legal value regulating auditing activities. The Law stipulates the principles, conditions, scope, and forms of independent auditing activities; the rights and obligations of practicing auditors, auditing enterprises, and audited entities. Regulations on audit reports are stipulated separately in Section 2, Chapter V of the Law on Auditing. In addition to regulations on the basic contents of audit reports, one of the important contents in the audit reporting regulations is the regulation that audit reports are prepared according to the provisions of auditing standards. This ensures consistency and synchronization in regulations on the formation of audit opinions and preparation of audit reports, ensuring the legality of audit reports.

- Securities Law No. 70/2006/QH11 dated June 29, 2006 and Law No. 62/2010/QH12 dated November 24, 2010 of the National Assembly amending and supplementing a number of articles of the Securities Law and Consolidated Document No. 27/VBHN-VPQH dated December 18, 2013 on the Securities Law. Securities law documents also govern the auditing activities.

Regarding the responsibility of auditing units and professional auditors in explaining the contents except in the audit report on financial statements of public companies, securities companies, stock exchanges, etc. Regarding the responsibility to confirm the accuracy and honesty of published information, the law on securities has specifically stipulated that the responsible entities are the auditing companies and auditors who sign the audit report.

- Decree No. 17/2012/ND-CP details and guides the implementation of a number of articles of the Law on Independent Auditing. To further ensure the independence of auditors, the Decree stipulates that practicing auditors are not allowed to sign audit reports for an audited entity for more than three (03) consecutive years. At the same time, the Decree also stipulates specific subjects that have the right to request the auditing enterprise to explain in writing the contents excluded from the audit report.

- Decree No. 105/2013/ND-CP dated September 16, 2013 of the Government stipulates administrative sanctions for violations in the field of accounting and independent auditing. The decree details administrative violations in auditing activities, including violations of regulations on auditing reports. Such as signing reports without proper authority, signing reports before the financial reporting date, not having enough signatures on the report, arranging auditors without proper authority, not fully and promptly explaining contents except in the report upon request of the competent person, etc.

- Circular No. 129/2012/TT-BTC dated August 9, 2012 of the Ministry of Finance regulating the examination and granting of auditor certificates and auditing practice certificates.

- Circular No. 183/2013/TT-BTC dated December 4, 2013 of the Ministry of Finance on independent audit of public interest entities. The Circular stipulates the conditions for auditing enterprises and conditions for professional auditors to be allowed to audit public interest entities. The issuance of strict regulations for auditing enterprises and professional auditors aims to minimize audit risks for financial statements of public interest entities because these entities have an impact on many subjects in society.

- Circular No. 157/2014/TT-BTC dated October 23, 2014 of the Ministry of Finance regulating the quality control of auditing services. The purpose of controlling the quality of auditing services is to

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