Set up an auditing company services in Vietnam

Audit services are a type of business that has developed strongly in recent times stemming from the desire to have an independent unit providing audit services to be transparent in financial information and data. However, in order to be able to establish and provide audit services, enterprises need to meet the conditions and regulations required by law. Therefore, to support you in this matter, Viet An Tax Agent will provide some information about auditing company establishment services.

The concept of audit services and auditing company

Audit services are understood as the process of assessing the reliability of financial information provided by a certain organization. Auditing helps ensure the transparency and accuracy of financial statements, increasing the trust of stakeholders in businesses such as shareholders, banks or partners.

Pursuant to the provisions of Clause 5, Article 5 of the Law on Independent Audit 2011, an auditing firm is a company that has all the conditions to be able to provide audit services in accordance with the provisions of the Law on Independent Audit 2011 and other relevant laws.

Pursuant to the provisions of Article 20 of the Law on Independent Audit 2011, when establishing an auditing firm, only one of the types of enterprises may be selected, namely:

• Limited liability company with two or more members
• Partnerships
• Sole proprietorship

Market access conditions for foreign investors providing audit services

Pursuant to the provisions of Clause 4, Article 21 of the Law on Independent Audit 2011, foreign investors, when wishing to provide audit services in Vietnam, need to meet the following conditions:

• Foreign auditing firms are permitted to provide independent audit services in accordance with the law of the country where such enterprises are headquartered
• Having at least 2 practicing auditors, including the Director or General Director of the branch
• The director or general director of a foreign auditing firm’s branch shall not be allowed to hold the position of manager or executive of other enterprises in Vietnam
• The foreign auditing firm will have to send a document to the Ministry of Finance to ensure the responsibility for all obligations and commitments of the foreign auditing firm’s branch in Vietnam
• The foreign auditing firm must ensure that the capital amount is not lower than the legal capital level as prescribed in Article 8 of Decree 17/2012/ND-CP, specifically:
• Establishment of a branch: maintain equity on the balance sheet at the end of the most recent fiscal year of US$500,000
• The allocated capital of a branch of a foreign auditing firm shall not be lower than the legal capital for a limited liability company of VND 5 billion.
• In the course of operation, the foreign auditing firm must maintain the equity on the balance sheet and the allocated capital of the branch in Vietnam and not lower than the capital specified in Clause 1, Article 8 of Decree No. 17/2012/ND-CP which is USD 500,000. The foreign auditing firm or branch of the foreign auditing firm shall have to supplement the capital if the equity on the balance sheet of the foreign auditing firm and of the foreign auditing firm’s branch in Vietnam is lower than USD 500,000 and lower than the legal capital level for this limited liability company during the 03 months from the end of the fiscal year.

Conditions for setting up an auditing company

Article 21 of the Law on Audit 2011 specifies the conditions for establishing an auditing company for each type of enterprise, specifically as follows:

Conditions for limited liability companies with two or more members

• Must have a business registration certificate or an investment certificate as prescribed by law
• There must be at least 5 practicing auditors, including at least 2 members contributing capital. Pursuant to the provisions of Article 7 of Decree 17/2012/ND-CP, the capital contribution of practicing auditors is prescribed as follows:
• An auditing limited liability company must have at least 2 capital contributors who are registered auditors practicing at the company. The contributed capital of practicing auditors will have to account for more than 50% of the total charter capital of the company
• Practicing auditors shall not be concurrently capital contributing members of two or more auditing firms.
• The legal representative, director or general director of the Company shall be a practicing auditor
• Guarantee of legal capital as prescribed in Article 5 of Decree 17/2012/ND-CP, specifically: The legal capital of a limited liability company from January 1, 2015 is VND 5 billion
• During the course of operation, the limited liability company will always have to maintain its equity on the balance sheet, not lower than the legal capital of VND 5 billion mentioned above. The auditing firm will have to supplement capital if the equity on the balance sheet is less than VND 5 billion within 3 months from the end of the fiscal year.
• The contributed capital of members who are organizations will not be allowed to exceed the amount specified in Article 6 of Decree 17/2012/ND-CP, the representative of members who are organizations will have to be practicing auditors
• Members who are organizations will be entitled to contribute up to 35% of the total charter capital of an audited limited liability company with two or more members. In case there are many organizations contributing capital, the total capital contribution of the organizations will be equal to 35% of the total charter capital of the company
• Members who are organizations shall appoint a person to represent the organization to the Board of Members. The representative of the member being an organization will have to be an auditor and must register to practice at the auditing firm to which the measuring organization participates in contributing capital
• A practicing auditor who is a representative of an organization will not be allowed to contribute capital to that auditing firm as an individual

For Partnerships

• Must have a business registration certificate or investment registration certificate as prescribed;
• Must have at least 5 practicing auditors, including at least 2 general partners;
• The legal representative, Director or General Director must be a practicing auditor.

For Sole Proprietorships

• Must have a business registration certificate, enterprise registration certificate or investment certificate as prescribed
• There must be at least 5 practicing auditors, including the owner of a private business
• The owner of a sole proprietorship must also be a director of the company

Procedures for setting up a Vietnam capital auditing company

Step 1: Submit the dossier for the establishment of an auditing company

The dossier for establishment of an auditing company will include:

• Application for business registration
• Company Charter
• List of capital contributors for limited liability companies with two or more members or list of general partners for partnerships
• A notarized/certified copy of the ID card/ID card or passport of the individual member, a notarized/certified copy of the business registration certificate in case the member is an organization, enclosed with a notarized/certified copy of the ID card/ID card or passport of the legal representative of that organization.
• Power of attorney for the person carrying out the procedures for establishing a company at a competent agency

After preparing 01 set of the above-mentioned dossier, the enterprise shall submit the dossier to the Department of Planning and Investment where the enterprise is headquartered. Pursuant to the provisions of Clause 1, Article 26 of the Law on Enterprises 2002, enterprises may submit by one of the following methods:

• Submit directly to the business registration agency which is the Department of Planning and Investment
• Submit via postal service
• Submission via the web

Step 2: Resolve the dossier

Within 03 days from the date of receipt of the dossier, the business registration authority will review the validity of the dossier and issue the business registration. In case the dossier is incorrect or invalid, the agency must issue a written notice notifying the enterprise founder of many contents that need to be amended and supplemented.

If the business registration agency refuses to register the enterprise, it must give a written notice clearly stating the reason.

Step 3: Submit an application for a certificate of eligibility to provide audit services

Pursuant to the provisions of Article 22 of the Law on Independent Audit 2011, the dossier of application for a certificate of eligibility for business in audit services will include:

• Application for a certificate of eligibility for audit services business
• A certified/authenticated copy of the business registration certificate or investment registration certificate
• A certified/authenticated copy of the practicing auditor registration certificate of the practicing auditors
• Full-time employment contracts of the practicing auditors
• Documents proving capital contribution in case of establishing a limited liability company
• Other documents as prescribed by the Ministry of Finance

Step 4: Review and process the application

Within 30 days from the date of receipt of a valid dossier, the Ministry of Finance will issue a certificate of eligibility to provide audit services to the auditing firm. In case of refusal, the Ministry of Finance will have to reply in writing and clearly state the reason. In case it is necessary to clarify related issues, the Ministry of Finance will have the right to request the enterprise to explain.

If you have any difficulties or questions related to the service of setting up an auditing company, please contact Viet An Tax Agent for the most specific advice.