Quyết định 322/1999/QD-NHNN5

DECISION

PROMULGATING THE REGULATION ON ORGANIZATION OF INDEPENDENT AUDIT OF CREDIT INSTITUTIONS

THE GOVERNOR OF THE STATE BANK

Pursuant to Vietnam State Bank Law No.01/1997/QH10 and Credit Institution Law No.02/1997/QH10 of December 12, 1997;
Pursuant to the Government’s Decree No.15/CP of March 2, 1993 on the tasks, powers and State management responsibility of the ministries and ministerial-level agencies;
Pursuant to the Government’s Decree No.07/CP of January 29, 1994 promulgating the "Regulation on independent audit in the national economy"
At the proposal of the director of the Department for Banks and Non-Bank Credit Institutions,

DECIDES

Article 1.- To promulgate together with this Decision the "Regulation on organization of independent audit of credit institutions".

Article 2.- This Decision takes effect 15 days after its signing and replaces Decision No.423/QD-NHNN5 of December 23, 1997 promulgating the provisional Regulation on organization of audit of joint-stock commercial banks and Decision No.272/QD-NHNN5 of August 12, 1998 on organization of audit of joint-stock commercial banks.

Article 3.- The director of the State Bank’s Office, the director of the Department for the Banks and Non-Bank Credit Institutions, the State Bank's chief inspector, the heads of the concerned units attached to the Central State Bank, the directors of the State Bank’s provincial/municipal branches, the chairmen and members of the Managing Boards as well as the Control Boards and the general directors (directors) of credit institutions shall have to implement this Decision.

REGULATION

ON ORGANIZATION OF INDEPENDENT AUDIT OF CREDIT INSTITUTION
(Promulgated together with the State Bank Governor Decision No.322/1999/QD-NHNN5 of September 14, 1999)

Chapter I

GENERAL PROVISIONS

Article 1.-

1. This Regulation stipulates the organization independent audit of credit institutions licensed operate in Vietnam under the Law on Credit Institutions (called credit institutions for short), including:

a/ State credit institutions (including banks and non-bank credit institutions);

b/ Joint-stock credit institutions of the State and people (including banks and non-bank credit institutions), hereafter referred to as joint-stock credit

institutions for short;

c/ Foreign credit institutions licensed to operate in (including: joint-venture credit institutions, non-bank credit institutions with 100% foreign capital and branches of foreign bank;

d/ Central people’s credit funds.

2. The organization of independent audit of the regional people’s credit funds, grassroots people's credit funds and credit cooperatives shall comply with the State Bank's separate regulations in conformity with the management requirements and operation scope of these organizations.

Article 2.- Independent audit of a credit institution is the inspection and certification by professional auditors from an independent auditing organization (called the auditing organization for short) of the accuracy, truthfulness and legality of accounting documents and data as well as financial statements of such credit institution according to the current provisions of Vietnamese law.

Chapter II

SPECIFIC PROVISIONS

Article 3.- A credit institution’s yearly financial statements which must be audited include:

1. The accounting balance sheet;

2. The report on the business results;

3. The report on the monetary flow;

Article 4.- An auditing report must reflect the following:

1. The evaluation and certification of the accuracy, truthfulness and legality of the credit institution’s financial statements; the comments and assessment of the observance of financial and accounting policies and regimes by such credit institution.

2. The proposal made to the audited credit institution on the detected matters which are deemed unclear in the course of auditing, and on measures for the settlement thereof.

3. The auditing report must be signed and stamped by the general director (director) of the auditing organization or his/her mandatary, and signed by the auditor who takes the prime responsibility for auditing the credit institution (written clearly under each signature must be the auditor’s full name and number of his/her auditing license issued by the Finance Ministry).

Article 5.- The auditing organizations which audit credit institutions shall have to fully meet the following conditions:

1. Lawfully operating in accordance with the current provisions of Vietnamese law.

2. Not having economic ties (such as capital contribution, joint venture, stock capital contribution...) with the audited credit institutions or vice versa.

3. Not being the clients who are enjoying preferences granted by the audited credit institutions (such as being granted credit, guaranty without security or credit with preferential terms...).

4. Not providing services on keeping accounting books or drawing up the final account settlement reports for the audited credit institutions.

5. Having a contingent of qualified auditors who meet all conditions defined in Article 6 of this Regulation to take part in the audit of the credit institutions.

Article 6.- An auditing organization’s auditors allowed to audit credit institutions must fully meet the following conditions:

1. Having the audit practicing licenses (still valid), grimed by Vietnam’s Finance Ministry;

2. Having university degrees in such fields as finance, accountancy and banking; having at least 5 years working in the field of finance, accountancy or banking and being the professional auditors with at least 2 years practicing audit at the independent auditing organizations.

3. Not being the shareholders or lawful representatives of the shareholders who own a number of the registered shares and have the voting right in the audited credit institutions.

4. Not being members of executive boards of the audited credit institutions.

5. Not being the clients enjoying preferential terms of the audited credit institutions (such as being granted credit without security or with preferential terms...);

6. Not having family tie (such as wife, husband, farther, mother, son, daughter or sibling) with members of the Managing Boards, the Control Boards or the Executive Directors of the audited credit institutions;

7. Not providing services on keeping accounting books or drawing up the final account settlement reports for the audited credit institutions.

Article 7.-

1. The selection of auditing organization for the annual audit of a credit institution shall be decided by the Managing Board after consulting the Control Board (for credit institutions with managing boards) or by the Directorate (for credit institutions without managing boards).

2. The Managing Board, the Control Board (for credit institutions with managing boards) or the Directorate (for credit institutions without managing boards) shall take responsibility for the selection of an auditing organization and auditors to participate in the audit of their unit according to the provisions of Articles 5 and 6 of this Regulation.

3. The auditing organization and auditors participating in the audit of the credit institution must get the written approval from the State Bank. Only after getting the written approval from the State Bank can the credit institution officially sign the contract with the auditing organization to conduct the audit.

Article 8. -

1. The credit institution's dossier of application for the approval of an auditing organization includes

a/ The report of the Managing Board (for credit institutions with managing boards) or of the Directorate (for credit institutions without managing boards), applying for the approval of the auditing organization, which must clearly state the name and address of tile auditing organization as well as its commitments, and the list of auditors registered to take part in the audit, not in contravention of the provisions of Articles 5 and 6 of this Regulation;

b/ The minutes of meetings of the Managing Board with the Control Board (for credit institutions with managing boards) or of the Directorate (for credit institutions without managing boards) on the agreement to choose the concerned auditing organization;

c/ The notarized copies of the audit practicing licenses of auditors who will participate in the audit of the credit institution;

d/ The list of auditors participating in the audit (with their full names and numbers of their auditing licenses issued by the Finance Ministry clearly inscribed), which must be signed and stamped by the general director (director) of the auditing organization or his/her mandatary, certifying that the listed auditors are qualified to take part in the audit of the credit institution as prescribed in Article 6 of this Regulation.

e/ Other documents proving that the auditing organization and auditors meet the conditions mentioned in Articles 5 and 6 of this Regulation.

2. Where the credit institution decided to choose the auditing organization and auditors of the preceding year for the audit in the current year, the dossier of such credit institution asking for the approval of the auditing organization shall include only documents mentioned at Points a and b, Clause 1 of this Article, which are added with new documents (if any) related to any changes of the auditing organization and auditors participating in the audit.

3. After getting the approval from the State Bank, if the auditing organization wishes to add or replace the auditor(s) participating in the audit, the credit institution shall have to make a selection according to the provisions of Clause 2, Article 7 of this Regulation and submit a report thereon together with the dossier set for auditors to the State Bank. Only after the State Bank issues the written approval, shall the added or substitute auditor(s) be allowed to take part in the audit of the credit institution.

Article 9.- The Governor of the State Bank shall authorize the consideration and approval of auditing organizations to audit credit institutions as follows:

1. The State Bank’s provincial/municipal branches shall consider and approve the auditing organizations and auditors to audit joint-stock credit institutions which are headquartered in their localities. After signing the official dispatches approving auditing organizations to audit credit institutions, the State Bank’s provincial/municipal branches shall have to send 01 copy thereof to the Central State Bank (the Department for the Banks) as their reports thereon.

2. The Department for the Banks shall consider and approve auditing organizations and auditors to audit the State credit institutions, foreign credit institutions and central people’s credit funds.

Article 10.- Order and procedures for consideration and approval of auditing organizations

1. Before September 30 every year, the Central State Bank shall announce the list of auditing organizations allowed to audit credit institutions so that the credit institutions may proceed with the selection according to the provisions of Articles 5 and 6 of this Regulation.

2. Within 30 days before the end of a fiscal year, each credit institution shall have to select an auditing organization as prescribed by law which shall audit its operations and send the dossier stipulated in Article 8 of this Regulation to the State Bank for consideration and approval of the audit.

a/ A joint-stock credit institution’s dossier of application for the approval of an auditing organization shall be forwarded to the State Bank’s branch in the province or city where such joint-stock credit institution is headquartered. Within 15 days after receiving the credit institution’s complete dossier asking for the approval of the auditing organization, the State Bank’s branch shall have to consider and reply in writing, stating its approval or disapproval. In case of disapproval, the State Bank’s branch shall have to notify the concerned unit of the reasons therefor.

b/ The dossiers of application for the approval of auditing organizations of the State credit institutions, foreign credit institutions and central people’s credit funds shall be forwarded to the Central State Bank. Within 15 days after receiving the complete dossier asking for approval of in auditing organization, the Central State Bank shall consider and reply in writing, stating its approval or disapproval. In case of disapproval, the Central State Bank shall notify the concerned unit of the reasons therefor.

3. The written approval of an auditing organization to audit credit institutions, issued by the Central State Bank (the Department for the Banks) and by the State Bank’s provincial/municipal branches shall be made according to the set form.

Article 11.- Within 120 days after the end a fiscal year, the audited credit institutions shall have to send to the State Bank the auditing reports enclosed with their audited financial statements. More concretely:

1. A joint-stock credit institution shall send 3 copies of the report to the State Bank’s branch in the province or city where it is headquartered. Within 15 days after receiving the report, the State Bank’s provincial/municipal branch shall have to consider and give its appraisal comments on the situation of organization and operation of the concerned credit institution, which shall be sent together with two copies of the report to the Central State Bank (the Department for the Banks and the Banking Inspectorate).

2. A State credit institution, a foreign credit institution or a central people’sredit fund shall send 2 copies of the report to the Central State Bank (the Department for the Banks and the Banking Inspectorate).

Article 12.- Responsibilities of the audited credit institutions

1. To sign the auditing contracts with the selected auditing organizations, clearly stating the requirements on the to be-audited contents, the auditing charge and responsibilities of the parties involved in the auditing process, and the handling of breaches of the auditing contract.

2. To accurately, adequately and promptly provide their accounting and financial documents of the accountancy and finance units is well as other documents related to the audited contents at the auditors' request;

3. To create favorable conditions, not to cause difficulties to the auditing organizations and auditors in the auditing process; and at the same time, respect the comments and proposals stated in the auditing reports.

Article 13.- Credit institutions shall have to organize the annual independent audits according to the provisions of this Regulation and, if committing violations, shall, depending on the seriousness of their violations, be disciplined or administratively sanctioned according to the provisions of law.

Article 14.- Responsibilities of auditing organizations and auditors that audit credit institutions.

1. An auditing organization that wishes to audit a credit institution shall have to file its written request to the Central State Bank (the Department for the Banks) before June 30 each year for consideration and approval of its audit of the credit institution. The written request must clearly state the situation of the auditing organization’s organization, operation and auditing experiences, enclosed with other necessary documents so as to prove and commit itself to strictly comply with the provisions of Article 5 of this Regulation; and enclosed with the legal dossier of the auditing organization (if it is the first time) as well as a list of the qualified auditors to take part in the audit as prescribed in Article 6 of this Regulation. As for 1999, auditing organizations having a demand to audit credit institutions shall have to send their written requests together with the dossiers to the Central State Bank (the Department for the Banks) before October 31, 1999.

2. Auditing organizations and auditors that audit credit institutions shall have to take responsibility for the auditing results according to the provisions of law and this Regulation; for their violations of the State’s regulations on auditing; and for information secrecy according to the provisions of Article 104 of the Law on Credit Institutions, and pay compensation for the damage caused to audited credit institutions when breaking its commitments (if any) in the contracts.

3. In cases where an auditing organization violates the provisions of this Regulation or the auditing results fail to satisfy the requirements (according to the appraisal of the State Bank), the State Bank may limit the number and types of credit institutions to be audited by such auditing organization or may not permit it to audit credit institutions.

Chapter III

IMPLEMENTATION PROVISIONS

Article 15.- Any amendment to this Regulation shall be decided by the Governor of the State Bank.