Auditing firms’ still failing to add up

Local auditors are struggling to keep up with increased demand for their services

The Vietnam Association of Certificated Public Accountants’ (VACPA) annual inspection in late 2010 revealed that almost all auditing firms violated local independent auditing regulations. Nine auditors were punished for violations.

In a report just sent to the Ministry of Finance, VACPA said several auditing firms passed financial statements which contained mistakes reflecting the deficiencies of auditors and board of directors on understanding current accounting standards.

VACPA claimed that those mistakes might be caused by an “easy compromise” between the auditing firm and audited company.

The State Securities Commission (SSC) in its early-year meeting also reprimanded local auditors for cutting corners.

According to an SSC representative, “many auditing firms” did not carefully assess the risk of some big values in companies’ financial statements. “The auditors merely excluded those values from their judgments, which could generate big differences between the actual and the on-paper business results.”

Other auditors were criticised for being “easy to a fully accept” some special reports which should be particularly examined, referring to the consolidated business reports of parent companies in holdings.

Last year saw a series of scandals relating to the financial reports of listing companies, which involved big names like Quoc Cuong Gia Lai Corp. (QGC) and Vietinbank (CTG). Those reports after being re-checked revealed great differences between the actual business results and announced ones.

“Many auditing firms look for sales and do not invest adequately in their operations,” said VACPA general secretary Bui Van Mai.

This year will see a shortage of auditing firms. While the stock market has 261 additional companies to list this year, the amount of auditing firms accepted by SSC to audit listed companies had reduced to 45 from 46 last year.

“The amount of auditing firms is not enough,” said Mai.

Meanwhile, the newly-amended Law on Securities, effective from July 1 this year, will force unlisted public companies to audit their financial statements as listing companies do.

Nguyen Thanh Tung, deputy director for AASC - among the leading Vietnamese auditing firms, indicated that some auditors might truncate auditing procedures.

“The truncating will lead to a low-quality auditing,” said Tung.