STATE-OWNED SECTOR SET FOR MAJOR OVERHAUL
A New Era of Transparency and Accountability in Vietnam’s State-Owned Sector
Hanoi - In a significant move towards modernizing its economy, Vietnam is introducing mandatory independent audits for all state-owned enterprises (SOEs). This change aims to bring greater transparency and accountability to the sector, paving the way for a more robust and efficient economy.
Improved Financial Reporting and Decision-Making
Under new regulations, state-owned commercial banks will be required to make lending decisions based on reliable financial data, rather than relying on incomplete or inaccurate information. This is expected to lead to:
- Improved financial reporting
- More informed decision-making across the board
- Enhanced transparency and accountability in the sector
Valuation Process for SOEs Undergoing Equitization
The audits will also play a crucial role in the valuation process for SOEs undergoing equitization, allowing the state to obtain a fair price for their disposal.
Driving Efficiency and Effectiveness within SOE Management Teams
The introduction of independent audits is likely to drive greater efficiency and effectiveness within SOE management teams, as they will be incentivized to improve performance based on transparent reporting.
Challenges Ahead: Meeting the Surge in Demand for Auditing Services
However, the implementation of these new regulations presents significant challenges for Vietnam’s audit profession. With nearly 5,000 SOEs in operation, and only around 61 audit companies currently operating in the country, a surge in demand for auditing services is expected.
- A shortage of trained auditors to meet this demand
- Concerns about the availability of skilled professionals
Addressing the Gap: Greater Investment in Accountancy and Audit Training
To address this issue, there are calls for greater investment in accountancy and audit training, as well as efforts to attract more skilled professionals into the profession.
International Best Practices Incorporated
The new regulations also incorporate international best practice, including:
- Restrictions on non-audit services provided by audit firms
- Mandatory auditor rotation
- Measures to ensure the independence and objectivity of auditors, preventing conflicts of interest
Criticism and Future Direction
While some have criticized the introduction of annual examinations for auditors as excessive regulation, the overall impact of Decree 105 is seen as a significant step forward in modernizing Vietnam’s audit profession.
- “The objectives of this initiative are clear and laudable,” said an industry expert. “However, the setting out of the course of action to deliver these objectives is still a work in progress.”
The Road Ahead: Careful Implementation and Continued Investment
The success of these reforms will depend on careful implementation and continued investment in training and capacity-building for Vietnam’s audit profession. With the right support, however, this overhaul has the potential to bring greater transparency, accountability, and efficiency to the state-owned sector, driving long-term economic growth.