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WHAT IS A FINANCIAL STATEMENT AUDIT? SUBJECTS REQUIRED TO AUDIT FINANCIAL STATEMENTS ACCORDING TO LAW
A financial statement audit is a document that demonstrates the process of evaluating and certifying the accuracy, fairness and reliability of financial information shown in the financial statements of an organization or enterprise. This audit process is usually carried out by practicing auditors, auditing firms, branches of foreign auditing firms in Vietnam prepared after the end of the audit, giving opinions on the financial statements and other contents that have been audited under the audit contract.
To provide an independent assessment of the reasonableness of financial information, ensuring that the financial statements properly and fully reflect the financial position and business results of that organization. So what is the role of auditing? And who is currently required to audit financial statements in accordance with current laws? Let’s find out with Siglaw Law Firm through the article below!
The role of auditing financial statements
* For businesses: Auditing financial statement plays an important and multidimensional role for businesses, especially in the context of today’s economy. Here are the roles of financial statement audit for businesses:
– Ensure Accuracy and Reliability: Audits help verify the transparency and accuracy of financial information in the business, providing reliable information to shareholders, investors, creditors and other stakeholders. Enhance the reputation of the business, help attract investment capital and create trust from business partners.
– Vulnerability and Risk Detection: Audits help evaluate the performance of the internal control system, detect vulnerabilities and recommend improvements, helping to effectively prevent risks. The auditor provides an assessment of risks that may affect the business, helping business leaders identify and manage proactively.
– Compliance with Laws and Regulations: Audits help ensure that the business complies with regulations and laws related to financial reporting, helping to prevent and mitigate potential legal risks.
– Financial Management: Through auditing, businesses can manage finances responsibly, optimize resources and minimize financial risks.
– Enhanced Risk Management: Audits help businesses identify and manage risks effectively, facilitating stability and sustainable development.
Auditing financial statements is not only a legal requirement but also an important management tool to help businesses plan strategies and ensure transparency and transparency in business operations.
* For state agencies: auditing financial statements helps the state control and prevent financial risks, ensuring that resources and funds are used efficiently and transparently. Through the audit of financial statements, it is possible to promote sustainable development, enhance the ability to attract investment capital, support strategic decisions of the state, set priorities and directions for economic and social development, Help the state assess financial risks and manage debt in a sustainable way, reducing the risk of financial instability.
Subjects required to audit financial statements in accordance with current law
According to the provisions of Article 15 of the Government’s 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, enterprises and organizations whose annual financial statements are required to be audited by auditing enterprises include:
(1) Foreign-invested enterprises;
(2) Credit institutions established and operating under the Law on Credit Institutions, including branches of foreign banks in Vietnam;
(3) Financial institutions, insurance enterprises, reinsurance enterprises, insurance brokerage enterprises, branches of foreign non-life insurance enterprises;
(4) Public companies, issuers, and securities trading organizations;
(5) State-owned enterprises, except state-owned enterprises operating in the field of state secrets as prescribed by law, must be audited for annual financial statements;
(6) Enterprises and organizations implementing projects of national importance or group A projects using state capital, except for projects in the field of state secrets as prescribed by law, must be audited for finalization reports of completed projects;
(7) Enterprises and organizations in which state corporations and corporations hold 20% or more of the voting rights at the end of the fiscal year must be audited for annual financial statements;
(8) Enterprises in which listed organizations, issuers and securities trading organizations hold 20% or more of the voting rights at the end of the fiscal year must be audited for annual financial statements;
(9) Auditing firms, branches of foreign auditing firms in Vietnam must be audited for annual financial statements.
Above is some basic information about Auditing financial statements. If you have any questions about the Financial Statement Audit service, you can contact Siglaw Law Firm directly for assistance!
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