QUALITY CONTROL OF AUDITING ACTIVITIES

GENERAL PROVISIONS

01. The purpose of this standard is to prescribe the basic principles and procedures and guide the application thereof to the quality control of audit work in the following aspects:

a/ The audit firms’ policies and procedures relating to auditing activities;

b/ Procedures relating to the work assigned to auditors and audit assistants in specific audits.

02. Auditors and audit firms must implement quality control policies and procedures for all auditing activities of audit firms and for each audit.

03. This standard shall apply to the audit of financial statements and also to the audit of other financial information and related services of audit firms.

Auditors and audit firms must comply with the provisions of this standard in the process of auditing and providing related services.

The audited units (clients) and the users of audit results must possess necessary knowledge of the principles and procedures prescribed in this standard so as to fulfil their duties and cooperate with auditors and audit firms in dealing with relationships in the auditing process.

The terms in this standard are construed as follows:

04. Audit firm means an enterprise established and operating under the law provisions on the establishment and operation of enterprises in the field of provision of independent auditing services.

05. Director (or head) of an audit firm means the highest representative at law of that audit firm, who bears the final responsibility for the audit.

06. Professional personnel means leaders of all levels, auditors, audit assistants and consultants of an audit firm.

07. Auditor means a person who possesses the auditor’s certificate granted by the Ministry of Finance, has made practice registration with an independent audit firm, participates in the auditing process, may sign the auditing reports and bears responsibility for the audit before law and the director of the audit firm.

08. Audit assistant means a person who participates in the auditing process but is not permitted to sign the auditing reports.

09. Quality of auditing activities means the degree of satisfaction of the users of audit results in terms of objectivity and reliability of the audit opinions of auditors; and also satisfaction of the audited units’ expectations of the auditors’ opinions in order to improve the business efficiency within a pre-determined period and with reasonable charges.

CONTENTS OF THE STANDARD

Audit firms

10. Audit firms must establish and implement quality control policies and procedures with a view to ensuring that all audits are conducted in accordance with the Vietnamese auditing standards or international auditing standards accepted by Vietnam so as to constantly improve the quality of audits.

11. The contents, timetable and scope of an audit firm’s quality control policies and procedures depend on a number of factors such as the size and nature of its operation, geographical area of operation, organizational structure and cost and benefit considerations. The quality control policies and procedures adopted by individual firms may vary but must comply with this standard’s provisions on the quality control of auditing activities.

Examples of quality control policies and procedures are presented in Appendix No. 01.

12. In order to achieve the objectives of quality control of auditing activities, the audit firms normally apply the following policies in combination:

a/ Compliance with principles on professional ethics

Professional personnel of audit firms must adhere to the audit profession’s principles on ethics of the audit profession, including independence, integrity, objectivity, professional capability, prudence, confidentiality, professional behavior and compliance with professional standards.

b/ Professional skills and competence

Professional personnel of audit firms must possess professional skills and competence, regularly maintain, update and raise their knowledge so as to fulfil their assigned tasks.

c/ Assignment

Audit work must be assigned to trained professional personnel who have adequate professional skills and competence meeting the practical requirements.

d/ Guidance and supervision

The audit work must be adequately guided and supervised for personnel at all levels to secure that it has been conducted in accordance with the auditing standards and relevant regulations.

e/ Consultation

When necessary, auditors and audit firms must consult with experts inside or outside the firms.

f/ Retention and acceptance of clients

In the process of retaining existing clients and evaluating potential ones, the audit firms must take into consideration their independence and ability to serve clients as well as the integrity of the clients’ management boards.

g/ Examination

The audit firms must regularly monitor and examine the adequacy and efficiency in the process of implementing their policies and procedures for quality control of their auditing activities.

13. The audit firms’ policies and procedures for quality control of their auditing activities must be communicated to all of their personnel so that they can be fully understood and implemented.

Individual audit contracts

14. Auditors and audit assistants must apply their firms’ quality control policies and procedures to each audit contract in an appropriate manner.

15. Auditors shall have to consider the professional capability of audit assistants performing the work assigned to them so as to provide guidance, supervision and examination appropriate to each audit assistant.

16. When assigning work to audit assistants, it must be ensured that such work is assigned to persons with adequate professional capability as required.

Guidance

17. Auditors must guide audit assistants on the necessary contents relating to each audit such as their responsibilities for the assigned work, the objectives of the procedures they are to perform, characteristics and nature of the clients’ production and business activities as well as accounting or auditing matters that may affect the contents, time table and scope of auditing procedures which they are performing.

18. The overall audit plans and the audit programs shall serve as an important tool for guiding auditors and audit assistants to perform the audit procedures.

Supervision

19. Supervision is closely related to guidance and examine and may involve both of these elements.

20. The audit firms’ personnel assigned to supervise the quality of an audit must perform the following functions:

a/ Supervising the auditing process so as to determine whether or not:

– Auditors and audit assistants have adequate professional skills and capability needed to fulfil their assigned tasks;

– Audit assistants understand the audit guidelines;

– The audit work is being conducted according to the overall audit plan and the audit program;

b/ Grasping and identifying important accounting and auditing questions arising in the auditing process so as to adjust the overall audit plan and the audit program appropriately;

c/ Handling the difference of professional opinions between auditors and audit assistants jointly participating in the audits and considering whether consultation with experts is needed or not.

21. The persons assigned to supervise the quality of audits must perform the following responsibilities:

a/ If detecting that auditors and/or audit assistants breach the audit profession’s ethics or show signs of colluding with clients to distort financial statements, to report such to competent persons for handling;

b/ If deeming that auditors or audit assistants fail to have the required professional skills and competence for carrying out the audits, to propose competent persons to replace such auditors and/or audit assistants so as to ensure the quality of the audits according to the set overall audit plans and audit programs.

Examination

22. The work performed by the auditors and audit assistants must be examined by persons having equal or higher professional capability in order to determine whether or not:

a/ The work has been performed in accordance with the audit program;

b/ The work performed and the results obtained have been fully documented into audit dossiers;

c/ All important audit matters have been settled or reflected in audit conclusions;

d/ The objectives of the audit procedures have been achieved;

e/ The conclusions made in the auditing process are consistent with the results of the work performed and support the audit opinions.

23. Auditors and audit firms must regularly examine the following:

a/ The implementation of the overall audit plan and the audit program;

b/ The assessments of inherent and control risks, including the results of tests of control and the modifications (if any) made to the overall audit plan and the audit program;

c/ The documentation in audit dossiers of the obtained audit evidences, including consultants’ opinions, and the conclusions drawn from the basic tests;

d/ Financial statements, proposed amendments thereto and draft auditing reports.

24. When examining the quality of audits, especially big and complicated audit contracts, professional personnel outside the audit teams may be requested to carry out certain additional procedures before the issuance of the auditors’ report.

25. Where there still exist divergent opinions on the quality of an audit, the audit team should discuss collectively so as to reach agreement on the evaluation thereof and draw experiences. If the audit team fail to reach agreement, such should be reported to the director for handling or presented at a meeting of the firm’s key members.