VI What is the minimum capital for a foreign auditing company that establishes a branch in Vietnam? How many auditors is the minimum number of auditors required for a foreign auditing company branch in Vietnam? Will a foreign auditing company branch in Vietnam have its Certificate of Eligibility for Auditing Services revoked if it does not have enough auditors? Through today’s article, let’s find out about this issue with Pham Consult!
What is the minimum capital for a foreign auditing company that establishes a branch in Vietnam?
Clause 1, Article 8 of Decree 17/2012/ND-CP stipulates the minimum capital for foreign auditing enterprises establishing branches in Vietnam as follows:
Minimum capital for foreign auditing enterprises establishing branches in Vietnam and the capital granted to branches of foreign auditing enterprises in Vietnam.
1. Foreign auditing enterprises requesting to be granted a Certificate of eligibility to provide auditing services for branches of foreign auditing enterprises in Vietnam must have equity capital on the balance sheet at the end of the fiscal year closest to the time of requesting to be granted a Certificate of eligibility to provide auditing services for branches of at least 500,000 (five hundred thousand) USD.
2. The capital granted to branches of foreign auditing enterprises in Vietnam must not be lower than the legal capital for limited liability companies prescribed in Article 5 of this Decree.
3. During the operation, foreign auditing enterprises must maintain the equity capital on the balance sheet and the granted capital of the branch in Vietnam not lower than the capital prescribed in Clause 1 of this Article. Foreign auditing enterprises and branches of foreign auditing enterprises must supplement capital if the equity capital on the balance sheet of the foreign auditing enterprise and the branch of the foreign auditing enterprise in Vietnam is lower than the capital levels prescribed in Clause 1 and Clause 2 of this Article within 03 (three) months from the end of the fiscal year.
Thus, the minimum capital level is the equity capital on the balance sheet calculated from the end of the fiscal year closest to the time of requesting the issuance of a certificate of eligibility to conduct auditing services for the branch.
Accordingly, foreign auditing enterprises establishing branches in Vietnam must have a minimum capital equivalent to 500,000 (five hundred thousand) US dollars.
Note: A branch of a foreign auditing enterprise must supplement capital if the equity on the balance sheet is lower than the prescribed capital levels within 03 (three) months from the end of the fiscal year.
How many auditors must a branch of a foreign auditing enterprise in Vietnam have?
Pursuant to Clause 4, Article 21 of the Law on Independent Auditing 2011, the conditions for granting a Certificate of eligibility to provide auditing services of a branch of a foreign auditing enterprise in Vietnam are as follows:
Conditions for granting a Certificate of eligibility to provide auditing services
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4. When applying for a Certificate of eligibility to provide auditing services, a branch of a foreign auditing enterprise in Vietnam must satisfy the following conditions:
a) The foreign auditing enterprise is permitted to provide independent auditing services in accordance with the laws of the country where the foreign auditing enterprise has its head office;
b) There must be at least two practicing auditors, including the Director or General Director of the branch;
c) The Director or General Director of a branch of a foreign auditing enterprise must not hold a management or executive position in another enterprise in Vietnam;
d) The foreign auditing enterprise must send a document to the Ministry of Finance guaranteeing responsibility for all obligations and commitments of the branch of the foreign auditing enterprise in Vietnam;
dd) The foreign auditing enterprise must ensure that its capital is maintained at no lower than the legal capital level prescribed by the Government.
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Thus, a branch of a foreign auditing enterprise in Vietnam must have at least 02 practicing auditors, including the Director or General Director of the branch.
If a branch of a foreign auditing enterprise in Vietnam does not have enough auditors, will its Certificate of Eligibility for Auditing Services be revoked?
According to Article 27 of the Law on Independent Auditing 2011, it is stipulated as follows:
Suspension of auditing services and revocation of the Certificate of Eligibility for Auditing Services
1. An auditing enterprise or a branch of a foreign auditing enterprise in Vietnam shall be suspended from auditing services in one of the following cases:
a) Operating outside the scope of activities of an auditing enterprise as prescribed in Clause 1, Article 40 of this Law;
b) Failing to ensure one of the conditions prescribed in Clauses 1, 2, 3 and 4, Article 21 of this Law for three consecutive months;
c) Having serious professional violations or violating auditing standards, professional ethics standards of accounting and auditing.
2. An auditing enterprise or a branch of a foreign auditing enterprise in Vietnam shall have its Certificate of eligibility to provide auditing services revoked in one of the following cases:
a) Making false declarations or committing fraud or falsifying documents requesting the issuance of a Certificate of eligibility to provide auditing services;
b) Not providing auditing services for twelve consecutive months;
c) Failing to remedy the violations specified in Clause 1 of this Article within sixty days from the date of suspension;
d) Being dissolved, bankrupt or voluntarily terminating the provision of auditing services;
dd) Having its Certificate of Business Registration, Certificate of Enterprise Registration or Certificate of Investment revoked;
e) A foreign auditing enterprise with an auditing branch in Vietnam is dissolved, bankrupt or has its license revoked or its operations suspended by a competent authority of the country where the auditing enterprise has its head office.
g) Violating the provisions of Clause 11 and Clause 15, Article 59 of this Law.
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Thus, in case a branch of a foreign auditing enterprise in Vietnam does not have enough auditors as prescribed, its business will be suspended.
Within sixty days from the date of suspension, if the branch of a foreign auditing enterprise in Vietnam does not ensure enough auditors, its certificate will be revoked.
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