Auditing in the finance and banking sector involves examining and verifying the accuracy and fairness of financial statements and the legal compliance of credit institutions. According to the State Bank of Vietnam, by the end of 2024, the total assets of the credit institution system in Vietnam reached a record high, creating significant pressure for transparency. Conducting audits is not only a requirement from regulatory authorities but also a "shield" protecting the rights of depositors and investors.
Based on the Law on Credit Institutions 2024 and Circular 39/2011/TT-NHNNIn the finance and banking sector, auditing activities are required to be conducted on a rigorous and regular basis. The complexity of derivative, credit, and fundraising operations demands a highly qualified team of auditors. This article will provide a comprehensive overview of the role, process, and latest legal regulations that all businesses need to be aware of.
The nature and importance of auditing in the finance and banking sector.
The finance and banking sector plays a central role in the allocation and circulation of capital in the economy; therefore, any discrepancies in financial information can have significant ripple effects. Auditing in this sector aims not only to meet legal requirements but also to ensure transparency, system security, and market confidence. Given its high risk and stringent regulations, auditing in the finance and banking sector demands in-depth expertise, adherence to accounting standards, and compliance with State Bank regulations.
Advanced concepts of auditing in the financial field
Auditing in the finance and banking sector is the process of collecting and evaluating evidence regarding the financial information of a banking entity. The main objective is to determine compliance with accounting standards (VAS/IFRS) and regulations of the State Bank of Vietnam. This is a specialized field that plays a crucial role in maintaining the integrity of the global capital market.
The role of "gatekeeper" for the economy.
In the financial system, banks play a crucial role as intermediaries in payments and capital circulation. A small error in the financial reporting of a large bank can cause a domino effect, leading to an economic crisis. Therefore, auditing in the financial and banking sector helps assess the health of the system and ensures that capital adequacy ratios (CAR) always meet Basel II and III standards.
Strategic objectives of auditing activities
Auditing activities focus on three objectives: the reliability of financial reporting, process efficiency, and legal compliance. In particular, auditing in the finance and banking sector aims to protect shareholder assets by detecting irregularities in credit granting and investment. Verifying integrity helps maintain confidence in the entire financial market today.
Legal framework governing auditing in the finance and banking sector.
Auditing activities in the finance and banking sector in Vietnam are governed by a strict legal system to ensure transparency and system security. Regulations from laws and circulars of the State Bank of Vietnam have standardized the requirements for independent auditing. internal audit and the professional responsibilities of auditors. Compliance with this legal framework is not only a mandatory obligation for credit institutions but also a basis for controlling risks, improving the quality of financial reporting, and strengthening market confidence.
The most important legal documents
The implementation of financial and banking audits in Vietnam is directly regulated by a strict system of legal documents. This helps standardize processes and ensure consistency throughout the entire system of credit institutions.
| Text type | Reference Number/Citation | Content related to auditing |
| Law | Law on Credit Institutions 2024 | Regulations on independent auditing and internal control |
| Law | Independent Auditing Law 2011 | Standards for financial auditors |
| Circular | Circular 39/2011/TT-NHNN | Regulations on internal auditing of credit institutions |
| Circular | Circular 13/2018/TT-NHNN | Regulations concerning internal control systems and risk management. |
Regulations on mandatory independent audits
According to regulations, all commercial banks in Vietnam must have their annual financial statements audited by an approved independent entity. Audits of both consolidated and individual financial statements must be completed within 90 days of the end of the fiscal year. This regulation aims to ensure maximum transparency in the information disclosed.
Auditor's legal liability
Auditors conducting audits in the finance and banking sector are legally responsible for the results they produce. If serious irregularities are overlooked, causing damage to the system, the auditor may have their professional license revoked. The auditing firm also faces the risk of being banned from auditing credit institutions for an extended period.
Types of audits in the finance and banking sector
In the finance and banking sector, auditing plays a crucial role in ensuring transparency, system security, and legal compliance. Due to the complex nature of its operations, high risks, and strict oversight, this industry employs various types of audits, ranging from financial statement audits and internal audits to compliance audits and information technology audits. Each type serves a specific management and risk control objective.
Financial statement audit (External audit)
This is the most common type, focusing on assessing the accuracy of balance sheets and income statements. Auditing in the finance and banking sector in this aspect requires thorough examination of credit risk provisions. Auditors also need to determine the fair value of complex financial instruments at market prices.
Internal audit and the role of control
Internal audit is a department under the Supervisory Board, operating independently from the direct management structure. Internal auditing in the finance and banking sector helps review daily transactions and ensure that credit approval processes are not violated. This activity contributes to preventing internal fraud and optimizing organizational operational efficiency.
Specific regulatory compliance audit
Banks are subject to stringent regulations regarding safety ratios, credit limits, and anti-money laundering (AML) measures. Therefore, compliance audits in the financial and banking sector are mandatory to avoid massive fines. Good compliance helps protect an organization's reputation in the international market and maintain its operating license.
Information Technology Audit (IT Audit)
In the era of digital banking, financial data is largely stored on complex core-banking systems. Modern financial and banking audits require IT audits to assess the security and integrity of this data. This process ensures that customers' electronic transactions remain safe from increasingly sophisticated cyberattacks.
Analyzing key risks in auditing the finance and banking sector.
In the finance and banking industry, auditing is implemented in diverse ways to comprehensively control risks. Financial statement audits verify the accuracy of data and mitigate risks. Internal audits help monitor processes, prevent fraud, and improve operational efficiency. Compliance audits ensure compliance with regulations on capital safety, credit, and anti-money laundering. In the era of digital banking, IT auditing plays a crucial role in protecting data and transaction systems.
Credit risk and bad debt
Credit risk is a top concern. When conducting audits of the finance and banking sector, experts must carefully assess loan classification skills according to Circular 11/2021/TT-NHNN. Insufficient provisioning can create a false financial statement, jeopardizing the bank's liquidity and capital safety in the future.
Liquidity risk and capital management
Banks often use short-term capital to provide long-term loans, creating a potential liquidity gap. Financial and banking auditors need to analyze stress test scenarios. This ensures that banks have sufficient funds to meet customer obligations even in the most volatile market conditions.
Market risk and exchange rate volatility
For banks with strong foreign exchange trading operations, market risk is extremely high. Financial and banking audits focus on examining valuation models and hedging methods. Auditors need to verify that derivative contracts are recorded at their true value in response to market fluctuations.
| Risk group | Indicators requiring audit | Comparison regulations |
| Credit | Non-performing loan (NPL) ratio, Risk provision. | Circular 11/2021/TT-NHNN |
| Liquidity | LDR ratio, Liquid assets | Circular 22/2019/TT-NHNN |
| Work | System errors, internal fraud | Circular 13/2018/TT-NHNN |
Professional auditing procedures for the finance and banking sector.
The auditing process in the finance and banking sector consists of four main steps. Auditors develop a plan based on risk assessment and determine materiality levels appropriate to the bank's specific characteristics. Next is control testing to examine the effectiveness of processes, particularly in credit operations. The substantive testing phase focuses on data analysis, balance reconciliation, and interest rate verification. Finally, the results are compiled and presented in an audit report with a formal opinion in accordance with professional standards.
Step 1: Develop an audit plan based on risk assessment.
In the initial stage, auditors identify the key risk areas of a credit institution. For financial and banking audits, the plan must include understanding the organizational structure and control environment. Determining materiality is crucial because the volume of transactions at banks is often very large and complex.
Step 2: Conduct control tests
Auditors examine whether a bank's control processes are working effectively in practice. For example, in financial and banking audits, they will randomly inspect credit files. The goal is to verify the completeness of approval signatures and that collateral is valued correctly according to applicable regulations.
Step 3: Conduct basic tests and analyze the data.
With modern software, auditors run query commands on the core banking database. Auditing in the finance and banking sector at this stage includes reconciling deposit balances and confirming them with clients. Checks on the calculation of deposit and lending interest rates are also performed to ensure there are no discrepancies.
Step 4: Summarize the results and publish the report.
After gathering sufficient evidence, the auditor discusses the findings with the Board of Directors. The final audit report for the finance and banking sector will then issue a formal opinion. This opinion may be unqualified, qualified, adverse, or a disclaimer, depending on the level of scrutiny.
Application of technology and data in auditing in the finance and banking sector.
The rapid development of digital technology is fundamentally changing the way audits are conducted in the finance and banking industry. Faced with massive amounts of data and increasingly stringent risk control requirements, auditors can no longer rely solely on traditional methods but must apply Big Data, Blockchain, and Artificial Intelligence. These technologies help improve accuracy, detect fraud early, and enhance transparency throughout the entire system.
Big Data Analytics
With millions of transactions every day, traditional sampling methods no longer guarantee absolute reliability. Financial and banking audits now use the 100% algorithm to scan transaction data. This technology helps to immediately detect unusual transactions or signs of money laundering that older methods easily miss.
Blockchain technology in transaction authentication.
Many banks are adopting Blockchain technology to record interbank transactions and trade finance. This is fundamentally changing the way modern financial and banking audits are conducted. Instead of verifying paper documents, auditors are now examining nodes and smart contracts on the blockchain.
Artificial intelligence (AI) detects fraud.
AI has the ability to learn from past fraudulent behavior to predict future risks more accurately. In financial and banking auditing, AI tools effectively support the classification of high-risk customers. The system also provides early warning of loans that are likely to be classified as bad based on macroeconomic data.
Knowledge and skills required of a financial auditor
Financial and banking auditors are a core force in ensuring transparency and safety for the financial system. Due to the high-risk nature of the industry and the strict compliance requirements, auditors need not only solid professional knowledge but also strong analytical skills, critical thinking, effective communication, and exemplary professional ethics to meet increasingly demanding job requirements.
Solid professional foundation
To succeed in auditing the finance and banking sector, personnel need a degree in Accounting or Finance. However, international certifications such as CPA, ACCA, or CFA are considered essential for working at the Big4 firms. A deep understanding of the banking accounting system is a mandatory requirement for this position.
Analytical and critical thinking skills
The financial field is always full of complex numbers and transaction structures. A good financial and banking auditor must be able to see through the economic nature of transactions. Professional skepticism helps them uncover the truth behind sophisticatedly presented financial reports.
Communication skills and professional ethics
Auditors frequently work with senior management at commercial banks. Persuasion skills and the ability to present issues objectively are extremely important. Above all, professional ethics help auditors in the finance and banking sector withstand pressure and protect their independence.
Career opportunities in the financial and banking auditing industry.
The field of financial and banking auditing offers many attractive career opportunities. You can work at large independent auditing firms with a professional environment, competitive salary, and clear career advancement paths. In addition, commercial banks always prioritize hiring auditors for their internal control departments, helping to ensure the safety and efficiency of operations. Besides the private sector, government agencies also need auditing experts to supervise systems and manage macroeconomic finances.
Working at independent auditing firms
Large firms like PwC, Deloitte, EY, and KPMG always have specialized financial services (FS) departments. This is a rigorous training environment but offers attractive salaries and career advancement opportunities. Experience gained from auditing in the finance and banking sector here provides a solid foundation for a future career.
Become an internal specialist at banks.
Commercial banks are always looking for experienced auditors to work in their internal control departments. Working "on the other side of the fence" after conducting audits in the finance and banking sector gives you a systemic perspective. This position directly contributes to the safety and efficiency of the organization.
Opportunities in government agencies
The State Bank Inspectorate or the State Audit Office needs personnel with in-depth knowledge of finance. Here, you will perform the task of national supervision and ensuring the soundness of the economy. This is an opportunity to participate in the implementation of important monetary policy and macroeconomic management.
Conclude
Auditing in the finance and banking sector plays a crucial role as a filter, helping to eliminate misinformation and strengthen trust. In a volatile world, conducting audits is not only about compliance but also a strategy to enhance competitiveness. Deep insights into finance and banking auditing help credit institutions identify potential problems early, thereby maintaining long-term sustainable growth.
If your organization is seeking expert consulting services in accounting and tax matters, MAN – Master Accountant Network is ready to assist you. With a team of experienced professionals in the financial and banking auditing industry, we are committed to providing optimal solutions. We guarantee the highest level of compliance and protect your business's best interests. Contact MAN today for professional advice on your financial transparency journey.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
FAQ – Frequently Asked Questions about Auditing in the Finance and Banking Industry
Why do banks need to conduct mid-year audits?
Banks are listed organizations with high systemic risk, therefore mid-year audits of the financial and banking sector are mandatory. This helps shareholders stay updated on the financial situation and supports regulatory authorities in monitoring. Early detection of signs of capital insecurity helps prevent potential crises.
How are bank audit fees calculated?
Audit fees in the finance and banking sector depend on the size of assets and the number of operating branches. The complexity of derivative financial instruments also directly affects service fees. Typically, these fees are significantly higher than those for auditing typical manufacturing or trading businesses.
What is the difference between bank audits and typical business audits?
The biggest difference lies in the subject matter and key risks. Financial and banking audits focus deeply on credit risk and liquidity risk. Meanwhile, corporate audits typically place more emphasis on inventory, fixed assets, and cost of goods sold throughout the production cycle.
