Auditing key projects and state capital is a supreme financial oversight activity carried out by the State Audit Office (SAO) or independent audit units to protect national resources. According to the 2015 Law on State Audit (amended and supplemented in 2019), nationally important projects and Group A projects must be audited before the final investment capital settlement is approved.
With the disbursement of public investment in 2025 and 2026 being accelerated to complete the medium-term plan, with the total capital expected to reach a record high, controlling losses is a top priority. In fact, through audits of key projects and state capital, authorities have recommended financial adjustments totaling trillions of dong, while also uncovering loopholes in bidding and contract management. This is a solid barrier to prevent waste and corruption in the basic construction sector.
Legal framework governing the auditing of key projects and state-funded projects.
Auditing key projects and state-funded projects is not simply about checking data, but rather a rigorous legal process. Vietnam's legal framework has created a solid foundation for transparent implementation of this work.
The most important legal basis includes the Law on State Audit, the Law on Public Investment, and Decree No. 99/2021/ND-CP Government regulations on the management, payment, and settlement of projects using public investment capital. These regulations require all projects using budget funds to undergo auditing to determine the accuracy of investment costs.
To gain a thorough understanding of key project audits and state capitalTo do this, we need to refer to the following texts:
- Law on State Audit No. 81/2015/QH13Regulations defining the functions and duties of the State Audit Office.
- Circular 09/2016/TT-BTCGuidelines for the final settlement of investment capital for completed projects funded by the state budget.
- Decree 10/2021/ND-CPRegarding the management of construction investment costs.
Incorrect application of unit prices and norms in cost estimates is often the cause of financial discrepancies when auditing key projects and state-funded projects. Therefore, project accountants need to continuously update material and labor price announcements from the local Department of Construction.
The subject and scope of auditing key projects and state-funded projects.
All projects involving public funds are subject to the regulation of key projects and state-funded projects. Depending on the scale and nature, the audited entities will be specifically classified to determine the appropriate approach.
List of projects subject to mandatory audit
Below is a table summarizing the project groups that are frequently included in the annual audit plan for key state-funded projects:
| Project team | Sources of funding | Main features |
| National key project | Central government budget | The investment plan was approved by the National Assembly (capital > 10,000 billion VND). |
| Group A Project | ODA funds, concessional loans | Large-scale infrastructure, transportation, and irrigation projects. |
| Projects of the Corporation/Group | State-owned enterprise capital | Investing in improving production capacity and purchasing fixed assets. |
| PPP project | Combining state and private capital | Auditing the state's capital contribution and the reasonableness of the contract. |
Detailed inspection scope
Auditing of key projects and state-funded projects covers the entire project lifecycle, from the investment preparation phase (feasibility study, basic design) to the implementation phase (bidding, construction) and finally the investment completion phase (acceptance, handover).
The focus of this work is usually on verifying the legality of bidding documents. The most common violations are splitting contracts into smaller packages to award contracts through direct negotiation or inserting "technical" criteria to restrict the participation of capable contractors, causing losses to state funds.
The core purpose of auditing key projects and state-funded projects.
Why should key projects and state-funded capital be audited regularly? The goal is not just to cut costs, but also to ensure the sustainability of the economy.
Preventing misconduct and corruption.
Auditing key projects and state-funded projects helps to detect early instances of bid rigging, inflated quantities, or incorrect unit prices. When auditors get involved, all expenditure documents are examined from a legal and market perspective, thereby preventing embezzlement in construction projects.
Improving the efficiency of public resource utilization.
Efficiency is the ultimate measure of public investment. Auditing key projects and state capital assesses whether the project has achieved its initial objectives. Will a trillion-dong road project truly alleviate traffic congestion, or is it merely a stalled project wasting the nation's limited resources?
Proposals for revising and improving policies.
Following each audit of key projects and state-funded capital, the State Audit Office of Vietnam (SAO) typically submits thematic reports to the Government and the National Assembly. These recommendations help amend overlapping circulars and decrees, making the public investment environment more transparent and open for implementing units.
The role of the State Audit Office in the public finance system.
The State Audit Office acts as the "gatekeeper" for the budget. Its auditing activities of key projects and state capital projects carry the power of state authority, and audit conclusions are binding on the audited entities.
Through auditing key projects and state capital, the State Audit Office not only addresses financial irregularities but also assesses the responsibility of individuals and organizations involved. This creates a significant deterrent, forcing investors to enhance their sense of responsibility in managing public funds.
Furthermore, the results of audits of key projects and state capital are an important basis for the National Assembly to approve the annual state budget settlement. It provides an accurate picture of the actual use of investment capital nationwide.
Standard procedures for auditing key projects and state-funded projects.
An audit of a key project and state-funded project typically lasts from 30 to 60 days, depending on its scale. The process is divided into scientific steps to ensure no errors are overlooked.
Step 1: Prepare for the audit
During this phase, the audit team for key state-funded projects will gather information about the project and assess the investor's internal control system. Identifying key risk areas helps to focus resources on stages prone to errors, such as advance payments or design changes.
Step 2: Conduct an on-site audit.
Auditors will directly compare the written records with the actual construction site. For audits of key projects and state-funded projects, on-site measurements are mandatory to determine whether the construction volume matches the reported figures.
Step 3: Prepare and submit the audit report.
Audit reports on key projects and state-funded projects must clearly state the achievements, shortcomings, limitations, and recommendations for handling them. The audited entity has the right to provide explanations before the official report is issued, ensuring objectivity and fairness.
Common risks and errors in investment capital management.
The practical experience of auditing key projects and state-funded projects has revealed many valuable lessons for project managers. Identifying risks is the best way to prepare for audits.
Errors in cost estimation and design
Many key projects and state-funded projects, during audits, have been found to have overcalculated quantities right from the design stage. The application of outdated technologies but with inflated pricing is also a common tactic to artificially inflate total investment costs.
Violations in bidding and contracting procedures.
Construction contracts are often complex, with numerous clauses regarding price adjustments. When auditing key projects and state-funded projects, experts will carefully examine whether price adjustments comply with the construction price index published by the state agency.
Delays in final settlement of completed investment capital
This is a chronic problem for many projects. Auditing key projects and state-funded projects is a prerequisite for settling project accounts at the Treasury. This delay not only causes capital to be tied up but also generates additional interest costs and project management fees.
Solutions to improve the quality of audits for key projects and state-funded projects.
To ensure the highest efficiency in auditing key projects and state-funded capital, a synchronized coordination between technology and human resources is necessary.
- Digital technology applicationsUse BIM software and big data to compare market prices and construction quantities.
- Enhancing auditor capacityThe team conducting audits of key projects and state-funded projects needs to have expertise in both construction engineering and financial accounting.
- Strengthen post-inspectionMonitoring the implementation of post-audit recommendations to ensure that state funds are fully recovered.
Making information about audits of key projects and state capital transparent through mass media also helps to strengthen public oversight.
Conclude
Auditing key projects and state capital plays an irreplaceable role in maintaining national financial discipline. Through this activity, irregularities are prevented, investment efficiency is optimized, and public confidence in budget management is strongly strengthened. For businesses and investors, complying with audit procedures is not only a legal obligation but also an opportunity to review and standardize internal management processes.
If you are struggling with preparing settlement documents or need more in-depth advice on regulations for auditing key projects and state-funded projects, please contact MAN – Master Accountant Network. We are proud to be a leading provider of professional auditing and tax accounting services with a team of experts who have a thorough understanding of the Vietnamese legal system. MAN is committed to supporting businesses in protecting investment values and ensuring maximum transparency before government inspections.
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.
Frequently Asked Questions about Auditing Key Projects and State-Funded Capital Projects
Which projects are required to hire independent auditors before the State Audit Office intervenes?
According to regulations, Group A projects using state capital are usually required to undergo independent audits of their final accounts before being submitted to the competent authority for approval. However, these results are still subject to re-examination by the State Audit Office if they are included in the annual audit plan for key projects and state capital.
What is the timeframe for conducting a project audit after completion?
Within nine months of the project's completion and handover for use, the investor must prepare a final settlement report and carry out the auditing procedures for key projects and state-funded projects in accordance with current regulations.
How are project audit costs calculated?
Audit costs are included in the total investment of the project, following the percentage rates stipulated by the Ministry of Finance in Circular 09/2016/TT-BTC and its amendments.
What is the biggest difference between a major project audit and a financial inspection?
Auditing of key projects and state-funded capital focuses on verifying the accuracy and reasonableness of financial figures and the efficiency of capital utilization before final settlement. Meanwhile, financial inspections are typically aimed at addressing violations when there are specific signs of wrongdoing or at the sudden request of higher-level management agencies.
