Financial auditing is a core activity that helps to ensure transparency in reporting figures, building strong trust with strategic partners and regulatory bodies. In the economic context of 2026-2027, when sustainable governance (ESG) and financial transparency standards are pushed to the highest levels, understanding the nature of this activity becomes vital for all business leaders.
In Vietnam, regulations on financial auditing are constantly changing to be compatible with the times. International Financial Reporting Standards (IFRS)This poses a significant challenge for businesses in preparing data and coordinating with auditing firms to ensure that reports are not only accurate in terms of numbers but also compliant with current legal requirements.
Quick information for managers
- Financial auditing is The process of gathering and evaluating evidence regarding an entity's financial statements to determine whether they fairly and accurately reflect its financial position.
- Purpose: Verifying your financial health is essential for obtaining bank loans, raising investment capital, paying taxes, and complying with the law.
- Applicable subjects: Foreign-invested enterprises (FDI), public companies, credit institutions, and other entities required to undergo independent auditing under the Law on Independent Auditing.
- The necessary time: Annually (at the end of the fiscal year) or as specifically required by the fundraising project.
How is financial auditing defined in legal terms?
Financial auditing is the most common type of audit, focusing on verifying the accuracy and reasonableness of the information presented. financial reports. According to Law on Independent Auditing No. 67/2011/QH12 And according to the updated guidelines up to 2027, this is the activity of practicing auditors and audit firms to provide an opinion on the conformity of financial statements in material respects.
The essence of this activity is not to search for extreme accounting errors. Instead, it is a process of providing reasonable assurance that the financial statements are free from material misstatements due to fraud or error.
When banks or financial institutions review loan applications, the auditor's opinion is the most important factor in assessing risk. An unaudited financial statement is often heavily discounted in terms of credibility, leading to higher interest rates or credit denial.
Which entities are required to undergo annual financial audits?
Based on Decree No. 17/2012/ND-CP According to the latest regulations, not all businesses are required to undergo audits. However, the following groups of entities cannot be exempt from this regulation:
- Foreign direct investment (FDI) enterprises: All FDI businesses operating in Vietnam are required to have their annual financial statements audited.
- Listed organizations and public companies: To protect shareholder interests, these entities must periodically disclose their audited financial reports.
- State-owned enterprises: This includes state-owned corporations, conglomerates, and enterprises in which the State holds more than 50% of the charter capital.
- Credit and insurance institutions: Due to the inherent nature of systemic financial risk, these entities are subject to very close auditing oversight.
Furthermore, businesses participating in bidding for large projects or projects using state budget funds are often required to submit audited financial reports as part of their company profile. Proactively conducting financial audits helps businesses professionalize their image in the eyes of international business partners.
The role of financial auditing in loan and fundraising strategies.
For management, financial auditing is the "ticket" to enter the capital market. When a business wants to access large financial resources, transparency is a prerequisite.
During the loan application review process, banks need to be certain that your revenue is genuine, your liabilities are sufficient, and your assets are valued as described. Auditors will conduct procedures such as bank balance reconciliation, debt confirmation letters, and physical inventory checks. This objective evidence helps banks alleviate concerns about businesses manipulating figures to obtain loans.
For equity financing, venture capital funds or strategic investors typically require audit of financial statements At least the last 3 years. If the financial statements have significant adjustments after auditing, investors may underestimate the company's internal control and governance systems, thereby forcing down the valuation or withdrawing from the deal.
The core elements that constitute a quality financial audit.
A audit It's not just about checking numbers, but a combination of many professional and ethical factors.
- First, there is independence: Auditors must not have any economic or family ties to the audited entity. Objectivity is the greatest value an auditing firm can bring. Without independence, the audit opinion becomes worthless before the law and stakeholders.
- Secondly, there is audit evidence: All auditor's opinions must be based on sufficient and appropriate evidence. This evidence may include accounting documents, meeting minutes, or feedback from third parties such as banks or suppliers.
- Thirdly, the applicable standards: In Vietnam, audits must comply with the Vietnamese Auditing Standards (VSA). Currently, many large businesses have begun to apply both standards simultaneously. International Auditing Standards (ISA) to serve the purpose of listing abroad or reporting to the parent company.
Update current legal regulations on financial auditing.
The legal system for auditing and accounting in Vietnam is undergoing a significant transformation. Below is a summary of the most important legal documents that chief accountants and financial directors need to be familiar with:
| Legal documents | Main content | Note for businesses |
| Independent Auditing Law 2011 | The highest legal framework for auditing activities. | Regulations regarding the obligations and rights of the audited entity. |
| Decree 17/2012/ND-CP | Detailed guidelines for the implementation of the Law on Independent Auditing. | The regulations clearly specify the list of entities that are required to undergo annual audits. |
| Circular 200/2014/TT-BTC | Business accounting system. | It serves as a basis for auditors to compare and provide an opinion on accuracy. |
| The roadmap for applying IFRS in Vietnam. | Decision 345/QD-BTC of the Ministry of Finance. | Large businesses need to prepare for the transition from VAS to IFRS for international auditing. |
Failure to comply with mandatory audit regulations can result in significant administrative penalties. Decree 41/2018/ND-CP Regarding administrative penalties for violations in the field of accounting, independent auditThe fines can amount to tens of millions of dong and, more importantly, negatively impact the company's reputation.
Standard financial audit procedures from an expert's perspective.
Based on our experience at MAN, a audit process Professionalism typically goes through four key stages that businesses need to coordinate:
Phase 1: Preparation and Planning
Auditors will conduct a preliminary survey of the business to assess potential risks. They need to understand the business model, the legal environment, and the internal control system. The business needs to provide legal documents, a list of bank accounts, and major business contracts for the year.
Phase 2: Evaluation of the internal control system
If a business has a robust management system, auditors can reduce the number of detailed inspection procedures. Conversely, if the system is lax, they will intensify the examination of original documents to ensure that no fraud occurs.
Phase 3: Perform detailed inspection procedures
This is when auditors scrutinize the numbers closely. Activities include:
- Compare cash balances and bank deposit balances.
- Send confirmation letters to customers and suppliers with large outstanding debts.
- Witnessing the inventory of goods and fixed assets at the warehouse.
- Check the payroll costs, taxes, and other payments due to the government.
Phase 4: Report Compilation and Publication
After gathering sufficient evidence, the audit team will discuss any necessary adjusting entries with the Board of Directors. The final result is the Audit Report, which includes an official opinion on the entity's financial health.
Case Study: Managing Financial Audit Risks at a Vietnamese Construction Company
To illustrate this further, let's consider the case of Company X, a construction contractor in Ho Chi Minh City in 2025.
Situation: Company X recognizes revenue based on project progress. However, at the end of the fiscal year, a key project was in dispute with the investor regarding the completed work volume. The company's accountants still recorded the full revenue according to the initial estimate.
Auditor's analysis: During a financial audit, experts discovered discrepancies between actual revenue and figures recorded in the books. Without correction, revenue would be inflated, leading to fictitious profits. This is extremely risky if the company is using these reports to obtain bank loans.
Solution: The auditors requested Company X to set aside a provision for uncertain revenue and adjust its profit accordingly. The management initially objected, fearing it would affect their credit limit. However, after being explained the legal risks and criminal liability for falsifying financial statements, the company accepted the adjustments.
Result: The final audit report was issued with an "Unqualified" opinion. The bank subsequently appreciated the company's integrity and continued to maintain the loan limit, trusting in the transparency of the management team.
Practical insights from financial auditing experts in the Vietnamese market.
Over more than 30 years in the profession, I've noticed a common mistake: Many Vietnamese business owners view auditing as a "competitor" or a cost burden. In reality, financial auditing is an invaluable management tool.
- Risks from a weak internal control system: Many businesses are unaware that employees are embezzling money or goods over extended periods. Auditors, with their objective perspective, are often the first to point out these "gaps." Early detection saves businesses significantly more than the cost of auditing.
- Tax and compliance issues: Accounting records used for tax purposes often differ from those used for administrative purposes. Without professional auditing advice, businesses are highly susceptible to tax arrears and late payment penalties due to misapplication of regulations. Financial auditing helps standardize data from the outset, reducing pressure during tax audits.
- Experience in handling errors: When auditors discover errors, don't try to conceal them. Work with them to find the cause and how to correct them. Transparency from the draft report discussion stage will help businesses receive insightful advice to improve accounting processes for the following year.
Conclude
Financial auditing is not simply a report submitted to regulatory authorities, but rather a company's "identity card" of credibility in the financial market. Conducting audits rigorously helps managers understand the true picture of cash flow, assets, and liabilities, thereby enabling them to make the most accurate strategic decisions.
In the digital age, as financial transactions become more complex, support from experienced auditing professionals is key to protecting your business's achievements. If you are seeking in-depth support in this area, MAN – Master Accountant Network is ready to accompany you. With a team of experts deeply knowledgeable about the Vietnamese market, MAN provides auditing services High quality helps businesses not only comply with the law but also enhance their standing in the eyes of global partners.
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 Financial Auditing
What factors typically determine the cost of a financial audit?
Audit fees are typically based on the size of the assets, revenue, complexity of business transactions, and the number of locations requiring physical inventory. There is no fixed price; each audit is a separate quote based on the auditor's hourly rate.
If a business is not required to have an audit but still wants to, is that permissible?
Absolutely, and highly recommended. Voluntary audits help businesses professionalize their systems, increase their competitiveness when participating in global supply chains, and more easily attract capital from large investment funds.
How long is an audit report valid?
An audit report confirms the figures for a specific financial year. However, banks typically require an audit report for the most recent year, no more than six months prior to the end of the financial year.
Are auditors responsible for detecting all fraudulent activity?
The primary responsibility of an auditor is to express an opinion on the financial statements. While the audit process is designed to detect material misstatements, auditors are not obligated to detect all minor frauds that do not affect the overall financial statements.
What preparations should businesses make before an audit team arrives?
You need to finalize your accounting records, print detailed ledgers, gather original supporting documents, prepare inventory lists and debt confirmation letters ready for submission. Thorough preparation will shorten the audit team's working time and minimize disruption to daily operations.
