KTC Legal Note: This article is based on the legislative dossier for the draft Law Amending and Supplementing a Number of Articles of the Law on Accounting and the Law on Independent Audit. The dossier includes Government Submission No. 804/TTr-CP, the Government’s Explanatory Report No. 806/BC-CP, and Appraisal Report No. 1421/BC-UBKTTC16 of the National Assembly’s Economic and Financial Committee, as available at the time the draft was submitted to the National Assembly for consideration. The following discussion reflects proposals under the draft and does not describe provisions currently in force.
As part of the administrative reform programme, the Government has submitted the draft Law to the National Assembly. For accounting services, the focus is on reducing barriers to market entry while maintaining professional standards appropriate to the scope of work. For independent audit, the proposals focus on eliminating duplicate documentation and shortening administrative processing times.
KTC highlights the key proposed changes and their implications for businesses.
PART I. DRAFT AMENDMENTS TO THE LAW ON ACCOUNTING
1. Simplifying business conditions for accounting services
- Removing prior licensing procedures: The draft proposes abolishing the procedures for issuing and reissuing Certificates of Eligibility to Provide Accounting Services and Certificates of Registration for Accounting Practice, together with the corresponding appraisal fees. This is intended to support the policy direction of removing accounting services from the list of conditional business lines under the Law on Investment.
- Expanding eligible service providers: The draft proposes allowing individuals to enter into accounting service contracts directly with clients, clarifying the participation of household businesses, and expanding the types of eligible enterprises to include single-member limited liability companies and joint-stock companies.
2. Differentiating professional standards by scope of service
The draft proposes amending Article 57 to align professional standards with the level of responsibility involved:
- Individuals providing general accounting services: Those who perform bookkeeping and accounting entries but do not sign financial statements must meet the general standards applicable to accounting personnel under Clause 1, Article 51 of the Law on Accounting.
- Individuals providing accounting services who sign clients’ financial statements: In addition to the general standards, these individuals must meet the prescribed professional competency requirements and hold a Certificate of Professional Competence for Accounting Services, in accordance with Ministry of Finance regulations.
- Individuals providing chief accountant services: These individuals must meet the standards applicable to those signing financial statements, hold a chief accountant training certificate, and have at least two years of practical accounting experience.
3. Legal responsibilities and compensation for damages
- Businesses engaging accounting services: The legal representative of the accounting entity remains legally responsible for its accounting activities, even when external services are engaged.
- Service providers: Individuals, household businesses and organisations are responsible to their clients in accordance with the service contract and relevant laws.
- Compensation for damages: The draft proposes removing the mandatory requirement to purchase professional indemnity insurance. Compensation would be determined based on the service contract and civil law.
4. Strengthening monitoring and enforcement
- Management database: Service providers would be required to declare and update their information. The data is expected to be published periodically on the Ministry of Finance’s official information portal for management and reference purposes.
- Continuing professional development: Annual updates to professional knowledge, technical expertise and professional ethics would remain required under applicable regulations.
- Suspension of activities: The draft proposes amending Article 69 to provide for time-limited suspension in cases involving serious professional or ethical violations; falsification, or collusion to falsify, financial statements or accounting documents; and the renting, borrowing, leasing or lending of a Certificate of Professional Competence for Accounting Services. Individuals subject to suspension would not be permitted to sign financial statements during the suspension period.
PART II. DRAFT AMENDMENTS TO THE LAW ON INDEPENDENT AUDIT
The draft retains business conditions for independent audit services while focusing on administrative simplification.
1. Eliminating duplicate documentation
Under the proposed amendments to Articles 21 and 22, applications for a Certificate of Eligibility to Provide Independent Audit Services would be streamlined:
- Copies of the Enterprise Registration Certificate or Investment Certificate, and auditors’ Certificates of Registration for Audit Practice, would no longer need to be submitted where the licensing authority can retrieve the relevant information from national databases.
- Documents demonstrating professional and financial capacity would still be required, including full-time employment contracts for practising auditors and documents evidencing charter capital or capital contributions, as prescribed by the regulations.
2. Shortening administrative processing times
The draft proposes reducing the processing periods as follows:
- Initial issuance: From 30 calendar days to 10 working days.
- Reissuance or amendment: From 20 days to 5 working days.
3. Reviewing approval procedures for audit firms serving public-interest entities
The draft legislative dossier outlines a policy direction to develop a legal instrument replacing Decree No. 84/2016/ND-CP, with the aim of addressing overlapping approval procedures involving the Ministry of Finance and the State Securities Commission.
PART III. EXPECTED EFFECTIVE DATE AND TRANSITIONAL ISSUES
- Proposed effective date: The draft proposes that the Law take effect on 1 March 2027.
- Transitional issues to monitor:
- Holders of accounting certificates: The draft provides for holders of certain accounting certificates to be eligible to sit the Certified Public Accountant (CPA) examination. Eligibility to sit the examination should be distinguished from the requirements for professional practice and the right to provide services under the new framework.
- Existing accounting service businesses: Businesses should monitor transitional requirements concerning operating conditions, the validity of previously issued certificates and the time allowed to comply with the new requirements.
- Ongoing service contracts: Businesses should monitor the transitional arrangements for contracts entered into before the Law takes effect to ensure continuity in their financial and accounting operations.
KTC RECOMMENDATIONS
In light of the draft’s proposed shift towards risk-based, post-compliance supervision, KTC recommends that businesses:
- Assess service providers’ competence carefully. Review the qualifications and practical experience of personnel who sign financial statements or provide chief accountant services under the proposed Article 57. Provider selection should not be based on cost alone.
- Strengthen accounting service contracts. Clearly define the scope of work, confidentiality obligations, responsibilities for explaining financial data and mechanisms for compensating damages, bearing in mind that the business’s legal representative remains legally responsible for its accounting activities.
- Proactively control financial data quality. Maintain transparent, consistent and readily reconcilable accounting records and supporting documents. Strong internal controls can help businesses mitigate risks as the authorities expand data-driven, risk-based post-compliance supervision.
KTC will continue to monitor the National Assembly’s consideration of the draft Law and provide timely updates to businesses on relevant developments.
