Enhancing Legal Accountability in the 2025 Audit Season

The 2025 audit season is not merely a process of “checking financial records” but a critical measure of legal accountability for CEOs, CFOs, and senior corporate leaders. Any misstatement in financial reporting may trigger administrative penalties, tax arrears, or even criminal liability. What should businesses do to prepare and navigate the audit season safely and transparently? The following article provides a comprehensive overview of new regulatory trends, common legal risks, and practical solutions for effective compliance.

Tightened Regulatory Environment and Emerging Trends

The year 2025 marks a significant shift in Vietnam’s accounting and auditing landscape. Regulatory bodies have intensified oversight to ensure transparency, accuracy, and integrity in financial reporting—particularly for listed companies and foreign-invested enterprises.

A key highlight is the increasing focus on personal liability. Legal representatives, CEOs, CFOs, and even board members may be held personally responsible—administratively, civilly, or criminally—if financial reports are misstated, information is concealed, or reporting procedures are non-compliant.

This trend aligns with global practices (SOX Act – U.S., UK Corporate Governance Code), where corporate leaders must sign certifications and assume direct responsibility before regulators, investors, and shareholders.

Legal Responsibilities of Corporate Leaders in Accounting

Under the Accounting Law 2015 (amended 2020), the Enterprise Law 2020, and relevant decrees (132/2020/NĐ-CP, 155/2020/NĐ-CP), the responsibilities of legal representatives, CEOs, CFOs, and corporate leaders include:

• Administrative liability: The company may be fined for misstatements or improper disclosures; signatories (CEO/CFO/legal representative) may be personally fined under Decree 41/2018/NĐ-CP.

• Civil liability: Leaders may be sued for damages if inaccurate financial reporting causes losses to investors, shareholders, or partners.

• Criminal liability: Fraud, falsification of reports, or concealment of material information may lead to prosecution under Article 221 of the Penal Code 2015 (amended 2017), with potential imprisonment of 5–7 years.

Recent enforcement cases show that CEOs and CFOs—those who sign the financial statements—are often the primary subjects of investigation, not merely the chief accountant.

Common Legal Risks Faced During Audit Season

From practical auditing and advisory experience, businesses often encounter five major legal risks:

• Incorrect revenue and expense recognition: Violations of accounting standards distort profit and affect tax obligations.

• Unsubstantiated or non-deductible expenses: Insufficient documentation may lead to disallowance of tax-deductible expenses.

• Related-party transactions and transfer pricing: Missing or inadequate transfer pricing documentation under Decree 132/2020/NĐ-CP raises suspicion of tax avoidance.

• Lack of transparency in financial statement disclosures: Omission of contingent liabilities, guarantees, or off-balance-sheet commitments.

• Internal control weaknesses: Poor segregation of duties, enabling fraud, embezzlement, or data manipulation.

These risks may trigger tax arrears, administrative penalties, or—if fraudulent intent is proven—criminal proceedings.

What Legal Representatives, CEOs, and CFOs Must Do to Reduce Risks

To manage and mitigate legal exposure, business leaders should focus on four strategic areas:

• Strengthen the internal control system

  • Establish clear segregation of duties: documentation, recording, and approval.

  • Implement internal audit or hire external consultants for periodic reviews.

  • Stay updated on accounting standards (VAS, IFRS).

• Ensure strict compliance with tax and accounting regulations

  • Maintain transparent tax finalization documentation with clear explanations of risk items.

  • Ensure expenses meet deductibility rules under Circular 78/2021/TT-BTC.

  • Prepare complete transfer pricing documentation under Decree 132/2020/NĐ-CP.

• Maintain transparency with shareholders and investors

  • Provide timely and accurate information disclosures.

  • Include detailed explanations of risks and management commitments.

  • Implement whistleblowing systems to enhance transparency and governance.

• Strengthen leadership involvement in the audit process

  • CEOs/CFOs/legal representatives should attend meetings with external auditors.

  • Prepare response scenarios for key audit issues (revenue, expenses, transfer pricing).

  • Sign representations asserting the accuracy of financial information.

  • Request auditors to exercise full independence and professional skepticism.

The 2025 audit season is not just a procedural requirement—it is a legal “stress test” for corporate leadership. Without adequate preparation, CEOs, CFOs, and legal representatives face significant legal consequences, from administrative sanctions to criminal liability. Conversely, strong compliance and transparent governance enhance corporate credibility and investor confidence.

Viet Australia
Viet Australia Auditing Company is an independent auditing organization licensed and established in 2007 in the Socialist Republic of Vietnam.