Actualités
An important issue in the management of a company is to be able to predict and avoid risks, especially financial penalties. Vietnam is not an exception and all the companies operating in Vietnam, would they be Vietnamese or foreign invested companies, are exposed to penalties if they forget or fail to comply with the Laws. The Vietnamese Government is also constantly updating its legal system therefore companies and entities operating in the country should be aware of the penalties so as to always be in compliance with the Vietnamese regulations.
In terms of penalties, the Vietnamese government issued Decree No. 41/2018/NĐ-CP clarifying administrative penalties in March 2018, and it took effect on the 1st of May 2018. This legal document replaced Decree No. 105/2013/NĐ-CP from September 2013, that regulated administration penalties given for accounting issues and fraud. It provides updated penalties for administrative violations in the fields of accounting and independent audit. It is important to remember that Vietnam sets strict requirements for the format of the accounting vouchers, books, charts of accounts and financial statements, and this decree shows even a minor transgression could result in significant financial penalties, as we will outline it below.
Compared with the previous regulation, this new Decree increased the maximum penalty in the field of accounting and auditing from 30 million to 50 million VND (for individuals) and from 60 million to 100 million VND (for the organizations).
The Decree categorizes penalties into two main groups:
1. Primary penalties:
a) a warning.
b) a fine.
2. Additional penalties:
Depending on the nature and seriousness of the violation, the entity found guilty of administrative violations regulated by this Decree may also incur one or several additional penalties as specified below:
a) Suspension of certificate of registration for accounting practice or certificate of registration for auditing practice for a period of 3 to 6 months.
b) Suspension of certificate of eligibility for providing accounting services or certificate of eligibility for providing audit services for a period of 1 to 2 months.
c) Suspension from running refresher courses for a period of 1 to 3 months.
d) Confiscation of evidence of administrative violations.
Remedial measures:
In addition to incurring the above-mentioned penalties, the Decree establishes remedial measures for entities that commit administrative violations as follows:
1. Add missing contents of accounting records.
2. Destroy forged or falsified accounting records.
3. Create records for transactions that did not have records before.
4. Destroy excessive accounting records.
5. Add missing contents to the accounting books.
6. Adjust the accounting books to the actual data in case of a lack of accounting records backing up existing figures or in case the accounting books' figures do not match the figures from the accounting records.
7. Adjust the accounting books to the actual data if the accounting books’ figures lack continuity between consecutive years.
8. Add omitted assets and liabilities belonging or related to the accounting unit to the accounting books
9. Restore the accounting books.
10. Make and present financial statements in compliance with the Vietnamese Standards on Accounting and other regulations.
11. Submit and disclose the audit statement attached to the financial statement.
12. Rectify false or misleading information.
13. Appoint or hire accountants, chief accountants and accounting managers who meet all standards and conditions.
14. Return illegal profits earned through administrative violations.
AMOUNTS OF THE PRIMARY PENALTIES
Here is an outline of the amount of the various administrative penalties against accounting-related and and independent audit-related violations with a detailed outline of the violations identified by the Vietnamese administration.
I. Penalties and fines for accounting-related violations
. VIOLATIONS IN ACCOUNTING WORKS
A penalty ranging from a warning to 50.000.000 VND shall be imposed for violations against accounting law’s general provisions and against regulations on accounting records, on accounting books, on accounts, on creation and presentation of financial statements, on submission and disclosure of financial statements, on duplication of and sealing accounting documents, on accounting inspection, on retention of accounting documents, on stocktaking, on organization of accounting apparatus, appointing or hiring accountants, on training chief accountants and issuance of training certificates for chief accountants.
2. VIOLATIONS AGAINST REGULATIONS ON ACCOUNTANT CERTIFICATE EXAMS AND PROVISION OF REFRESHER TRAINING FOR ACCOUNTING PRACTITIONERS AND ACCOUNTING PRACTICE REGISTRATION APPLICANTS
A penalty ranging from a warning to 30.000.000 VND shall be imposed for violations against regulations on documents for accountant certificate exam, on provision of refresher training for accounting practitioners and accounting practice registration applicants.
3. VIOLATIONS AGAINST REGULATIONS ON ACCOUNTING PRACTICE
A penalty ranging from a warning to 30.000.000 VND shall be imposed for violations against regulations on management and use of accountant certificates and auditor certificates, on application documents for accounting practice, on management and use of certificates of accounting practice registration.
4. VIOLATIONS AGAINST REGULATIONS ON PROVISION OF ACCOUNTING SERVICES
A penalty ranging from a warning to 50.000.000 VND shall be imposed for violations against regulations on application documents for certificate of eligibility to provide accounting services, on management and use of certificates of eligibility to provide accounting services, on provision of accounting services, on retention of accounting service documents, on provision of accounting services.
5. VIOLATIONS AGAINST REGULATIONS ON PROVISION AND USE OF TRANSBOUNDARY ACCOUNTING SERVICES
A penalty ranging from a warning to 50.000.000 VND shall be imposed for violations against regulations on conditions for provision of transboundary accounting services, on methods for provision of transboundary accounting services, on violations against foreign accounting firm’s obligations in provision of transboundary accounting services in Vietnam, on violations against obligations of accounting firms forming joint venture with foreign accounting firms for provision of transboundary accounting services in Vietnam.
6. VIOLATIONS AGAINST REGULATIONS ON NOTIFICATIONS AND REPORTS
A penalty ranging from a warning to 20.000.000 VND shall be imposed for violations against regulations on notification and reporting committed by households and enterprises providing accounting services, on notification and reporting obligations of accounting practitioners.
7. VIOLATIONS AGAINST REGULATIONS ON ACCOUNTING SERVICE INSPECTION
A penalty ranging from 10.000.000 VND to 30.000.000 VND shall be imposed for violations against regulations on accounting service inspection.
II. Penalties and fines for independent audit-related violations
1. VIOLATIONS AGAINST REGULATIONS ON AUDITOR CERTIFICATE EXAMS AND PROVISION OF REFRESHER TRAINING FOR AUDITORS
A penalty ranging from a warning to 30.000.000 VND shall be imposed for violations against regulations on documents for auditor certificate exam, on provision of refresher training for auditors.
2. VIOLATIONS AGAINST REGULATIONS ON AUDIT PRACTICE REGISTRATION
A penalty ranging from a warning to 30.000.000 VND shall be imposed for violations against regulations on management and use of auditor certificates, on application documents for audit practice, on management and use of certificates of audit practice registration.
3. VIOLATIONS AGAINST REGULATIONS ON PROVISION OF AUDIT SERVICES AND ITS REQUIREMENTS
Penalties for violations against regulations on application documents for certificate of eligibility to provide audit services, on management and use of certificates of eligibility to provide audit services, on provision of audit services by auditing firms, from a warning to 50.000.000 VND.
4. VIOLATIONS AGAINST REGULATIONS ON AUDITING WORKS
A penalty ranging from a warning to 40.000.000 VND shall be imposed for violations against regulations on purchase of professional liability insurance for audit practitioners or setting up professional risk reserve fund.
5. VIOLATIONS AGAINST REGULATIONS ON AUDITED UNITS
A penalty ranging from a warning to 50.000.000 VND shall be imposed for violations against regulations on selection of auditing firms and audit practitioners, on contracts for audit of annual financial statements, on audits.
6. VIOLATIONS AGAINST REGULATIONS ON AUDIT OF UNITS WITH PUBLIC INTEREST’S FINANCIAL STATEMENTS
A penalty ranging from a warning to 50.000.000 VND shall be imposed for violations against regulations on announcement and notification obligations of approved auditing firms, on audit and review services to units with public interest, on disclosure of transparency reports, on application documents for audit of units with public interest, on responsibilities of units with public interest, on independence.
7. VIOLATIONS AGAINST REGULATIONS ON PROVISION AND USE OF TRANSBOUNDARY AUDIT SERVICES
A penalty ranging from a warning to 50.000.000 VND shall be imposed for violations against obligations of firms providing transboundary audit services, and against regulations on conditions for provision of transboundary audit services, on methods for provision of transboundary audit services, on forming joint venture with foreign auditing firms for provision of transboundary audit services in Vietnam.
8. VIOLATIONS AGAINST REGULATIONS ON NOTIFICATIONS AND REPORTS
A penalty ranging from a warning to 20.000.000 VND shall be imposed for violations against regulations on notification and report obligations of auditing firms, on announcement and notification obligations of audit practitioners
9. VIOLATIONS AGAINST REGULATIONS ON CONTROL OF AUDIT SERVICE QUALITY
A penalty ranging from a warning to 30.000.000 VND shall be imposed for violations against regulations on control of audit service quality of auditing firms and branches of foreign auditing firms.
