Starting in April, a new regulation will require public companies and certain government owned business in Vietnam to conduct internal audits.
Under a government decree (Decree 05/2019/NĐ-CP), which was issued last month, companies that are listed on a public stock exchange and those that are owned at least 50 percent by the state must carry out internal audits. The decree also applies to some municipalities and government units.
While the decree was not specific in what types of internal audits will be required under the regulation, the goal of the order is to encourage companies to adopt robust systems of internal control and to do a better job managing risk. According to Hoàng Hùng, partner at PricewaterhouseCoopers Vietnam, the new decree will help improve the quality and transparency of corporate governance.
“The issuance of Decree 05 will make local firms pay more attention to internal audits so that internal auditors can independently review and assess the procedures in corporate governance, risk management and internal management performed by a business,” Hùng told the Saigon Times.
The decree, which forces changes to Vietnamese securities law and its Code of Corporate Governance also encourages companies that are not covered by the regulation to also build internal audit functions and to conduct internal audits.
Those subject to the decree are required to complete necessary preparations within 24 months from April 1, 2019 to conduct internal audits as outlined in Decree 05. 