Facing difficulties in auditing activities for credit institutions and foreign bank branches, recently, the State Bank of Vietnam issued Circular No. 24/2021/TT-NHNN amending and supplementing a number of articles of Circular No. 39/2011/TT-NHNN dated 15 December 2011 providing for independent audit of credit institutions and foreign bank branches. Amending and supplementing current regulations to ensure that the independent audit activities of credit institutions are more feasible and effective.

The article discusses new amendments and supplements to independent audit activities for credit institutions and foreign bank branches.

Requirement to complete regulations on audit independence for credit institutions

Independent audit of a credit institution, foreign bank branch is the practice of a practicing auditor, an independent auditing organization to audit the financial statements (financial statements), the operation of the system. internal control of credit institutions, foreign bank branches and other audit work under the audit contract

According to the Law on Credit Institutions 2010 (amended and supplemented in 2017), the internal control system of credit institutions and foreign bank branches must be internally audited and evaluated by an independent audit organization. periodic. Before the end of a fiscal year, credit institutions and foreign bank branches must select an independent auditing organization that is qualified as prescribed to audit their operations in the next fiscal year. This is the legal basis for the State Bank of Vietnam (SBV) to develop Circular No. 39/2011/TT-NHNN dated 15 December 2011 providing for independent audit of credit institutions and foreign bank branches.

In addition, according to the provisions of Circular No. 39/2011/TT-NHNN, before the end of the fiscal year, credit institutions and foreign bank branches must select an independent auditing organization to audit financial statements. , the operation of the internal control system for the next fiscal year. Independent audit activities of financial statements of credit institutions, foreign bank branches include auditing: Balance sheet; Report on business results; Statements of cash flows; Notes to financial statements.

In the process of implementation, credit institutions, foreign bank branches and independent auditing units encountered difficulties and problems and proposed to amend Circular No. 39/2011/TT-NHNN. On 31 December 2021, the SBV issued Circular No. 24/2021/TT-NHNN amending and supplementing a number of articles of Circular No. 39/2011/TT-NHNN. This amendment and supplement is considered to help ensure that the independent audit activities of credit institutions and foreign bank branches are feasible and more effective. The article codifies the outstanding amendments and supplements in Circular No. 24/2021/TT-NHNN of the State Bank of Vietnam, which took effect from 15 April 2022.

Notable amendments and supplements to the independent audit of the bank

Firstly, about the independent audit.

According to the new regulations in Circular No. 24/2021/TT-NHNN, the independent audit of the internal control system of credit institutions and foreign bank branches must be performed at least with the following contents:

– Auditing the internal control system of credit institutions and foreign bank branches (including internal mechanisms, policies, processes and regulations) in compliance with current laws and regulations SBV on the internal control system of credit institutions and foreign bank branches. For the contents of the internal control system that have been audited for compliance without any change, such content is not required to be re-audited.

–  Auditing the performance of the internal control system for the preparation and presentation of financial statements.

– In addition, commercial banks and foreign bank branches must audit the operation of the internal control system for the content of internal assessment of capital adequacy of commercial banks and foreign bank branches. in accordance with the SBV’s regulations on the internal control system.

Thus, compared with the old regulations in Circular No. 39/2011/TT-NHNN, the content of independent audit of the internal control system has been supplemented with some details. In particular, the regulation has been added, “for the contents of the internal control system which have been audited for compliance without any change, such content is not required to be re-audited” in order to avoid overlapping audits. cross, avoid wasting time and resources for credit institutions, foreign bank branches.
Also related to the regulation on independent audit content, Circular No. 24/2021/TT-NHNN has added the following regulations: Auditing activities for the internal control system of credit institutions and bank branches foreign countries ensure the following requirements: Efficiency and safety in operation; protect, manage, and safely and effectively use assets and resources; The financial information and management information system is honest, reasonable, complete and timely.”

Second, amending and supplementing the independent audit results.

According to the old regulations, the audit report for the operation of the internal control system of credit institutions and foreign bank branches must assess the compliance with current laws and the guidance of the State Bank in the development, organization, implementation of the internal control system and the evaluation of the effectiveness of this system in preventing, detecting and promptly handling risks and other objectives of the credit institution. foreign bank branches.
However, according to new regulations in Circular No. 24/2021/TT-NHNN, audit reports for financial statements of credit institutions and foreign bank branches must comply with the provisions of the law on independent audit, Vietnamese accounting standards, auditing standards and other relevant laws. The audit report on the operation of the internal control system of credit institutions and foreign bank branches must at least assess the compliance with current law provisions and the SBV’s guidance in developing , organize the implementation of the internal control system and evaluate the economy, effectiveness and operational efficiency of this system in preventing, detecting and promptly handling risks and other objectives. of credit institutions, foreign bank branches for the contents specified at Points b and c, Clause 2, Article 8 of Circular No. 39/2011/TT-NHNN”.

Third, amend and supplement conditions for independent auditing organizations that audit banks, non-bank credit institutions and foreign bank branches.

In Circular No. 24/2021/TT-NHNN, the State Bank of Vietnam has amended and supplemented the conditions for independent auditing organizations to audit banks, non-bank credit institutions and foreign bank branches.

Specifically, if Circular No. 39/2011/TT-NHNN stipulates one of the conditions for independent auditing organizations to audit banks, non-banking credit institutions, bank branches are “Not on the List of Unaudited Lists announced by the State Bank”, in Circular No. 24/2021/TT-NHNN, the State Bank has amended and supplemented more specifically.

Accordingly, auditing organizations, practicing auditors performing audits of banks, non-banking credit institutions, foreign bank branches are on the list of audit organizations and the list of licensed auditors. approved to conduct the audit for the entity with public interest as announced by the Ministry of Finance for the period of audit implementation.

In case a bank or non-banking credit institution is an entity with public interests in the securities sector, the auditing organization or practicing auditor performing audits for the bank or non-banking credit institution must belong to the list of auditing organizations and the list of practicing auditors approved to conduct audits for entities with public interests in the securities sector as announced by the State Securities Commission for the period of audit implementation.

In addition, the SBV also abolished the regulation on “Not performing asset valuation, management consulting, financial consulting, risk management consulting for banks, non-banking credit institutions, branches. that foreign bank in the year preceding the year of the audit.

Fourth, conditions for independent auditing organizations to audit microfinance institutions and people’s credit funds.

With the provisions “conditions for independent auditing organizations to audit microfinance institutions and people’s credit funds” in Article 12, Circular No. 39/2011/TT-NHNN, Circular No. 24 2021/TT-NHNN has also amended, supplemented and clarified the condition “Not on the List of Unaudited Lists announced by the State Bank as follows: Auditing organizations, practicing auditors performing organizational audits microfinance, people’s credit funds on the list of auditing organizations and the list of practicing auditors approved to perform audits for entities with public interest as announced by the Ministry of Finance for the period conduct audits.

In addition to the above amendments and supplements, Circular No. 24/2021/TT-NHNN also adds Clause 2a after Clause 2, Article 12. Accordingly, there is no independent audit of microfinance institutions and trust funds. using that person for a period of 05 consecutive years preceding the audit year.

Fifth, about the responsibilities of credit institutions and foreign bank branches.

In order to match the new situation and enhance the responsibility of the responsibilities of credit institutions and foreign bank branches, Circular No. 24/2021/TT-NHNN has amended and supplemented regulations for organizations and individuals.

Specifically, within 30 days from the date of deciding to choose an independent auditing organization, it is responsible to send a written notice of the selected independent auditing organization to the State Bank in accordance with the following provisions: Credit institutions , foreign bank branches send to the State Bank (via the Banking Inspection and Supervision Agency), except for the case specified at Point b of this Clause; People’s credit funds, foreign bank branches subject to micro-safety inspection and supervision by the State Bank’s branches in provinces and centrally run cities shall send it to the State Bank of the provinces and cities where the people’s credit funds are located. foreign bank branches located their headquarters.

Within 90 days from the end of the fiscal year, send the independent audit results to the State Bank in accordance with regulations. At the same time, re-audit in case the audit report has an exception; send the audit results back to the State Bank according to regulations.

In addition to the above contents, Circular No. 24/2021/TT-NHNN also contains amendments and supplements related to: Independent audit opinion, Responsibilities of the State Bank of provinces and cities where the credit institution is located. , Responsibility of the Banking Inspection and Supervision Agency. At the same time, also removed a number of provisions that are no longer relevant related to: Audit scope; Time to choose an independent audit organization; Responsibilities of the State Bank of the province or city where the credit institution is headquartered…

According to Circular No. 24/2021/TT-NHNN, the above regulations will take effect from 15 April 2022. However, the independent audit of the operation of the internal control system for the internal assessment of the capital adequacy of the commercial bank or foreign bank’s branch in accordance with the provisions of this Circular shall be carried out for fiscal year 2022 onwards.

Conclusion

The independent audit of credit institutions is a mandatory requirement to ensure the safety of the banking system, so new amendments and supplements in Circular No. 24/2021/TT-NHNN are necessary. According to the general assessment of credit institutions, foreign bank branches and auditing organizations, the amendments and supplements to the provisions of Circular No. 24/2021/TT-NHNN have met the practical requirements and solve problems arising and problems in the process of performing independent audit that are mentioned many times by these subjects.

(According to tapchitaichinh.vn)

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