PRESCRIBING INDEPENDENT AUDIT OF CREDIT INSTITUTIONS THAT ARE COOPERATIVES

1. This Circular provides regulations on independent audit of financial statements of credit institutions that are cooperatives, and provision of assurance about their internal control systems over preparation and presentation of financial statements.

2. Independent audit of credit institutions that are cooperatives must comply with regulations of relevant laws and provisions of Articles 7, 11, 12, 13, 14 hereof in the following cases:

a) Independent audit organizations are hired to carry out partial or entire evaluation of their internal control systems at the request of the State Bank of Vietnam (hereinafter referred to as “SBV”);

b) Independent audit organizations are hired to conduct audit of their financial statements and evaluation of their financial health as the basis for developing remedial plans at the SBV’s request as prescribed in clause 4 Article 156 of the Law on Credit Institutions No. 32/2024/QH15;

c) The cooperative bank placed under special control hires an independent audit organization to conduct audit of its financial statements as prescribed in clause 1 Article 167 of the Law No. 32/2024/QH15;

d) Independent audit organizations are hired to conduct independent audits which aim to serve performance of banking inspection and supervision tasks in accordance with regulations of law.

This Circular applies to:

1. Credit institutions that are cooperatives, including:

a) Cooperative banks;

b) People’s credit funds.

2. Independent audit organizations, practicing auditors, auditors and other organizations and individuals involved in independent audit of credit institutions that are cooperatives.

For the purposes of this Circular, the terms used herein shall be construed as follows:

1. “independent audit” of a credit institution that is a cooperative means a practicing auditor or independent audit organization’s act of auditing financial statements of that credit institution and provision of assurance about its internal control system over preparation and presentation of financial statements under an audit engagement.

2. “independent audit organizations” include audit firms and branches of foreign audit firms operating in Vietnam.

1. Each credit institution that is a cooperative must select a qualified independent audit organization as prescribed in this Circular to:

a) carry out audit of its financial statements; and

b) provide assurance about its internal control system over preparation and presentation of financial statements, if it is a cooperative bank or people’s credit fund whose total assets are worth at least VND 50 billion as at September 30 of the year preceding the audit year.

2. Review of half-yearly financial statements, audit of final statements of finished projects and other auditing tasks of credit institutions that are cooperatives (if any) shall be subject to relevant laws.

For the purpose of ensuring their safe operation, SBV encourages credit institutions that are cooperatives to conduct audit of restrictions using independent audit services.

Before the end of a fiscal year, credit institutions that are cooperatives must complete selection of independent audit organizations as prescribed in this Circular to conduct audit of their financial statements, and provide assurance about their internal control systems over preparation and presentation of financial statements for the next fiscal year.

1. General Meeting of Members shall decide to select independent audit organizations in accordance with provisions of this Circular.

2. The power to select independent audit organizations for credit institutions that are cooperatives and are placed under special control is granted to their Boards of Directors.

Subject matters of an independent audit of a credit institution that is a cooperative include:
1. Independent audit of its financial statements, including:

a) Audit of financial position statement;

b) Audit of income statement;

c) Audit of cash flow statement;

d) Audit of notes to financial statements.

2. Provision of assurance about its internal control system over preparation and presentation of financial statements.

1. Based on audit outcomes, practicing auditors and independent audit organizations must give their opinions according to regulations of law on independent audit and Vietnam’s audit standards.

2. SBV is entitled to request independent audit organizations and audited credit institutions that are cooperatives to provide explanation about qualified opinions included in the audit reports.

1. Outcomes of an independent audit of a credit institution that is a cooperative include:

a) Report on audit of financial statements;

b) Report on provision of assurance about its internal control system over preparation and presentation of financial statements;

c) Management letter and relevant documents and evidences.

2. Report on audit of financial statements of a credit institution that is a cooperative and report on provision of assurance about its internal control system over preparation and presentation of financial statements shall be made in accordance with regulations of law on independent audit, Vietnam’s accounting and audit standards, and other relevant laws.

3. The management letter reflects specific issues and events identified during the audit, including actual status, potential risks, auditor's recommendations and opinions given by the executive or manager of the credit institution that is a cooperative about such events. A management letter shall, inter alia, include the following main contents:

a) General approach and scope of the audit, and additional requirements;

b) Evaluation of changes in any significant policies and practices that have effects on financial statements of the credit institution that is a cooperative and/or its internal control system over preparation and presentation of financial statements;

c) Risks which may produce material effects on financial statements of the credit institution that is a cooperative and/or its internal control system over preparation and presentation of financial statements;

d) Adjustments proposed by the independent audit organization and practicing auditor to the issues and events which have or could have material effects on financial statements of the credit institution that is a cooperative and/or its internal control system over preparation and presentation of financial statements;

dd) Disagreements with the manager or executive of the credit institution that is a cooperative about matters that could have material effects on its financial statements and/or its internal control system over preparation and presentation of financial statements or the opinions given by the practicing auditor and independent audit organization. The opinions given by the practicing auditor and independent audit organization must clearly include consideration of whether such disagreements have, or have not, been resolved and the significance of the matter;

e) Any other matters agreed upon in the terms of the audit engagement.

An independent audit organization in charge of auditing a cooperative bank shall be required to meet the following requirements:

1. It has been duly established and operating in audit sector in Vietnam for at least 03 years.

2. Its owner's equity or allocated capital is VND 10 billion or higher.

3. There are at least 05 practicing auditors engaging in the audit of the cooperative bank, including at least 03 practicing auditors having 02 or more years’ experience in engaging in audits in finance and banking sectors.

4. All of its practicing auditors and representatives engaging in audit of the cooperative bank must fully meet the standards set out in Article 13 of this Circular.

5. It does not have any relationship, such as purchase of bonds and/or assets, capital contribution, or establishment of joint venture, with the audited cooperative bank.

6. It is not a client to which unsecured line of credit is extended or other line of credit services are rendered with preferential treatment by the audited cooperative bank.

7. It has not engaged to perform any audit of the subject cooperative bank in the past 05 years preceding the audit year.

8. It has not faced any penalties for violations against regulations of law on independent audit in the past 02 years preceding the audit year.

9. The audit organization and practicing auditors in charge of conducting audit of the cooperative bank are included in the list of audit organizations and the list of practicing auditors approved for engagement in audit of public interest entities as announced by the Ministry of Finance of Vietnam in the audit period.

10. It does not fall in any of the cases of disqualification for engagement in audit as prescribed by the law on independent audit.

11. It meets other independent audit requirements laid down in the law on independent audit.

An independent audit organization in charge of auditing a people’s credit fund shall be required to meet the following requirements:

1. All of its practicing auditors and representatives engaging in audit of the people’s credit fund must fully meet the standards set out in Article 13 of this Circular.

2. It is not a client to which unsecured line of credit is extended or other line of credit services are rendered with preferential treatment by the audited people’s credit fund.

3. It has not engaged to perform any audit of the subject people’s credit fund in the past 05 years preceding the audit year.

4. The audit organization and practicing auditors in charge of conducting audit of the people’s credit fund are included in the list of audit organizations and the list of practicing auditors approved for engagement in audit of public interest entities as announced by the Ministry of Finance of Vietnam in the audit period.

5. It does not fall in any of the cases of disqualification for engagement in audit as prescribed by the law on independent audit.

6. It meets other independent audit requirements laid down in the law on independent audit.

A practicing auditor or representative of an independent audit organization engaging in audit of a credit institution that is a cooperative must meet the following standards:
1. He/she is not a client to which unsecured line of credit is extended or other line of credit services are rendered with preferential treatment by the audited credit institution that is a cooperative.

2. He/she has not faced any penalties for violations against regulations of law on independent audit in the past 02 years preceding the audit year.

3. He/she does not fall in any of the cases of disqualification for engagement in audit as prescribed by the law on independent audit.

4. He/she meets other independent audit requirements laid down in the law on independent audit.

1. Fulfill all obligations as prescribed by the law on independent audit.

2. Assume responsibility for the adequacy, accuracy and punctuality of information provided for credit institutions that are cooperatives during their selection of independent audit organizations.

3. Comply with regulations of law on financial statements and operation of credit institutions that are cooperatives.

4. Provide explanation, information and documents concerning auditing activities, including explanation about qualified opinions included in audit reports, at the SBV’s written request.

5. Notify and provide the audited credit institution that is a cooperative and is found during the audit to have failed to comply with regulations of law on audit scope with recommendations on measures for remedying and dealing with its violation; include their opinions in audit report or management letter as prescribed in clauses 2 and 3 Article 10 of this Circular.

6. If, after an audit report has been issued, the audited credit institution that is a cooperative is suspected of committing, or is found to have committed, any material errors as a result of their noncompliance with regulations of law regarding the audit scope, the independent audit organization shall follow procedures for giving notification thereof to the audited entity and third party in accordance with Vietnam’s audit standards and also notify SBV of this circumstance.

1. Select independent audit organizations in accordance with provisions of this Circular.

2. Within 30 days from the date of their decision on selection of independent audit organization, send written notice of the selected independent audit organization to SBV according to the following provisions:

a) Cooperative banks shall send their notices to SBV (via the Credit Institution Management and Supervision Department);

b) A people’s credit fund shall send its notice to the SBV's regional branch in charge of the area where it is headquartered.

3. Fulfill all obligations as prescribed by the law on independent audit.

4. Provide explanation about qualified opinions included in audit reports at the SBV’s written request.

5. Within 90 days from the end of a fiscal year, send reports on audit of financial statements, reports on provision of assurance about its internal control system over preparation and presentation of financial statements, and management letters to SBV according to provisions of clause 2 of this Article.

6. Send written notification to SBV, according to provisions of clause 2 of this Article, of any violation committed by a practicing auditor or audit organization during their engagement in audits, and any dispute about independent audit outcomes, in which description, explanation and proposed solutions for settling the dispute must be included in accordance with relevant laws.

7. Carry out public disclosure of financial information in accordance with regulations of law in force.

1. The Credit Institution Management and Supervision Department shall:

a) Analyze, assess and propose measures for responding to reports on audit of financial statements, reports on provision of assurance about its internal control system over preparation and presentation of financial statements, and management letters of cooperative banks;

b) Submit reports and proposals to the SBV’s Governor on the following contents:

(i) Cases where it receives written notifications from cooperative banks as prescribed in clause 6 Article 15 of this Circular;

(ii) Cases where it receives reports from SBV’s regional branches as prescribed in point dd clause 3 of this Article;

(iii) Send notification to the Ministry of Finance of Vietnam upon detection of, or receipt of a report from a SBV’s regional branch as prescribed in point a clause 3 of this Article on, the case that a practicing auditor or audit organization has committed violations against law during their engagement to perform independent audit of people’s credit funds;

c) Give professional opinions about the issues in banking and money sectors in reports on audit of financial statements, reports on provision of assurance about its internal control system over preparation and presentation of financial statements, and management letters of cooperative banks at the request of competent authorities.

2. The SBV Inspectorate shall inspect and examine the implementation of this Circular and take actions within its jurisdiction or request the SBV's Governor to take actions against cooperative banks that commit violations against this Circular and other regulations of law on independent audit.

3. Each SBV's regional branch shall:

a) Analyze, assess and propose measures for responding to reports on audit of financial statements, reports on provision of assurance about its internal control system over preparation and presentation of financial statements, and management letters of people’s credit funds received in accordance with clause 5 Article 15 of this Circular;

If any practicing auditor or audit organization is found to have committed violations against law during their engagement to perform independent audit of a people’s credit fund, the SBV’s regional branch shall promptly submit a report on such case, in which proposed remedial actions must be also indicated, to the SBV’s Governor (via the Credit Institution Management and Supervision Department);

b) Receive notifications of the cases involving people’s credit funds as prescribed in clause 6 Article 15 of this Circular, and respond to such notifications within the ambit of its assigned functions and tasks;

c) Inspect, examine and supervise the implementation of this Circular and take actions within its jurisdiction against people’s credit funds that commit violations against this Circular and other regulations of law on independent audit;

d) Give professional opinions about the issues in banking and money sectors in reports on audit of financial statements, reports on provision of assurance about its internal control system over preparation and presentation of financial statements, and management letters of people’s credit funds that are headquartered in the area falling under its management at the request of competent authorities;

dd) Request the SBV’s Governor (via the Credit Institution Management and Supervision Department) to take actions against the issues falling beyond its jurisdiction.

4. Other SBV’s affiliated units shall, within the ambit of their assigned functions and tasks, cooperate with the Credit Institution Management and Supervision Department upon its request.

Heads of SBV’s affiliated units, cooperative banks, people’s credit funds, independent audit organizations, practicing auditors, auditors and relevant organizations and individuals are responsible for the implementation of this Circular.

1. This Circular comes into force from January 01, 2026, and provisions of this Circular shall apply to independent audit of financial statements, and provision of assurance about internal control systems over preparation and presentation of financial statements from the fiscal year of 2027.

2. Circular No. 39/2011/TT-NHNN prescribing independent audit of credit institutions and foreign bank branches, and Circular No. 24/2021/TT-NHNN providing amendments to Circular No. 39/2011/TT-NHNN prescribing independent audit of credit institutions and foreign bank branches shall cease to have effect from the effective date of this Circular.

3. Audit engagements which have been concluded before the effective date of this Circular shall still remain valid or may be modified according to provisions of this Circular. Provision of assurance about internal control systems over preparation and presentation of financial statements shall comply with provisions of this Circular in place of the independent audit of internal control systems from the fiscal year 2025./.