MINISTRY OF EDUCATION
NATIONAL ECONOMIC UNIVERSITY
‐‐‐‐‐‐‐‐*‐‐‐‐‐‐‐‐Nguyen thi my



Thesis topic: Improving the audit of financial
statements of listed firms
in the Vietnam Stock Market

Major in Accounting (Accounting, Auditing and Analysis)

Code: 62.34.30.01
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 HA NOI, NAM 2012
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INTRODUCTION
1. The Urgency of the Topic:
Nowadays, many companies choose to expand the capital market through the Stock
Exchange (stock market) which is a channel to attract capital potentially and
effectively with the participation of both domestic and foreign investors. Among the
information provided on the stock market, accounting information is offered in the
forms of financial statements (FS) which supply information and particularly play an
important role: they have a great influence on the relationship between supply and
demand of securities, are the motivation for the investors’ decision to buy or sell on
the market after analyzing published financial statements. One of the factors
contributing to investors’ trust in published information of listed companies is
financial auditing activities of these companies. According to Vietnam’s Securities
Law, financial statements of listed companies on stock market have to be audited
annually by independent auditors in order to enhance honesty, rationality and
legitimacy of public information of the organizations listed on the stock market.
The stock market is still at the starting point and there are a lot of complicated
changes: The rise in the number of listed companies has resulted in the
diversification, abundance and complexities of commodity on the stock market. In
addition, listed companies also have to face the fact that the attraction and expansion
of capital markets is now very difficult because of both objective and subjective
reasons. This circumstance, along with the trend of world economic integration in
general and audit in particular requires to specify arguments for auditing financial
statements the listed companies and improve the quality of audit operation.
Recognizing the urgency mentioned above, the author confidently went into a
research thesis with the topic "Improving the audit of financial statements of listed
firms in the Vietnam Stock Market".
2. The Research Objectives:
This research specified the general theory of the stock market, activities of the
listed companies on the stock market. It researched and developed the theory of
the financial audit for listed companies from other countries and the similar

the stock market;
Chapter II: Current situations of audit the financial statements of companies listed on
the Vietnamese stock market;
Chapter III: The direction and complete solution for audit the financial statements of
companies listed on the stock market in Vietnam.

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3
CHAPTER I:
GENERAL THEORY OF THE AUDIT OF FINANCIAL STATEMENTS OF
THE COMPANIES LISTED ON THE STOCK MARKET
1.1. Stock market and those companies listed on the stock market with the
management:
1.1.1. Overview about the stock exchanges:
Securities market plays an important role in capital market to raise the funds from
each social saving capital to large capital long-term financing for enterprises,
investment projects, economic organizations and the State to develop the production,
strengthen the economy. The stock market is the place that securities are issued and
exchanged.
1.1.2. The Company listed on the stock market:
Listed companies are issuers of securities on the stock market.
Thus, the characteristics of the listed companies’ impact on the audit are reviewed on
a number of main aspects:
Firstly, listed companies are joint stock companies.
Secondly, listed companies may issue securities under the two types of stocks and
bonds to the public; the number of Shareholders in listed companies are quite
complex and change from time to time, it is therefore difficult to control and manage;
Thirdly, the capital raise of listed companies may be conducted under a variety of
forms and highly effective: through bank loans and the stock market;
Fourthly, to the publicized information in general and financial information in

listed companies with many industries and business areas;
Third, due to the number of shareholders of the listed companies which are large and
continuously variable. Therefore, the professional track and report of the details of
equity according to the specific object on the accounting books are very difficult;
Fourth, a number of financial indicators appear only on the accounting books and
financial statements of joint stock companies in general and Listed companies in
particular;
Fifth, the Listed companies with many shareholders and constantly changing, it will
affect the operation of the company (for example, when changing strategic
shareholder or shareholders), and at the same time the distribution of profits therefore
meets complicated;
Sixth, those listed companies always exist in many complex financial relationships,
then to track and identify the stakeholders or to consolidate financial statements is
very difficult;
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5
Seventh, the number and qualifications who are interested in information on the
financial statements of the listed companies.
The characteristics of the financial statements of the listed companies in the stock
market above greatly impact on the audit of financial statements of listed firms in the
stock market Specifically:
First, affect the planning of the audit;
Second, impact the auditing operation;
Third, affect the synthesis and report of audits (audit statement);
Fourth, influence to the responsibility of the auditors;
Fifth, the auditors have to conduct and review the semi-annual or quarter financial
statements of those companies listed on the security exchange.
The Approach method to the audit of financial statements of listed firms in the stock
market
1.2.1.3. for the companies listed on the stock market:

Third, audit the consolidated financial statements.
The selection of the audit comes from the complexity and risk seriousness of the need
for information of those interested to the content of the financial statements of the
listed companies.
1.3. International experience in the audit of financial statements of companies
listed on the stock market:
About regulations for listed companies on the stock market.
Requirements for financial statements of the listed companies on the stock market.
Approach to the audit of the financial statements of the listed companies on the stock
market.
Procedures of the audit of the financial statements of the listed companies on the
stock market.
Regarding the selection of auditing companies for the audit of the financial
statements of the listed companies on the stock market.
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7

Chart 1.3: The process of auditing the financial statements - The World Experience [50,
page 62]
1. The risk assessment and the evaluation of potential customers
Acceptance
to the
customer
Seeking completed
and giving
commitment to audit
2. Implementation of the overall analysis of the company, strategy,

companies.
Fourth, thoroughly apply the approach to audit of financial statements of the listed
companies in the direction of risk.
Fifth, complete the financial statements of the listed companies.

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CHAPTER 2
CURRENT SITUATIONS OF AUDITING THE FINANCIAL STATEMENTS
OF COMPANIES LISTED ON THE VIETNAMESE STOCK MARKET
NOWADAYS
2.1. The Characteristics of the Vietnam’s securities market and the companies
listed on the Vietnam’s Stock market in relationship with the audit of financial
statements:
2.1.1. The overview of Vietnam’s Securities market:
2.1.2. The companies listed on the Vietnam’s Stock market:
The foundation, development and specific requirements of the stock market and listed
companies on this market have formed the characteristics when audit financial
statements of the listed companies on the stock market. The confusion of the
correlations in the operation of the listed companies, the sensitive nature of the
capital mobilization of the listed companies and especially the essential information’s
transparency of listed companies are urgently required by investors and other
interested groups of people.
Due to the regulations on Vietnamese Stock Market, the vital conditions for the
progress of being listed on Stock Exchange, Securities Trading Centers are stipulated
in details under the provisions of the Securities Act of 2006 and Decree No.
14/2007/ND-CP, signed by the Prime Minister dated 19/1/2007 detailing the
implementation of a number of articles of the Law on Securities.
2.2. The situation of auditing the financial statements of companies listed on the
Vietnam’s stock market:

Thelegalbasisfor
theauditingobjects
Thelegalbasisfor
theaudited
objects
Thelegalbasisfor
theauditentity
Constitutionof1992 Constitutionof1992 Constitutionof1992
AccountingLaw
2003
‐LawonEnterprises
2005
‐SecuritiesLaw2005
Independent
AuditAct2011
‐International Financial
Reporting Standards
(IFRS)
- Accounting Standards
of Vietnam
- Accounting Regime of
Vietnam
- The decrees and
circular guiding to the
accounting regime
‐DecreeNo.14/2007/ND‐
CPstipulatesanumberof
articlesoftheLawon
Securities
‐Circular09/2010/TT‐BTC

were sent and
interviewed
Total
surveys
collected
back
%
I Group of auditing firms 75 68 90.7%
1 Companies listed on stock
market
60 53 88.3%
a Chief or higher 20 18 90.0%
b Members of the audit team 40 36 90.0%
2 Other auditing firms 15 14 93.3%
a Chief or higher 10 9 90.0%
b Members of the audit team 5 5 100.0%
II LISTED COMPANIES 60 35 59%
Specific results please visit Appendix 03a, 04.05
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2.2.2. The implementation of audit process of the financial statements of the
companies listed on the stock market in Vietnam:
The audit process of the financial statements of the companies listed on the stock
market still complies with the general 03-stage process: (from VACPA)
(1) Plan the audit;
(2) Perform the audit;
(3) Synthesize, conclude and report.
In the process of application, however, depending on each different company, the conduct
of the specific content will be different. Within the thesis, the author divided auditing firms
into two groups to analyze on the implementation of audit process of the financial

Make detailed audit
plan and risk
assessment
Aggregate to evaluate risks and audit plan
Planning procedures to check the performance o
f

operating efficiency of the internal control system
Planning audit in details
Synthesize and discuss on audit plan

Perform audit plan Implementation the test procedure to check the
performance of the internal control system about
operating efficiency
Perform basic tests and evaluate results
Assess faults in general and the scope of the audit
Review the financial statements

Finish the auditing job
and report audit
Review the events taking place after the end of the fiscal
year
Collect explaining letter from the Board of Directors
Synthesize records and writings
Release the audit report
The work performed after
the audit contract
Assess the quality of contract

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AUDIT PERFORMANCE PERIOD
AUDIT PREPARATION PERIOD
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* Group audit firms heading BIG FOUR
Working papers contents of auditors about the profit on items are in Appendix No. 08.
* The audit company not in the BIG FOUR
Specifically, it is presented on the audit program of the profit item and paper work in
Appendix No. 8.
2.2.3.3. Audited consolidated financial statements:
* Group audit firms heading BIG FOUR
* The audit company not in the BIG FOUR
The content of auditing the consolidated financial statements is illustrated in
Appendix No. 8.
2.3. General assessment of reality of the audited financial statements of
companies listed on the Vietnam’s stock market:
2.3.1. The achievement of the audited financial statements of companies listed on
the Vietnam’s stock market today:
First, auditing activities are more professional;
Second, issue samples of audit program;
Third, auditing staff is always improved;
Fourth, enhance inspection before and after auditing activities: reviewing system of
auditing firms is implemented through a lot of working steps:
During audit preparation
During the audit period
In the end of the audit period
Period after the release of the audit report:
Fifth, Positive integration to auditing activities in the world
Sixth, the legal system has been basically completed and still improving
Seventh, quantity and quality of auditing company increasingly strengthened.

+ Audit procedures to evaluate the continuous operation of listed companies
+ About the audit report and the auditor's opinion form.
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2.3.2.2. The restrictions about the audit approach in the process of auditing the
financial statements of companies listed on the stock market Vietnam
For auditing companies of the BIG FOUR group: the application of the audit
approach to the risk but not really effective.
For auditing companies not in the BIG FOUR: at present, this group of auditing
companies mostly use audit approach based on system.
2.3.2.3. The restrictions about the content of some basic items of audit and legal basis
for auditing the financial statements of companies listed on the stock market Vietnam
Firstly, about auditing the profit distribution; for both group of audit to consider the
distribution of profit to the written provisions of the general meeting of shareholders
but is not interested in the relevance of it with the production and business activities
(standing on shareholder interests).
Secondly, about auditing the consolidated financial statements; There is no audit
program of the consolidated financial statements for companies that are not in the
BIG FOUR.
Thirdly, on the legal basis for the audited financial statements of listed companies, the
legal system has not been completed; it still faces many problems and difficulties in
application and not strictly abides by objects.
2.3.3. The causes of limitations in the audit financial statements of companies
listed on the Vietnamese stock market
Subjective reasons:
Initially, on the auditing company, they do not ensure the quality control mechanism
comprehensive audit and full, close and effective building audit process.
Second, auditors have not actively raised the level of expertise.
Objective reasons:
First, on the side of the listed companies those are not properly aware of their

listed on the stock market Vietnam
The legal basis of the financial audit for the listed companies is a system of
provisions, regulations and standards on accounting, auditing, securities and other
legal documents related depending on the fields of activities of the listed companies
on the stock market The finish is needed on some points as follows:
First, about the organization of promulgating auditing standards in specific;
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Second, when adopting guidelines Independent Audit Law, it requires specific
guidelines on the independence of auditors and the legal framework and deterring
high enough to minimize errors in career;
Third, the system should be complete soon and give specific auditing standards which
are revised into execution;
Fourth, guidelines to profession ethical standards should be issued.
3.2.2. Improve the content and approach of audits in the process of auditing the
financial statements of companies listed on the Vietnam’s stock market.
First of all, improve the general audit process by using audit approach
For auditing firms of BIG FOUR, risk-approach has been made, however, it
needs to be taken seriously and is necessary to have parts to study the
environmental impact of the operation, object, audited objects in Vietnam to
guide on how to apply that methodology of corporations to avoid the imitated-
servile application.
To the remaining auditing companies, there should be specific guidelines and
training for auditors to approach the financial statements of listed enterprises in
direction of risk.
Next, complete contents in the periods of the audit process of auditing financial
statements of the listed companies on the stock market.
First: audit preparation period
+ Step of evaluating the audit acceptability
+ Audit program design step

customers
+ On the presentation of the audit opinion in particular and the entire audit report
in general. Auditors and auditing companies should highly improve
accountability and ethics in the judgment to the audit opinion identity except to
avoid the "trap" created for those interested in information of financial
statements from those listed companies. And management agencies such as the
Securities Commission and the Ministry of Finance should soon provide specific
guidelines in the field of general audit and audited financial statements of the
listed companies in particular on the comments exception.
Quantitative factors;
Qualitative factors:
3.2.3. Complete specific parts of the audit of the audited financial statements
of companies listed on the Vietnam’s stock market
First: For the audit of profit division
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When auditing profit division, the auditor should consider the compatibility
between the decisions to split the profits with the business situation.
Second: For the audit of consolidated financial statements
The auditing company needs to specify the audit directions in auditing the
consolidated financial statements of the specific audit program.
3.2.4. Improve the audit quality control and building the company's audit
corporate culture
First, strengthen the quality control of each audit.
Second, create brand and business culture for the Vietnamese auditing company
in the integration process.
3.2.5. Improve the quality of auditors to meet the requirements of economy
integration
First, raise the professional competence and profession discretion for auditors,
this is a crutial factor in the field of auditing.

of companies listed on the stock market Vietnam
Recommendations to the State:
First, strengthen the inspection and control of the State management agency of audit.
+ Set up an independent Commission to inspect and supervise the activities of the
listed companies as well as the operation of the audited financial statements of the
listed companies.
+ Consider the standard of auditing firms that is qualified to audit the financial
statements of the listed companies.
Second, enhance the roles of profession organizations and associations; in particular here
is the Vietnam Association of Certified Public Accountants, through the transfer of
certain functions of the Ministry of Finance as monitoring audits for the Association. In
addition, the Association need to deploy the application of the rules professional ethics,
improving the quality of training and exam profession for auditor, so it is able to choose
the good auditors for the development of Audit field in Vietnam;
Third, it should continue to promulgate adequate system of accounting and auditing
standards in Vietnam, shorten the gap between the standards of Vietnam compared to
international standards, and guide the application of standard match the reality.
Recommendations to the auditing firm:
The auditing firms have to improve the quality of auditor team. Furthermore, this
training should be coordinated closely with specialized training in universities to
combine both introduction of practical audits and determination of the important
orientation for students majoring in.
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CONCLUSIONS
Auditing in Vietnam was born just in the transition to a market economy with
socialist orientation. This confirms the need for truthful, reasonable and legitimate
information for government agencies, businesses and individuals in Vietnam is
urgently needed.
Along with the development of the country and of the audit, the year of 2000 has