The 2024 Amendment and Supplementary Law on Independent Auditing has added a new category of entities required to audit their financial statements annually: "other large-scale enterprises as defined by the Government." On April 14, 2025, the Government issued Decree No. 90/2025/ND-CP ("Decree 90"), amending and supplementing certain provisions of Decree No. 17/2012/ND-CP, which provides detailed guidance on the implementation of certain provisions of the Independent Auditing Law. This includes clarifying the criteria for determining large-scale enterprises that must audit their financial statements, as well as adding regulations to facilitate independent auditing activities in Vietnam. The key points are as follows:
1. Clarification of Criteria and Principles for Determining Large-Scale Enterprises That Must Audit Financial Statements Annually:
In addition to previously defined entities such as FDI enterprises, credit institutions, and public companies, enterprises must audit their financial statements annually if they meet the criteria for "large-scale enterprises," determined according to the following criteria and principles:
a) Criteria for Determining Large-Scale Enterprises:
An enterprise must satisfy at least 2 out of the 3 criteria:
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(1) The average number of employees participating in social insurance (SI) annually > 200 people
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(2) Annual revenue > 300 billion VND
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(3) Total assets > 100 billion VND.
b) Principles for Determining the Criteria:
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The average number of employees participating in SI annually = Total number of employees participating in SI for each month in the previous year / 12. (Employees are counted at the end of each month, based on SI payment documents.)
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Total annual revenue: Based on the financial statements of the previous year.
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Total assets: Determined at the end of the fiscal year, also based on the financial statements of the previous year.
Enterprises that meet these criteria in 2024 will be required to audit their financial statements starting in 2025.
Decree 90 also anticipates cases where an enterprise fails to meet the criteria for two consecutive years; such enterprises will no longer be required to audit their financial statements until they meet the criteria again. Therefore, enterprises must proactively monitor and determine their eligibility to avoid violations or missing their obligations.
2. Extension of the Audit Period for Auditors Signing Reports for the Same Entity:
Decree 90 extends the period during which auditors can sign audit reports for the same audited entity to no more than 5 consecutive years, instead of the previous limit of 3 consecutive years.
Auditors who have signed audit reports before January 1, 2025, may continue to sign for up to 5 years for the same entity.
The extension to 5 years helps improve stability, effectiveness, and aligns with Paragraph R540.11 of the International Ethical Standards for Professional Accountants (IESBA Code), which states that an auditor should not sign audit reports for the same entity for more than 7 consecutive years. However, it is necessary to control the risk of reducing independence through regular supervision and quality assessments.
Decree 90 takes effect from April 14, 2025.
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