Auditing Requirements for Foreign Firms in Vietnam

Audits in Vietnam are not simply compliance exercises. For foreign investors, they determine whether profits can be repatriated, whether banks will extend credit, and whether group financial statements under IFRS can be consolidated without delay. Vietnam applies the Vietnam Accounting Standards (VAS) to all statutory reports, which differ from international norms. Aligning these systems early in the financial year prevents restatements and builds transparency with regulators, lenders, and shareholders.

When an audit becomes mandatory

Any company with foreign equity is classified as a foreign-invested enterprise (FIE) and must undergo an annual audit by a licensed firm in Vietnam. Local or mixed-ownership entities are also required to audit their financial statements once they meet at least one of the three criteria under Decree 174 of 2016. The first is a total charter capital of VND 10 billion (US$400,000) or more. The second is annual revenue of VND 20 billion (US$800,000) or more. The third is a workforce of 200 employees or greater.

Audits are compulsory regardless of size for companies in regulated sectors such as banking, insurance, securities, education, and healthcare. Groups that control subsidiaries in Vietnam must also prepare consolidated audited statements.

Even when the law does not strictly mandate an audit, many foreign investors commission one voluntarily to satisfy lenders, shareholders, or due diligence requirements, transforming a compliance step into a governance advantage.

Accounting framework and fiscal year planning

All statutory reports must be prepared in Vietnamese, denominated in Vietnamese dong, and follow VAS. Companies that operate in another functional currency, such as the US dollar or euro, may do so internally but must translate all figures into dong for audit purposes. To reconcile local and group reporting, most foreign investors maintain two synchronized ledgers — a VAS ledger for statutory filings and an IFRS ledger for consolidation.

Mapping both systems at the start of the year ensures that account codes, translation methods, and fiscal calendars align. Vietnam allows fiscal years ending on any quarter-end, including March 31 or June 30, provided the company notifies the tax authority in writing.

Managing the audit process from engagement to filing

The audit process in Vietnam follows a fixed sequence that links preparation, execution, and compliance into one continuous cycle. For foreign investors, understanding this sequence ensures that the audit not only meets statutory requirements but also supports efficient financial management and risk control. Each stage — from contracting the auditor to submitting the final report — carries its own deadlines and regulatory expectations.

Early engagement and preparation

The process begins well before the audit fieldwork starts. Every company must appoint a licensed audit firm and sign an engagement contract at least 30 days before the end of its fiscal year. Early engagement allows both parties to define the audit scope, documentation requirements, and delivery schedule while internal teams still have time to prepare. Delays at this stage can cause bottlenecks during the January–March busy season when demand for audit capacity peaks nationwide.

Conducting the audit and receiving the findings

Once engaged, the audit firm applies the Vietnamese Standards on Auditing, which closely follow international norms. Auditors evaluate whether accounting records, internal controls, and supporting evidence accurately reflect the company’s financial position under VAS. The audit produces two key outputs that define financial reliability. The audit opinion certifies the accuracy of the financial statements, while the management letter highlights control weaknesses and compliance risks that management can address before the next reporting cycle.

Filing, deadlines, and record retention

Timely submission completes the audit process and confirms statutory compliance. Audited financial statements must be filed within 90 days after fiscal year-end to the tax authority, the Department of Planning and Investment, and the General Statistics Office, and to zone management boards when applicable. Missing this deadline can turn a procedural step into a regulatory setback. Late filings attract fines from VND 5 million (US$200) to VND 20 million (US$800), while failure to conduct a required audit can result in higher penalties from VND 40 million (US$1,600) to VND 50 million (US$2,000).

 

Accounting books and audit reports must be retained for 10 years, and supporting documents for at least 5 years

. These obligations cover both paper and digital formats, reflecting Vietnam’s gradual transition toward electronic compliance. Treating record retention as a year-round governance practice creates an unbroken chain of accountability from audit engagement to final submission.

Strengthening audit readiness and avoiding common pitfalls

Foreign-invested firms often encounter issues that arise from incomplete documentation or mismatched systems rather than deliberate non-compliance. The most common problems include weak control over related-party transactions, discrepancies between VAS and IFRS ledgers, and errors in VAT and payroll reconciliation. E-invoicing inconsistencies and currency translation differences also frequently surface during audit testing. These risks can be eliminated through consistent monthly closing routines, centralized storage of audit evidence, and internal reviews conducted at least 60 days before year-end.

How early planning turned compliance into advantage

A European manufacturer in Binh Duong with US$2 million in capital and 350 employees postponed its audit appointment until January. Because intercompany reconciliations were incomplete, the audit overran by six weeks and delayed profit repatriation. In the following year, the company began its internal review in November and completed the audit ahead of schedule, avoiding penalties and improving cash flow predictability.

Selecting an audit partner and structuring the engagement

The quality of the audit depends on the firm engaged. A suitable partner must hold a Vietnamese audit license, demonstrate experience with FIEs, and coordinate effectively with overseas auditors for group consolidation. Engagement terms should define scope, deliverables, materiality levels, and deadlines. Scheduling the audit before January secures availability during peak season and helps maintain continuity between local and group reporting. For banks and financial institutions, Vietnam enforces rotation rules that require the lead auditor to change every 3 years and the audit firm every 5. Selecting the right auditor early in the cycle ensures both independence and efficiency.

Planning point for management

Audit readiness should begin in the final quarter of the year. Management should review intercompany balances, e-invoice data, and asset registers in October or November, finalize the engagement letter 30 days before year-end, and schedule fieldwork within the first 2 months of the following year. The management letter from the completed audit should then serve as a performance benchmark for the next cycle, linking compliance outcomes directly to governance improvement.

From compliance to confidence in Vietnam

For foreign-invested enterprises, treating the audit as a forward-planning exercise rather than a post-year-end obligation transforms it into a driver of credibility and stability. Early preparation, consistent alignment between VAS and IFRS, and a strong partnership with qualified auditors ensure not only technical compliance but also operational confidence.

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