Vietnam's regulations
Nowadays, these following documents were promulgated in Vietnam:
- Decree 05/2019/NĐ-CP: The Decree generally prescribes all issues related to organizing and implementing internal audit activities in the enterprises. View document
- Circular 66/2020/TT-BTC: The circular provides the sample of internal audit charter for enterprises as the reference when announced. View document
International standards
The International Association of Internal Auditors has promulgated the International Professional Practices Framework (IPPF) as follows:
Mission of Internal Audit.
Mandatory Guidance, includes:
- Core Principles for the Professional Practice of Internal Auditing.
- Definition of Internal Auditing.
- Code of Ethics.
- International Standards for the Professional Practice of Internal Auditing (including Attribute Standards and Performance Standards).
Recommended Guidance, includes:
- Implementation Guidance.
- Supplemental Guidance.
Refer to link below for more detail: theiia.org.
Comparison between Vietnamese regulation and International practice:
Decree 05 has contents that are similar with 3 components of the International Professional Practices Framework (“IPPF ") issued by The Institute of Internal Auditors Inc. “IIA”, which are (1) Codes of Ethics, (2) Core Principles (3) Attribute Standards. In addition to the three components above, the IPPF also has other components: (4) Internal Audit Definition; (5) Performance Standards; (6) Recommended guidance to implement the Standards (Implementation Guidance and Supplemental Guidance).
Definition of “Internal Audit”: Decree 05 does not mention this definition, but instead is the concept of "Objectives of internal audit". This definition is one of indispensable components in International Professional Practices Framework, which helps guide the development of other detail guidance standards. In addition, all of the relevant standards and practices should conform to and guide with this definition.
The governing body to approve activities of internal audit (“The Board”): Decree 05 lists down the specific governing titles in the organization that are authorized to approve, but there is no general definition for the concept “the Board”. According to international standards (“Standards”), the level provides approval of the functional reporting of internal audit must be the highest level of the governing body charged and these members are not part of management on order to ensure that internal audit activities have to be carried out independently. Decree 05 just mentions the “Board of Management”/ “Board of Directors” of listed companies, but there are still governance models in which the “Board of Management” does not include independent members and non-operating members. Therefore, in this case, the “Board of Management” can not guarantee independence, it should be the “Supervisory Board” of the “General Assembly of Shareholders”.
Independence and Objectivity: Decree 05 seems to apply these concepts for internal auditors only whereas in the IPPF gives a clear definition and classification in independence and operation of different departments in internal audit as well as individual objectivity of internal auditors. Furthermore, according to IPPF, there are some confusion in the two definitions despite their clearly different meanings, so IPPF has supplemental guidance for each issue. These are the two important concepts of internal audit.