Circular 24/2021/TT-NHNN amending Circular 39/2011/TT-NHNN on independent audit of foreign bank branches

CIRCULAR

Amending and supplementing a number of articles of the Governor of the State Bank of Vietnam’s Circular No. 39/2011/TT-NHNN of December 15, 2011, providing independent audit of credit institutions and foreign bank branches^[1]

Pursuant to the June 16, 2010 Law on the State Bank of Vietnam;

Pursuant to the June 16, 2010 Law on Credit Institutions; and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the March 29, 2011 Law on Independent Audit;

Pursuant to the Government’s Decree No. 26/2014/ND-CP of April 7, 2017, on organization and operation of banking inspection and supervision agencies; and the Government’s Decree No. 43/2019/ND-CP of May 17, 2019, amending and supplementing a number of articles of the Government’s Decree No. 26/2014/ND-CP of April 7, 2017, on organization and operation of banking inspection and supervision agencies;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Chief of the Banking Supervision Agency;

The Governor of the State Bank of Vietnam promulgates the Circular amending and supplementing a number of articles of the Governor of the State Bank of Vietnam’s Circular No. 39/2011/TT-NHNN of December 15, 2011, providing independent audit of credit institutions and foreign bank branches (below referred to as Circular No. 39/2011/TT-NHNN).

Article 1. To amend and supplement a number of articles of Circular No. 39/2011/TT-NHNN

1. To amend and supplement Article 1 as follows:

“Article 1. Scope of regulation

1. This Circular provides independent audit of credit institutions and foreign bank branches.

2. Independent audit of credit institutions under special control specified in Articles 147 and 151a of the Law on Credit Institutions (which has been amended and supplemented) and independent audit of credit institutions and foreign bank branches to meet banking inspection and supervision requirements under the Government’s regulations on organization and operation of banking inspection and supervision agencies must comply with relevant regulations and Articles 11, 12, 13 and 14 of this Circular.”

2. To amend and supplement Clause 2, Article 8 as follows:

“2. Independent audit of the operation of the internal control system of a credit institution or foreign bank branch must cover at least the following contents:

a/ Audit of the credit institution’s or foreign bank branch’s internal control system (including mechanisms, policies, processes and internal regulations) regarding compliance with current laws and the State Bank’s regulations on internal control systems of credit institutions and foreign bank branches.

For the contents of the internal control system for which the compliance audit has been carried out and no change is seen, they are not required to be re-audited;

b/ Audit of the operation of the internal control system regarding the making and presentation of financial statements;

c/ In addition to the contents of audit specified at Points a and b of this Clause, a commercial bank or foreign bank branch is subject to audit of the operation of its internal control system regarding the internal evaluation of capital adequacy in accordance with the State Bank’s regulations on the internal control system.”

3. To add Clause 3 to Article 8 as follows:

“3. Audit of the operation of the internal control system of a credit institution or foreign bank branch specified at Points b and c, Clause 2 of this Article aims to ensure:

a/ Effectiveness and safety in operation; protection, management and safe and effective use of assets and resources;

b/ Truthful, reasonable, complete and timely financial information and management information systems.”

4. To amend and supplement Clause 4, Article 9 as follows:

“4. Within 90 days after receiving an audit report with a qualified opinion, the credit institution or foreign bank branch shall send the re-audit result to the State Bank for reporting.”

5. To amend and supplement Clause 2, Article 10 as follows:

“2. The audit report regarding financial statements of a credit institution or foreign bank branch must comply with the law on independent audit, Vietnamese accounting and audit standards and other relevant laws.

The audit report regarding the operation of the internal control system of a credit institution or foreign bank branch must at least appraise the compliance with current laws and the guidance of the State Bank in the building and operation of the internal control system as well as the economy, effect and effectiveness of this system in the prevention, detection and timely handling of risks, and other objectives of the credit institution or foreign bank branch, for the contents specified at Points b and c, Clause 2, Article 8 of this Circular.”

6. To amend and supplement Clause 11, Article 11 as follows:

“11. Audit organizations and certified public accountants carrying out audit of banks, non-bank credit institutions and foreign bank branches must be on the lists of audit organizations and lists of certified public accountants approved to audit entities with public interests as announced by the Ministry of Finance for the audit period.

In case a bank or non-banking credit institution is an entity with public interests in the securities sector, the audit organization or certified public accountant carrying out audit of such bank or non-bank credit institutions must be on the list of audit organizations and the list of certified public accountants approved to audit entities with public interests in the securities sector as announced by the State Securities Commission of Vietnam for the audit period.”

7. To amend and supplement Clause 2, Article 12 as follows:

“2. Audit organizations and certified public accountants carrying out audit of microfinance institutions and people’s credit funds must be on the lists of audit organizations and lists of certified public accountants approved to audit entities with public interests as announced by the Ministry of Finance for the audit period.”

8. To add Clause 2a to below Clause 2, Article 12 as follows:

“2a. Not carrying out independent audit of the same microfinance institution or people’s credit fund for 5 consecutive years preceding the year of audit.”

9. To amend and supplement Clauses 2, 4 and 5, Article 15 as follows:

“2. Within 30 days after deciding to select an independent audit organization, to send a notice of the selected independent audit organization to the State Bank according to the following provisions:

a/ A credit institution or foreign bank branch shall send a notice to the State Bank (via the Banking Supervision Agency), except the case specified at Point b of this Clause;

b/ A people’s credit fund or foreign bank branch subject to micro-safety inspection and supervision by a State Bank branch of a province or centrally run city (below referred to as provincial-level State Bank branch) shall send a notice to the provincial-level State Bank branch of the locality where its head office is based.

4. Within 90 days from the end of a fiscal year, to send the independent audit result to the State Bank under Point a or b, Clause 2 of this Article.

5. To submit to re-audit in case the audit report has a qualified opinion; to send the re-audit result to the State Bank under Point a or b, Clause 2 of this Article.”

10. To amend and supplement Clause 2, Article 16 as follows:

“2. To analyze, evaluate and handle the received independent audit or re-audit result in accordance with Clauses 4 and 5, Article 15 of this Circular.

If detecting that a certified public accountant or an audit organization violates the law in the course of carrying out independent audit of a credit institution or foreign bank branch, a provincial-level State Bank branch shall report thereon and propose prompt solutions to the State Bank Governor (via the Banking Supervision Agency).”

11. To amend and supplement Clauses 1 and 3, Article 17 as follows:

“1. To summarize, evaluate and submit to the State Bank Governor reports of provincial-level State Bank branches specified in Clause 3, Article 16 of this Circular for processing.

3. To report and propose the State Bank Governor:

a/ To consider and settle the cases specified in Clause 6, Article 15 of this Circular;

b/ To send a document to the Ministry of Finance when detecting or receiving a report from a provincial-level State Bank branch specified in Clause 2, Article 16 of this Circular on the fact that a certified public accountant or an audit organization commits violations in the course of carrying out independent audit of a credit institution or foreign bank branch.”

Article 2. To annul Clause 7 of Article 3, Clause 2 of Article 4, Clause 2 of Article 6, Clause 9 of Article 11, Clause 1 of Article 16, and Clause 5 of Article 17, of Circular No. 39/2011/TT-NHNN.

Article 3. Organization of implementation

The Chief of the Office, Chief of the Banking Supervision Agency, heads of the units of the State Bank of Vietnam, credit institutions and foreign bank branches shall organize the implementation of this Circular.

Article 4. Implementation provisions

1. This Circular takes effect on April 15, 2022, except the case specified in Clause 2 of this Article.

2. Independent audit of the operation of internal control systems regarding the internal evaluation of capital adequacy of commercial banks and foreign bank branches specified in this Circular shall apply to the fiscal year 2022 onward.-

For the State Bank Governor
Deputy Governor
DOAN THAI SON