If your company just crossed the threshold that requires an independent financial statement audit, the first one feels intimidating. It does not need to be. Most delays and awkward findings come from poor preparation, not from bad accounting. This guide explains exactly what an auditor asks for, how to get ready, and where first-timers stumble. By the end you will have a concrete checklist and a realistic timeline.
Who needs a statutory audit and why it exists
In Vietnam, foreign-invested enterprises, credit institutions, insurers, public-interest entities, and several other categories must have their annual financial statements audited by a licensed firm. The purpose is not to catch you out. An audit gives banks, investors, tax authorities, and owners reasonable assurance that the numbers are free of material misstatement. “Reasonable assurance” is a key phrase: an audit is not a 100% guarantee and it is not a fraud investigation.
What the auditor actually does
The auditor tests whether balances are real, complete, and correctly valued. They sample transactions, confirm balances with third parties, inspect contracts, and recalculate figures. They also assess whether your accounting policies follow the applicable framework, most commonly the Vietnamese Accounting Standards and Circular 200/2014/TT-BTC.
What to prepare before fieldwork starts
The single biggest time-saver is a clean, reconciled trial balance. Everything else supports it. Prepare your general ledger, sub-ledgers, and a mapping from your accounts to the financial statement lines. Have signed contracts, invoices, bank statements, and fixed asset records ready to retrieve quickly.
Documents auditors request almost every time
- Year-end trial balance and prior-year audited statements
- Bank confirmations and reconciliations for every account
- Accounts receivable and payable aging, with major balances confirmable
- Fixed asset register with additions, disposals, and depreciation
- Inventory count sheets and valuation basis
- Loan agreements, lease contracts, and related-party transactions
- Payroll summaries and tax filings (VAT, CIT, PIT)
A real scenario: the inventory that was not counted
A trading SME booked closing inventory at 4.2 billion VND but never performed a physical count at year-end. During fieldwork, the auditor could not verify existence and requested a count. By then, stock had already moved. The result was a scope limitation note and a stressful reconstruction of records. A 30-minute count on 31 December would have prevented all of it. The lesson: some evidence can only be captured at a point in time.
Common mistakes and how to fix them
Treating the auditor as an accountant. Auditors test your work; they cannot prepare your books and then audit them, because that breaks independence. Fix: close your own books first.
Reconciling only cash. Many SMEs reconcile bank accounts but ignore intercompany and related-party balances, which frequently disagree. Fix: reconcile both sides before fieldwork.
Missing supporting documents. A number without a contract or invoice behind it is a finding waiting to happen. Fix: attach source documents to significant entries.
Ignoring cut-off. Recording December sales in January, or vice versa, distorts revenue. Fix: check the last invoices and shipments around year-end.
Your preparation checklist
- Close the period and lock the trial balance
- Reconcile every bank, receivable, payable, and intercompany balance
- Perform and document a year-end inventory count
- Update the fixed asset register and recompute depreciation
- Gather tax filings and reconcile them to the ledger
- Prepare a schedule of accruals, provisions, and prepayments
- Assign one internal contact to answer auditor queries
- Agree a timeline and a document request list with the firm early
Conclusion and next step
A smooth first audit is mostly logistics. Reconcile early, document as you go, and keep one person accountable for auditor communication. Your next step this week: build the document request list with your audit firm and schedule the year-end inventory count now, not in January.
Frequently asked questions
How long does a first audit take?
For a small trading or service company with clean books, fieldwork often runs one to two weeks, plus review time. Poor records can double that. Early preparation is the main variable you control.
Can the auditor also do my bookkeeping?
No. Preparing the accounts and then auditing them impairs independence. You need a separate bookkeeper or accountant to close the books first.
What happens if we cannot provide evidence for a balance?
The auditor may treat it as a scope limitation, which can lead to a qualified or disclaimer opinion. Provide alternative evidence where possible, and prevent it next year by keeping contemporaneous records.
Do we have to be physically present during fieldwork?
Someone who understands the numbers should be available to answer questions and retrieve documents. Remote support works, but response speed directly affects the timeline.
References
- Law on Independent Audit (Vietnam)
- Circular 200/2014/TT-BTC on the enterprise accounting regime
- Vietnamese Standards on Auditing (VSA)