The role of a chief accountant may not be common in many countries, but in Vietnam, it holds significant importance in managing a firm's finances and is a statutory requirement. For foreign firms operating in Vietnam, it's essential to understand and ensure compliance with the chief accountant component of Vietnam's Law on Accounting. This ensures a smooth and legally compliant financial management process in the country.
Vietnam’s Law on Accounting provides comprehensive details of what is required of firms operating in the Southeast Asian nation with respect to bookkeeping and accounting. One of the key stipulations is the mandatory appointment of a chief accountant. While this term may be unfamiliar to many foreign firms, in Vietnam, failure to comply with this requirement can lead to financial penalties.
Understanding the significance of the chief accountant role is crucial for foreign firms operating in Vietnam. We discuss what foreign firms should know about this critical role.
What is the role of a chief accountant in Vietnam?
In Vietnam, a chief accountant serves as the head of a firm's accounting unit. Appointed by the firm's legal representative, the chief accountant operates under their direction. While they lead the accounting unit and may be held accountable for the firm's accounting practices, they typically report to a chief financial officer (CFO) who bears the ultimate legal responsibility.
Is having a chief accountant mandatory for firms in Vietnam?
Yes, all firms in Vietnam are required to have a chief accountant. This statutory obligation is enshrined in the Law on Accounting, and failure to appoint a chief accountant may result in a fine of several million Vietnamese dong.
It's worth noting that extra-small firms have the option to appoint an acting chief accountant for the first 12 months, after which a permanent chief accountant must be designated to comply with the legal requirement.
Criteria for appointing a chief accountant in Vietnam
A firm’s chief accountant must meet several key criteria:
- Comply with professional ethics, be truthful, integrated, and abide by the law.
- Have professional accounting knowledge and skills.
- Have at least an associate degree in accounting and three years of experience, or a bachelor's degree in accounting and 2 years of experience in accountancy.
- Have a training certificate in techniques for chief accountants.
Obligations of chief accountants in Vietnam
Chief accounts in Vietnam have the following responsibilities:
- To ensure the company is compliant with the Law on Accounting.
- To ensure a firm's accounting systems are organized in accordance with the Law on Accounting.
- To ensure all the financial statements of the firm are in full compliance with all relevant laws, regulations, and accounting standards.
On a practical level, a chief accountant in Vietnam will sign off on most accounting-related documents, financial statements, and the like. This can be time-consuming in that firms are required by law to keep hard copies of all key financial documents, and these must all be signed by the chief accountant and the legal representative. It is, however, required by law.
A chief accountant may also act as a liaison between the firm and the authorities, most often the Department of Taxation.
From time-to-time, firms may be audited and it will usually be the chief accountant that heads up the response. Firms should ensure their chief accountant is well versed in local accounting law, that they are organized, and that they have an excellent work ethic. In the event of an audit, this should mean that a resolution can be reached quickly and efficiently.
Rights of chief accountants in Vietnam
If more than 50 percent of a firm’s charter capital is held by the Vietnamese state, a chief accountant has several rights they may choose to exercise:
- To offer opinions in writing about employment, reassignment, pay rises, commendations, and disciplinary actions for accountants, warehouse-keepers, and treasurers.
- To request relevant departments of the accounting unit to provide adequate documents related to the chief accountant's accounting works and financial supervision works in a timely manner.
- Preserve their opinions in writing if they are at odds with that of the decision maker.
- Submit written reports to a legal representative of the firm if they discover regulatory violations of the law.
In essence, a chief accountant in Vietnam has the right to object to directives from legal representatives and to document those objections to limit their liability should there be an adverse reaction from the tax authorities.
Hiring a chief accountant in Vietnam
A chief accountant does not necessarily need to be on staff at an organization. Firms can hire a chief accountant or an accounting firm to provide the services of a chief accountant in Vietnam. In the latter situation, the Law on Accounting provides the following guidelines:
- There must be a signed contract between the firm and the chief accountant services provider.
- Firms are responsible for ensuring that adequate and accurate information and documents are provided.
- The chief accountant service provider is responsible for the accounting and data they provide.
Foreign firms should be mindful that the ultimate responsibility for a firm's accounting will rest with the legal representative/s. In this light, it’s worth taking the time to choose the right chief accountant or accounting firm to carry out the chief accountant’s responsibilities.
Firms should also consider other means of ensuring compliance and consider additional means of oversight. This could be in the form of additional accounting staff or processes and procedures that ensure all documents are double-checked for accuracy.
Chief accountants in Vietnam in a nutshell
All firms must have a chief accountant in Vietnam. This role is critical to compliance with Vietnam’s Law on Accounting and choosing the right accountant to carry out this role should be taken very seriously. Not only should a firm ensure that they find a chief accountant they can trust but they should also make sure they find a responsible individual with vast experience in providing chief accounting services in Vietnam.
Dezan Shira and Associates has been ensuring businesses are compliant with Vietnamese law since 2008. With teams of tax professionals in Hanoi, Danang, and Ho Chi Minh City, firms can access the highest quality tax support no matter where they are in this booming Southeast Asian nation. For more information email: email@example.com