THE STATE AUDIT OFFICE OF VIETNAM (SAV) Phan Truong Giang & Le Hoai Nam By State Audit Office of Viet Nam 8/2016
CONTENTS 1. State Audit Office of Vietnam – an Overview 2. Extractive Insductry and Auditing EI: an Overview 3. Policy and Legal Frameworks Approach: Experience and Practices in Vietnam
State Audit Office of Vietnam – an Overview Establised in 1994 (history of 22 years) In 2005, the National Assembly passed the first the State Audit Law In 2013, the legal status of SAV and the Auditor General was officially constitutionalized in the Constitution The SAV is structured in a centralised and unified organizational model which comprises of central Head Office (8 specilazed Audit Depts) and regional offices (13 R.Os)
SAV’s Development Strategy – Vision, Mission and Core Values The SAV Development Strategy by 2020 Vision: “Being an accountable, trustworthy, professional and modernized public financial audit institution that makes important contributions to the national industrialization and modernization in line with international practice and standards” . “Strengthening Mission: the operational capacity, legal effectiveness, performance quality and efficiency of SAV as a useful tool of the State for verifying and supervising the management and use of State budget, money and assets” . Core Values: “Transparency, Quality, Efficiency, and Continuously Value- added” ; Core values of auditors: “Fairness -Integrity- Professionalism- Honesty” .
The 2015 State Audit Law (take effect as from 1st January 2016) SAV’s functions : to assess, certify, determine and make recommendations on the management and use of public finance and public assets SAV’sTypes of Audit: financial audit, compliance audit and performance audit The objects of SAV audits: the management and use of public finance and assets, and those activities of audited entities in respect to the management and use of public finance and assets
Enhancing the international relations and cooperation on Performance Audit, Extractive Industry Audit and Environmental Audit Enhancing cooperation, exchange and share professional experiences Strengthening multilateral and bilateral cooperation Mobilizes the support from SAIs, international partners and donors SAV will be the Chair of ASOSAI for the term 2018- 2021
Extractive Industry in Vietnam There are several main areas of extractive Industry in Vietnam, such as: • Natural Gas and Oil • Coal • Other Minerals: Gold, Iron, Aluminium Bauxite, Titan, Apatit.... Contributing for around 10-11% GDP and 25% total revenue of Vietnam
The SYSTEM OF LEGAL DOCUMENTS OF VIETNAM Constitution Code/Law National Assembly passes Resolution Ordinance National Assembly Standing Committee passes Resolution Order President issues Decision Government promugates Decree Prime Minister Decision Procurator General of the Supreme People’s Procuracy, Circular Chief Justice of the Supreme People’s Court Ministers, heads of ministerial-level agencies Circular State Auditor General Decision People’s Councils at all levels Resolution Decision (and Directive under the People’s Committees at all levels 2008 Law) Local administrations in special Legal documents (introduced for the administrative-economic units first time in the 2015 Law)
Policy and Regulations Related to Extractive Industry in Vietnam Mineral Law, 2010; Law on Environmental Protection; Oil and Gas Law Decree No.15 of the Government detailing the Law on Minerals, regulated: Mineral activities must comply with Mineral exploration must fully evaluate mineral strategies and master plans the deposits and quality of all kinds of and connected with the protection of minerals in an exploration area. environment, natural landscape, In mineral mining, socio-economic historical-cultural relics, scenic effectiveness and environmental places and other natural resources protection must be considered basic while assuring national defense, criteria for making investment decisions; security and social order and safety. and advanced mining technologies Mineral activities may only be which are suitable to the size and carried out only after obtaining characteristics of each mine as well as permission from competent state each kind of mineral shall be applied in management agencies. order to recover minerals to the maximum.
Auditing Extractive Industry in SAV Audit procedures: Audit Standards and Financial Audit Procedures in general. There is no specific audit procedure/guideline for an extractive industry audit Type of audits: Compliance Audit, Financial Audit and Program Audit. However, we were now mainly focusing on financial and compliance audit
Auditing Extractive Industry in SAV ( Con’t ) The financial audit of entities which are responsible for managing extractive industries - Ministry of natural resources and Environment - General Department of Geology and Minerals - Department of Survey and Mapping; - Vietnam Institute of Geosciences and Mineral Resources. - ….
Auditing Extractive Industry in SAV( Con’t ) The financial audit of state-owned companies and groups which are responsible for mining and extracting resources - Vietnam National Coal and Mineral Industries Holding Group (TKV) - Vietnam National Oil and Gas Group (PVN) - Other state-owned companies operating in this area
Auditing Extractive Industry in SAV( Con’t ) Other audits related to Extractive Industry The audit of managing, extracting and trading Mineral Resources of some state- owned groups, corporation and companies The audit of issuing mining license and governmental management of extractive mineral resources in period from 2009- 2012.
Policy and Legal Frameworks Cycles in Vietnam Reviewing Developing Policy and Policy and Regulations Regulations Applying Delivering Policy and Policy and Regulations Regulations 1. Are there any relationship between Policy & Legal Frameworks Cycles and Extractive Industry Value Chain 2. Which steps of policy and regulations development Cycles should be audited?
Value chain Approach on Policy & Legal Frameworks Audit in Viet Nam Policy and Legal - Reviewing Policy and Regulations framework - Developing Policy and Regulations Exploration Award of contracts and Extractive Policy and licenses - Delivering Policy and Regulations Legal Industry - Appling Policy and Regulations Frameworks Value Monitoring of Cycles operations chain Collection of revenue Revenue management and allocation Implementation of sustainable policies
Audit Approach on EI Policy & Legal Frameworks in Viet Nam Policy and Legal Audit types Applied No EI Value chain Note Framworks Cycles by Vietnam SAI As consultants Policy and Legal framework and/or one of Developing Policy and Not yet (only using 1 Policy and Regulations audit results) Issues arising from other value Regulations chain Proponent Exloration Award of contracts and licenses Delivering Policy and 1. Financial Audit 2 Regulations 2. Compliance Audit Monitoring of operations 3. Performance Audit Auditing Collection of revenue Applying Policy and 4. Combined Audit 3 Revenue management and Regulations (and/or Specialized allocation Audit) Implementation of sustainable policies As consultants Policy and Legal framework and/or one of Reviewing Policy and Not yet (only using 4 Policy and Regulations audit results) Issues arising from other value Regulations chain Proponent
Sample of Audits that focus on Applying Extractive Industry Policy and Regulations in each EI Value chain Financial Audit State-owned Enterprises (SOEs) Financial Statements Compliance Audit Exploration Combined Audit Management of Mining Both Private and SOEs (Specialized Audit) Exploration Government Bodies Licensing and authorising Award of contracts and Combined Audit Local Governments for mining natural licenses Both Private and SOEs resources and minerals Monitoring of Financial Audit Government Bodies Financial Statements operations Compliance Audit Local Governments Finacial Audit Revenue Department The compliance of regulations on mining Collection of revenue Compliance Audit Local Governments sectors in Local Governments Combined Audit Both Private and SOEs Managing and using oil Government Bodies revenues which allocate Revenue management Combined Audit Local Governments to the Vietnam Oil and allocation SOEs Corporation The rehabilitation of Government Bodies Implementation of Performance Audit abandoned mines in Thai sustainable policies Compliance Audit Local Governments Nguyen Province Both Private and SOEs
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