(Stock Investment) The market for Financial Audit and Consultancy services is growing in potential but the competitive pressures in this field are still not cool down due to the market expansion strategy of International Auditing Firms-Big 4 or the price-cutting strategy of auditing enterprises. In New Year, what will Vietnamese Auditing Profession do to overcome these challenges?
Mr. Do Manh Cuong-Member of Board of Member, Deputy General Director of AASC Auditing Firm had a conversation with Stock Investment.
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" ...the gap between Big 4 Group and domestic auditing firms is narrowing in terms of service quality and personnel development. Domestic enterprises are outstanding in basic construction auditing services ...
In 2014, the market witnessed numerous expansion activities from Big 4 Group in Vietnam. How do you feel about the competition from this segment?
The influence of Big 4 Group in Vietnam is one of the inevitable development trends of market during integration period. However, the gap between Big 4 Group and domestic auditing firms is narrowing in terms of service quality and personnel development. Domestic enterprises are outstanding in basic construction auditing services, and considered equally in the list, which voted by international financial institution in Vietnam. Regarding the currently domestic human resources, there are more and more people graduate and granted international certificate. Domestic firms also focus on training and self-development of employees in order to narrow the gap with Big 4 Group.
At several meetings held by Ministry of Finance and Accounting and Auditing Associations, lower the audit fees have been a hot issue. During the year, whether have we handled this situation or not, sir?
Frankly, this issue was discussed for many times, but still has no suitable solutions. Like a domino effect, when the big companies charge lower prices to reach the segment of smaller companies, either the smaller companies will discount to maintain the number of customers, or approach the segment of other smaller companies, so this process has been repeated in recent years. Due to impact of this problem, a number of Professional Associations like VACPA has to offer a temporary solution, in which strengthen inspection the quality of low price service contracts.
Several areas have implemented restructuring by reducing quantity and increasing quality. In the auditing field, how is it going, sir?
Establishing an audit firm in newly- formed market would require at least 03 Auditors with few year experiences according to the formal regulation set by competent authority, as the result there were more than 150 companies established during that time. Until the Independent Auditing Law came into force in Vietnam, the requirements for establishment have been raised about the number of auditors and charter capital, etc. On the other hand, there are several companies consolidated in the market in order to increase the competitiveness. As of June 10, 2014, there are more than 134 firms granted the certificate of eligibility for providing auditing services by Ministry of Finance. In my opinion, this process should continue to perform.
According to forecast of the year 2015, the whole economy will be much better, along with changes in regulations, and the enterprise’s awareness about financial environment. What do you think about the opportunities for enterprises and Audit Sector in general?
The market will pave the way for auditing firms growing up. For example, the demand for equitization, business valuation, auditing and FDI enterprise sector consultancy services, restructuring the economy in general as well as the banking sector, the state-owned corporations operating ineffective in particular. New Procurement Law, which took effect from July 1, 2014 lower requirement of organizing public tender on auditing and consulting contracts with a value of VND 3 billion down to VND 500 million. Due to this result, number of project and work, which should be audited, is expanding.
Facing the opportunities and challenges from such competitions, what should Vietnamese Auditing Enterprises do in order to proactively involve?
The audit firms should pay attention to the professional investment, specialization and computerization of services provided towards becoming a reliable partner. In order to have enough competitive resources, domestic audit firms should prioritize the development of human resources and networking, forming the "supply chain" in the field through joint venture, association, merging into a big company, or joining the international accounting networks to combine and share the advantages of each member towards creating a favorably environment. After becoming a member of HLB International, AASC has more opportunities to spillover the brand to foreign customers. In 2014, AASC has hired senior personnel for many service sectors as well as preferential recruitment of foreign personnel who in charge of foreign customer sector. AASC also is about completing trial run of Caseware and customer database management software in order to ensure the quality and efficiency of service provided.
I believe that image of Vietnamese Auditing Firms would be promoted widely on the market by enhancing the quality of service thanks to the above investment factors bring back.
Source: The stock Investment