A survey says that the information in the financial reports was incomplete and much more formal. — File Photo

HA NOI (Biz Hub)—The evaluation of the quality of the financial statements of companies depends heavily on auditing firms but auditors are not responsible for fraud of companies and they have little ability to prevent swindling.

According to Bui Van Mai, vice chairman of the Viet Nam Association of Certified Public Accountants (VACPA), auditors can help companies find out data errors and shortcomings during the process of making reports, as well as consult and help companies improve their management systems.

"However if they wish to swindle, auditors are not responsible for detecting and making conclusions on such fraud," Mai was quoted as saying on the Thoi bao Ngan hang (Banking Times) newspaper.

According to market insiders, the responsibility is in the hands of the company's board of directors and its internal control department.

However, the role of board members in Vietnamese companies is more for execution rather than strategic management and supervision. Meanwhile, the roles of internal control departments are weak.

The Corporate Governance Scorecard 2012 of the State Securities Commission showed a disappointing result in which overall points of all surveyed businesses were below 60 per cent while the average score was 42.5 per cent, lower than the two previous surveys which scored 43.9 per cent and 44.7 per cent, respectively.

The annual survey rated quality of corporate governance of 100 listed companies on both HCM City and Ha Noi stock exchanges which represent 80 per cent of total market capitalization.

Following the 2012 survey, economic woes pushed many domestic companies into financial difficulty and many attempted to conceal their weak business results.

The report concluded that the information in the reports was incomplete and much more formal.

Experts say the most important thing is that shareholders should be aware of and utilise their authority in supervising operation of their businesses.

They should be strict in the matters of appointment of independent auditors, ask for information from board members as well as information in the financial statements. They are also encouraged to participate in shareholder meetings.

In addition, Le Thi Thao, from the Law Faculty of University of Hue, suggested to empower independent directors to increase their control over the performance of boards of directors as well as increasing the responsibility and power of the internal control department to support their supervisory role.

In an attempt to help listed companies improve their corporate governance, the Ha Noi Stock Exchange recently announced a plan to organise fact-finding tours for its listed companies to the Thai Stock Exchange to learn about the Thai system of managing information of listed companies as well as how the system can help strengthen the company corporate governance.

Earlier this year, a similar tour was organised by the HCM City Stock Exchange to Bursa Malaysia with the support of Maybank Kim Eng Securities Co. — VNS