According to the draft, auditing enterprises must purchase professional liability insurance or set up a professional risk reserve fund to have a source to pay compensation for damages (if any) to clients, audited units and users of audit results.
Auditing firms can simultaneously purchase professional liability insurance and set aside a professional risk reserve fund to protect the auditing firm.
Auditing enterprises must explain in detail the purchase of professional liability insurance or the annual professional risk reserve fund provision in the audited annual financial statements of the auditing enterprise.
Illustration photo. (Source: ST)
According to this draft, auditing enterprises are allowed to purchase auditing professional liability insurance from insurance enterprises, branches of foreign non-life insurance enterprises, and mutual organizations providing micro-insurance in accordance with the provisions of Vietnamese law on insurance business. In case an insurance enterprise operating in Vietnam cannot provide auditing professional liability insurance services, the auditing enterprise is allowed to purchase insurance from a foreign insurance enterprise. Foreign-invested auditing enterprises and auditing enterprises that are members of international auditing organizations can purchase auditing professional liability insurance from a foreign insurance enterprise.
Auditing enterprises and insurance enterprises shall agree on the insurance premium to ensure that in case of damage, the level of compensation shall be in accordance with the level of responsibility in the contract/agreement between the parties, but must not be lower than the audit service fee that the auditing enterprise receives from the client or audited unit at the time of agreement.
The cost of purchasing professional liability insurance for auditing is included in the business expenses of the auditing firm according to the actual cost of purchasing insurance and must have legal invoices and documents.
Auditing enterprises must always maintain the purchase of professional liability insurance for practicing auditors and auditing enterprises throughout the validity period of the Certificate of eligibility to conduct auditing services.
In case an auditing firm does not purchase professional liability insurance, it must set aside a professional risk reserve fund with a minimum annual deduction of 1% of audit service revenue (revenue excluding value added tax).
When the occupational risk reserve fund has a balance at the end of the fiscal year equivalent to 10% of the audit service revenue of the fiscal year, the auditing firm will no longer continue to allocate the occupational risk reserve fund for that year.
The provision for professional risk reserve fund is accounted for as the provision for payables and is included in the business expenses of the auditing enterprise according to the provisions of law.
Source: https://www.congluan.vn/de-xuat-doanh-nghiep-kiem-toan-phai-mua-bao-hiem-trach-nhiem-nghe-nghiep-post314828.html
Comment (0)