~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Vietnam moves on landmark audits for state firms

HANOI - Vietnam is moving ahead with landmark plans to audit for the first time 100 of its largest state firms, although one financial source indicated key corporations may be excluded from the scheme.

The source, who had seen a list of firms slated for audits, said on Wednesday that some of communist-ruled Vietnam's biggest companies such as Vietnam Airlines, Vietnam Coal Corp and Vietnam Posts and Telecommunications were not included.
The planned audits should be in line with international accounting standards and form part of the conditions Vietnam has pledged to meet in return for 20 billion yen ($162.5 million) in fresh bilateral assistance from Japan.

Japanese Finance Minister Kiichi Miyazawa, during a brief stopover in Hanoi on Sunday, said Tokyo had offered the money after Vietnam Premier Phan Van Khai promised action that included the audits, private sector encouragement and tariff reforms.
Finance Minister Nguyen Sinh Hung said the plans were not yet complete but that he hoped the first audits would take place by the end of 1999 and that he expected the process to last several years, the official Saigon Times Daily reported on Wednesday.

``This monitoring measure aims at greater financial disclosure by state companies to provide their potential partners with much more confidence,'' Hung was quoted as saying.
The head of a state-run audit firm, who declined to be identified, said firms to be audited would be those with registered capital in excess of 10 billion dong ($719,000) and which had annual revenues of more than 80 billion dong ($5.75 million).

``(The list) will be submitted to the government for approval and if given the green light the plan should begin from June,'' he told Reuters.
Very few of Vietnam's some 5,500 state firms have ever been audited, although in recent years some major commercial banks and state power monopoly Electricity of Vietnam have been examined.
Executives from foreign auditing firms welcomed the initiative and said it would be good for Vietnam.
``It will raise the confidence of everybody -- of the lenders, of the investors and of the companies themselves,'' said Ruy Moreno, partner and general director for U.S. accountants Arthur Andersen in Vietnam.
Peter Tibbitts, managing partner for Ernst & Young, said that as the firms had never been audited full disclosure may be problematic and that due diligence reviews may be preferable.

``The biggest problem is going to be that of inter-related debts between state-owned enterprises and the government and the issue of assessing recoverability,'' Tibbitts said.
Hanoi has come under fire from multilateral financial institutions for politically inspired lending and credit policies used in bids to shore up its ailing and cumbersome state sector.

Reuters - May 19, 1999.