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.
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