Lacking auditors for boom

The stock market boom in 2006 has led to the serious shortage of auditors authorised to audit listing companies and institutions operating in the stock market.
At the end of March, BHP Auditing and Accountant Consultancy Services Company lost the right to audit securities issuance institutions, listing companies and securities trading institutions since the company does not have enough auditors as required by the State Securities Commission (SSC).

The other remaining 11 auditing firms, which have been authorised by SSC to audit the institutions operating in the stock market, are also facing the serious shortage of labour force.

The stock market boom in 2006 with the massive listing of joint stock companies and the massive establishment of securities companies all have made the labour force shortage in auditing firms more serious. Eleven authorised auditing firms will have to audit 195 listing companies and 55 operational securities firms. It is clear that securities firms do not have many choices in having their financial reports audited.

Under the current regulations, auditing firms which have been operating for three years and more, and have 10 auditors and more, are eligible to apply to SSC for the authorisation to audit listing companies.

In order to settle the current problem of lacking auditors, SSC has recently informed auditing firms that firms which can meet the stipulated requirements should send applications to SSC for prompt approval. Under the current regulations, the agency only considers applications every two years.

Le Lan Huong, a senior staff at Grant Thorton, a foreign owned auditing and financial consultancy service provider, said that the firm was going to submit an application for the SSC’s approval in April. The information proves to be good news for auditing firms.

However, Mrs Huong has acknowledged that lacking labour is one of the hottest problems now in auditing firms, stressing that the lack of auditors would influence the quality of auditing services.

She said that auditing firms now all complained that they lacked staff and they would employ all experienced candidates.

Dao Xuan Dung, Director of UHY, complained that the labour force in auditing firms had never witnessed such a serious shortage as nowadays. “Labour force is the biggest problem of auditing firms,” Mr Dung said.

UHY, for example, once had 10 auditors who had practising licences, but two of them have left for other companies.

Hoang Duc Hung, Director of Enterprise Consultancy and Auditing Division under Ernst & Young Vietnam, said that the staff who had quit their jobs were mainly female staff who had 3-4 years of experience and practising licenses.

Several years ago, many employees left auditing firms to work for banks, while they now are leaving both auditing firms and banks to work for securities companies, a suitable decision as the stock market is developing strongly. Ernst & Young Vietnam, for example, lost 10 auditors in 2006.

Securities trading companies and investment funds are now offering high wages in a bid to attract more experts. High salary levels (offered salaries may be double the levels the staff receive from their current companies) and the right to buy shares at preferential prices prove to be very attractive in the eyes of auditors.

In securities trading companies, the salary level is not less than VND20mil a month for the post of manager. In addition, managers may have the right to buy VND500mil-1bil worth of shares at face value.

Mr. Hung said that Ernst & Young had to apply a new policy in order to attract more employees. In 2006, the total salaries paid to its staff increased by 20%, while more training courses were provided and office facilities were upgraded.

The ongoing crisis of financial experts in Vietnam has reminded Rhys Alan Johnson, training expert of ACCA, of the situation of Eastern European countries and China in the 1990s. In order to settle the problem of staff shortage, the countries had to hire senior experts from the US and the UK. Now, the countries which once lacked staff are exporting their experts to the countries which once provided financial experts to them.

However, it will be more difficult for Vietnam to settle the current problem. Mr. Johnson said that ACCA (Association of Chartered Certified Accountants) is trying to design a mini training course, and the trainees of the course will get CAT (Certified Accounting Technician).

Source: VNN