NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATIONAL PROGRAMS

🙢🕮🙠

ESSAY ON AUDITING

TOPIC: Organizational models of the State audit apparatus in the

world and the State audit of Vietnam

Student’s name: Nguyen Thi Mai Linh

Class: Auditing AEP 61B

Student’s ID: 11192952

Supervisor: Ph.D. Le Quang Dung

Hanoi, 2022
 Table of Contents
LIST OF ABBREVIATIONS iii

LIST OF FIGURES iii

INTRODUCTION iv

CHAPTER 1: Theoretical framework on Organizational models of the State

Audit 1

1.1 General overview of State Audit 1

1.1.1. The definition of the State Audit 1

1.1.2. The role of the State Audit in the Government apparatus 2

1.1.3. Functions, missions, and powers of the State Audit 3

1.2 Organizational model of State Audit 6

1.2.1. Principles of organization of State Audit 6

1.2.2. Classification of the organizational model of State Audit by Legal Status

7

CHAPTER 2: Current practice of the State Audit apparatus in Vietnam 13

2.1 History of the establishment and development of the State Audit in Vietnam
13

2.1.1. The historical background of the State Audit 13

2.1.2. The Party and State's guidelines and policies on the development of State
Audit 14

2.2 Organizational model of the State Audit in Vietnam 15

2.2.1. Legal status and functions 15

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 2.2.2. Organizational form of the State Audit in Vietnam 17

2.2.4. Activities of the State Audit of Vietnam in recent years and

achievements 18

2.3. Models of state audit organizations of some countries in the world and
lessons learned for the State Audit of Vietnam 20

2.3.1. The State Audit of China 20

2.3.2. The State Audit of the Federal Republic of Germany 21

2.3.3. The State Audit of Republic of Korea 22

CHAPTER 3: Assessments and recommendations 24

3.1 Assessment of the State Audit in VietNam 24

3.1.1. Advantages 24

3.1.2. Disadvantages 25

3.2 Recommendations to improve the organizational model of the State Audit

apparatus of Vietnam 27

CONCLUSIONS 29

REFERENCES 30

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 LIST OF ABBREVIATIONS
Abbreviations Explanation
CNAO National Audit Office of China

BAI The Board of Audit and Inspection of Korea

LIST OF FIGURES
Figure 1.1: State Audit agency under the legislature 8
Figure 1.2: The State Audit model is organized independently of the National
Assembly and the Government 10
Figure 2.1: Legal position of the State Audit before the Law on State Audit 15
Figure 2.2: Organizational model of the State Audit 17

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 ● INTRODUCTION

The State Audit was born very early in the world, especially in developed
countries. The organizational model and operation of the State Audit in each
country have different characteristics depending on the characteristics of each
country. However, the State Audit always plays an important role in the process of
inspection and management of the use of public finance and public property.

The State Audit was established under Decree No. 70/CP dated 11/7/1994 of
the Government. After its establishment, the State Audit just formed the
organizational structure, built the facilities, recruited and trained staff and auditors,
and developed the standards, auditing process, and organization to perform audit
tasks assigned by the government and the Prime Minister. Since then, the position
of the State Audit has been gradually enhanced; the responsibility is increasing; the
function is expanding, and it is more in line with the international practice of the
State Audit agency of each country. Organizationally, the State Audit of Vietnam
is organized and managed in a centralized and unified manner, including 8
advisory units under the Executive apparatus, 8 specialized State Audit units, and
13 audit units in regional states and non-business units.

During its operation, the State Audit of Vietnam has achieved several
achievements, however, there are still many limitations and inadequacies affecting
the quality, efficiency, and effectiveness of audit activities. To develop the State
Audit, it is necessary to study and apply the theory on the organizational model and
operating mechanism of the State Auditing agencies, and the practical experience
of the State Audit in the world on specific conditions by the law on State Audit in
Vietnam to meet new requirements.

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 Because of the above reasons, I have chosen the topic: "Organizational
models of the State Audit apparatus in the world and the State Audit in
Vietnam" with the guidance of Ph.D Le Quang Dung, Lecturer at National
Economics University.

The essay consists of three main parts:

Chapter 1: Theoretical framework of Organizational models of the State

Audit

Chapter 2: Current practice of the State Audit apparatus in Vietnam

Chapter 3: Assessments and recommendations

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 CHAPTER 1: Theoretical framework on Organizational
models of the State Audit

1.1 General overview of State Audit

1.1.1. The definition of the State Audit
According to the curriculum "Theory of Auditing", co-editors: Prof. Dr.
Nguyen Quang Quynh and Asso. Prof. Dr. Nguyen Thi Phuong Hoa, published in
2017, introduced the concept of the State Audit: "The State Audit is a system of
specialized apparatus of the state performing the functions of auditing the budget
and public assets. In the Middle Ages, the State Audit came to check the assets of
kings. "Throughout the development process so far, the State Audits in developed
countries have performed the function of auditing units in public areas."

In the Law on State Audit of the National Assembly of the Socialist

Republic of Vietnam No. 37/2005/QH11 dated June 14, 2005, effective from
January 1, 2006, Article 13, Section 1, Chapter 2 states: "The State Audit is a
specialized agency in the field of state financial inspection established by the
National Assembly, operating independently and only following the law". (Article
13)

According to the above concepts, the State Audit can be understood as a

system of state apparatus specialized in performing the audit function of the
management and use of all financial resources owned by the State. In other words,
the State Audit is a state agency performing the function of supervising state
finances.

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 Through the stages of the development of the state, financial inspection is
carried out in many different forms but with the same goal of checking and
determining the national public funds' financial expenditures. This enables timely
detection and prevents abuses of power aimed at causing the loss of public
property.

1.1.2. The role of the State Audit in the Government apparatus

Firstly, the State Audit contributes to the transparency and soundness of
information, economic and financial relations. Through audit activities, the State
Audit confirms the correctness and truthfulness of economic information, first of
all, information on the financial statements of all levels of government and
agencies. The audit results were made into reports and publicly announced in
accordance with the law, which contributed to making the audited economic and
financial information meet the requirements.

Secondly, the State Audit provides adequate and timely information for the
government, state management agencies, and other state agencies to use in the
management, administration, and performance of their duties. The State Audit
contributes to promoting state agencies to improve the management quality and
comprehensive use of resources. Through the audit, the State Audit discovered
limitations and inadequacies in the management and use of the state budget,
thereby making recommendations for the audited units to take remedial measures
to ensure order, financial discipline, and transparency in the use of budgets. The
State Audit not only contributes to the strict management of public expenditures
against embezzlement, waste, and loss, but more importantly, it ensures the
people's tax dollars are used for the right purposes. In addition, through audit
activities, the State Audit has proposed to amend, supplement or cancel documents
related to the management and use of the State budget that are inconsistent with

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reality or contrary to current regulations. Proposals to amend or cancel such
management documents have contributed to the transparency of financial policies,
such as transparency in determining revenue sources, revenue levels, state budget
revenues, and transparency in budget expenditures. It can be said that the
recommendations and proposals for financial handling of the State Audit have
contributed significantly to the transparency of the State budget and the soundness
of the financial system.

Thirdly, for state-owned enterprises operating in a competitive and

integrated environment, through audit activities, the State Audit has confirmed the
truthfulness of financial statements, production, and business situation of the
audited entity and the use of capital. In addition, audit activities also assess the
effectiveness and efficiency in the management and use of resources of agencies,
units, or countries, thus contributing to helping agencies, units, or countries take
measures to manage and use resources effectively, thereby enhancing the
competitiveness of enterprises and the country. From another perspective, the audit
activity and the disclosure of audit results of the State Audit have become an
important information channel in building the confidence of countries, banks,
credit institutions, and foreign investors in Vietnam in the context of international
economic integration.

1.1.3. Functions, missions and powers of the State Audit

1.1.3.1. Functions

The State Audit Office has functions to inspect, evaluate, verify, conclude
on, and make proposals regarding the management and use of public finance and
public assets in the following specific aspects:

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 ● Inspection and verification: the regular task of the State Audit is to conduct

the inspection of accounting work, the financial reports, the reports on the
final settlement of the budgets of the agencies, and the budget levels in the
apparatus government. Thereby, confirming the correctness, truthfulness,
and lawfulness of accounting documents, data, and budget settlement
reports; making proposals, and evaluating the performance of the auditee.

● Consulting function: through the audit process, consulting the audited entity

on shortcomings that need to be overcome and future predictions to avoid.

At the same time, advise the National Assembly, the Government, and
agencies under the Government to promulgate or amend laws and
regulations to suit the actual operation of the economy.

1.1.3.2. Missions

According to the law, the State Audit in different countries has different duties.
However, the most common missions of the State Audit include:

- Performing audits: auditing annual budget settlement reports of state

agencies, the government, and state economic organizations. The State Audit
Office shall examine the accounting of state revenues and expenditures set
forth by the government for budget settlement. In addition, the State Audit
often conducts compliance audits, reviewing the observance of laws,
policies, and regimes of the State at units using state capital and public
assets. The State Audit also conducts operational audits with the aim of
evaluating the management performance and operational efficiency of public
entities. To perform this task, the State Audit needs to:

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 ● Annually, it is necessary to prepare an audit plan and submit it to the

competent authority for approval.

● After the plan is approved, the organization shall carry out the annual

audit plan and tasks at the request of the competent state agency.

● Check documents related to the state budget to verify the correctness,

truthfulness, and objectivity, check information and financial

accounting documents of organizations and units using state funds,
see consider the observance of the state's financial, accounting, and
budgetary regimes and policies.

● Participating directly or indirectly in the correction and handling of

errors of the audited unit to rectify and overcome the financial

management, budget, and accounting regime.

● Manage audit files, keep confidential information, documents,

accounting data, and information about the activities of audited units

in accordance with the law.
- Developing and promulgating legal documents: The State Audit Office
drafts ordinances and laws on the State Audit. At the same time, promulgate
other legal documents on the State Audit and give opinions to competent
state agencies on this issue.
- Directing and guiding the auditing profession: The State Audit directs and
guides the auditing profession and expertise as well as the auditing
standards, processes, and methods in the State Audit system for socio-
political organizations and enterprises state-owned enterprises, ...

1.1.3.3. Powers of the State Audit Office

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 Depending on local legislative requirements, the State Audit Office's authority
varies throughout nations. The State Audit Office has the following general
authority:

- Have the right to request audited units to provide and solve and submit
issues related to audit activities.
- Coordinate and cooperate with organizations and agencies in collecting
evidences and documents.
- Responsible for amending, drafting, promulgating, and supplementing legal
documents and documents on economic-financial management, accounting -
auditing in order to more improve. Proposing, with competent authorities to
handle individuals, units, and organizations that violate the law, such as
providing false information on finance, accounting, budget, or purposefully
obstructing audit and audit work.

1.2 Organizational model of State Audit

1.2.1. Principles of organization of State Audit
The State Audit must adhere to the following basic operating principles in
order to well perform the above functions, missions, and powers:

Organizational independence: this is the basic premise that helps all

inspection work of the State Audit Office to ensure the right orientation and
efficiency. Only when it is independent of the audited entity and protected against
negative externalities can the state auditing agency objectively fulfill its statutory
duties.

Employee independence: the staff of the State Auditing agency is the person
who must make concluding decisions on behalf of the State Auditing agency and
must be responsible before the competent authority to inspect the State Audit

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Office of Vietnam. Employees can be auditors, members of a decision-making
board, or the head of the state auditing agency.

Financial independence, operating funding sources: when it is necessary to

provide funding sources for operations that the State Audit Office deems
necessary, the State Audit Office has the right to directly request the competent
authority to decide on funding from the state budget. This is the basic premise for
the State Audit Office to be independent in its organization, operation, and
personnel.

Independence and objectivity in operations: from planning audits to

performing audits to drawing audit conclusions, the independence of the State
Audit needs to be ensured throughout. The State Audit Office should not be subject
to any directives and must obey the law in its activities.

1.2.2. Classification of the organizational model of State Audit by Legal Status

The State Audit is a system of gathering these auditors in a defined order. In
that complex series of relationships, different organizational models have formed
according to the scope of the relationships.

1.2.2.1. Organizational model of the State Audit apparatus in relation to the

state apparatus

In relation to the state apparatus, the State Audit can be independent of the
legislative system and the executive system, or subordinate to an executive or
legislative side.

a. Model of the State Audit agency placed in the legislative system

In this model, the State Audit Office is a structure directly under the
National Assembly (Senate or House of Representatives), which is the
highest public financial inspection body of the supreme authority.
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 With this model, the State Audit plays the role of an effective assistant
to help the state carry out legal checks, and develop and draft laws related to
accounting, finance, budget, etc. This model also creates the maximum
conditions for being able to be independent and perform the function of
criticizing the Government, helping the National Assembly to exercise
control over the financial activities of the Government.

Figure 1.1: State Audit agency under the legislature

: Directing relationship

: Coordination relationship

When applying this model, the authority of the State Audit is attached
to the rights of the National Assembly, so the conclusions and
recommendations of the State Audit are associated with the supreme role of
the National Assembly. In addition, the independence of the state audit
agency from the Government should result in more objective conclusions
and evaluations of the administration and management of the government's
budget. In addition, the audit activities of the State Audit are external in
nature, providing information to the National Assembly and disclosure it
public, so transparency is ensured.

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 However, this model also prevents the State Audit Office from having
the opportunity to have direct contact with the government's operations,
thus, it may delay the audit work, making the agency's detection of
violations not timely, limiting the prevention. In this model, the State Audit
is still influenced by the National Assembly in many aspects, such as: the
collective operation mechanism, majority decision, and list of units to be
audited annually.
The model of the state audit agency under the legislative body is
widely applied in many countries around the world, such as the UK, USA,
Canada, etc.
b. Model of state audit agency placed in the executive system
In this model, the State Audit agency is the government's internal
audit agency, so its independence from the audited units is not high.
Therefore, in order to operate effectively, it is necessary to delineate the
boundary between administrative management responsibilities and financial
control responsibilities. In many respects, the State Audit is like an internal
inspection agency of the Government.
When applying this model, the Government is proactive in using audit
tools to control and check the economic and financial activities of its
agencies in order to promptly prevent mistakes. The State Audit has
favorable conditions to access information and data from administrative
agencies. Therefore, the recommendations and conclusions of the State
Audit will be more reliable and appropriate and will also be quickly
deployed to promptly correct detected errors.
However, this model also makes the State Audit Office look like an
internal audit agency of the Government, so it will lack objectivity. The

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 legal status of the State Audit is also limited by the powers and functions of
the Government.
This model is used in countries such as China, Laos, Thailand,...
c. Model of an independent state audit agency with both legislative and
executive systems
This is a model of the State Audit agency being placed in an
independent position from both the National Assembly and the Government,
so its independence is very high. The State Audit is a unit that assists the
legislature and the executive in financial control.
This model is applied mostly in countries with developed economies,
well-established rule of law states, and long-established audit systems, and
developed at a higher level. Some countries applying this model are France,
Italy, Germany, ...

Figure 1.2: The State Audit model is organized independently of the National
Assembly and the Government

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Notes: Audit relationship

Directing relationship

Relations within the organization

Audit order relationship

1.2.2.2. Organizational model of the State Audit of Vietnam in terms of

relationships within agencies

Considering the relationship between agencies, the State Audit has a

horizontal relationship and a vertical relationship.

a. Horizontal relationship

Horizontal contact is an internal relationship in auditing agencies at the same

level, such as regional, central, and local. This contact includes functional or online
contact.

● Online contact: The Chief Auditor General or the Deputy Auditor General is

directly authorized to direct the State Audit's activities. The advantage of

this contact is that it ensures that the order of the Chief Auditor General will
be transferred to the auditor directly and operated in a quick, compact, and
timely manner. However, this model is only suitable for small audit scales,
the number of auditors is not large. For example: Organizational model of
the Auditing Council of Japan, Singapore,…

● Functional relationship: In the functional relationship, the right to manage

the work is evenly divided into blocks, and the blocks are divided into many
different levels. Contrary to online contact, this model is suitable for large-
scale audit apparatus. For example: Australian National Auditing Authority

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 b. Vertical relationship

Vertical relationship is the relationship within the organization of the State

Audit Office by hierarchy, including the following two main models:

● The model of the central state audit agency has a network in localities. This

model is suitable for countries with large-scale, scattered and relatively

widespread local distribution, the volume of public property in each locality
must be large enough and have a complex but fairly uniform relationship. In
that situation, it is necessary to have a State Audit organization in the
locality. The State Audit of China organizes Auditing Departments in all
provinces and cities throughout the country, in addition, special
administrative regions, and autonomous regions ... are also organized State
Audit offices.

● The model of the central State Audit agency has an audit network in each

region. These areas must first have a large enough volume of public property
and are often far from the center, so it requires a state auditor in that area to
perform the functions of the State Audit. Countries with small-scale and
relatively dispersed locations will be suitable for this model. For example:
The State Audit of Thailand includes 15 regional audits.

In some small countries, there may not be a vertical relationship. There are
also cases where the vertical relationship is implemented right in the horizontal
relationship by arranging audits of certain areas into a division in specialized
departments.

Thus, the State Audit contains many organizational relationships based on

the characteristics of the object, the scope and object of the audit, the

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organizational characteristics of the state apparatus country, and a variety of other
relationships both inside and outside the audit system.

CHAPTER 2: Current practice of the State Audit apparatus

in Vietnam

2.1 History of the establishment and development of the State Audit in

Vietnam
2.1.1. The historical background of the State Audit
Each country in the world was born into different historical backgrounds,
political and economic conditions, and therefore, the State Audit Office of each
country was also born in different historical contexts. The State Audit was born
early in some countries, such as France (1807), England (1834), Thailand (1875)…
In Vietnam, the State Audit was born based on the following conditions:

Economic conditions

The control and management of the use of the State Budget is a must in any
country in the world. In Vietnam, the National Assembly as the highest state power
agency representing the people, must exercise the right to make decisions about
state finances, so it is necessary to inspect and supervise the subjects assigned to

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manage and control the state finances using state finance. A system of inspection
and control agencies was developed as a result of this requirement. During the
development of this system, the State Audit Office was established - an
organization operating with high expertise and independence from the outside to
evaluate and inspect the management and usage activities of the state's finances.

On the other hand, the state's function of managing and regulating the
economy is very important in the context of a market economy. The balance of the
economy, economic stability, and economic growth are significantly impacted by
state economic policies, necessitating a review of state finances. This is the reason
why the State Audit Office must be established and run efficiently.

Political conditions

The rule of law has the basic feature of managing society by law. This
feature requires the State to manage and use it for the right purposes, effectively,
obey the law, and maximize all socio-economic resources. In these circumstances,
it is necessary to have a State Audit agency for the purpose of evaluating the
management and use of economic resources of the State as an independently
operating organization. Therefore, the rule of law is the main factor in the political
and legal environment of the establishment of the State Audit.

2.1.2. The Party and State's guidelines and policies on the development of
State Audit
The Party's policy direction on the development of the State Audit is
reflected in many resolutions and documents. Resolution of the third meeting of
the Central Committee of the Party, term VIII: Promoting the people's mastery,
continuing to build a clean and strong Socialist Republic of Vietnam stated:
"Upholding the role of the State Audit Office in auditing all agencies and

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organizations using the state budget lets the people know". In the report of the
Party Central Committee VIII at the National Congress IX of the Party, it was also
stated: “Renovating the accounting, auditing, financial inspection, reporting, and
notification regimes information, ensure that production and business activities
must be public and transparent with respect to corporate finance. Formulate a law
on the management of the state's capital and assets; widely apply new science and
technology in financial management; and gradually upgrade the application of
international standards on publicity, accounting, and auditing operations to the
financial system. Establish a financial-monetary supervision mechanism to ensure
national financial security, control capital flows, debts, repay debts, and expand
forms of financial disclosure. Improve the legal validity and quality of the State
Audit as a powerful tool of the state”.

2.2 Organizational model of the State Audit in Vietnam

2.2.1. Legal status and functions
2.2.1.1. The period from establishment to before the Law on State Audit
Before the Law on State Audit came into being, the State Audit was a
government agency established on July 11, 1994 under Decree No. 70/CP of the
Government. The State Audit Office of Vietnam performs the function of
inspecting and certifying the correctness, truthfulness, and legitimacy of
accounting documents, data, and settlement reports of state agencies, social
organizations, financial statements, and financial statements of economic units
using funds provided by the state budget.

After a period of operation, due to the requirement to strengthen the audit

work to suit the new situation, the Government issued Decree 93/2003/ND-CP
dated August 13, 2003 defining the State Audit as an agency under the
Government with the function of auditing and determining the legality and

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correctness of state budget reports at all levels and reports on the state budget final
settlement.

The State Audit has its own seal and account, and the operating budget is
allocated annually by the state budget according to the same cycle as other
administrative and non-business agencies under the Government. The State Audit
is headed by the State Auditor General, followed by the Deputy State Auditor
General. These positions are appointed and dismissed by the Government. The
State Auditor General is accountable to the Prime Minister for all State Audit
activities.

Figure 2.1: Legal position of the State Audit before the Law on State Audit

2.2.1.2. The period from when the Law on State Audit took effect until now
The Law on State Audit 2005 at the 7th session of the National Assembly XI
passed on June 14, 2005 and took effect from January 1, 2006. On June 24, 2015,
at the 9th session of the National Assembly XIII, voted to approve the revised Law
on State Audit, effective from January 1, 2016, the Law stipulates the organization
and functions of the State Audit; the missions and powers of the State Auditor

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General; and powers and responsibilities of individuals, organizations, and
agencies involved in State Audit activities.

Regarding the legal status of the State Audit, the Constitution 2013
stipulates: “The State Audit is an agency established by the National Assembly,
operating independently and only obeying the law, performing audits of the
management and use of public finance and property”. Thus, in terms of
organization, the State Audit under the National Assembly is an important premise
to create the independence of the State Audit and is in accordance with
international practices.

Regarding functions, Article 14 of the Law on State Audit 2015 stipulates:

“The State Audit has the function of auditing financial statements, auditing
compliance, auditing activities of management agencies and organizations, using
state budget, money, and property”.

The Law on State Audit 2015 also dedicated Section 2 of Chapter 2 to

talking about the State Auditor General and the Deputy State Auditor General.
Accordingly, the State Auditor General is the head of the State Audit, taking full
responsibility for the organization and operation of the State Audit.

In addition, the Law on State Audit also provides separate provisions to

ensure human, material, financial, and operational guarantees for the State Audit
Office. This is an important basis for creating independence and objectivity in the
operation of the State Audit Office.

2.2.2. Organizational form of the State Audit in Vietnam

The State Audit is a unified organizational apparatus consisting of the
Central State Audit and the State Audits of the regions under it. Headed by the
State Auditor General, who is responsible for all activities of the State Audit

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Office, directs the entire central and regional State Audit Office to follow a unified
mission and plan. Currently, the organizational structure of the State Audit of
Vietnam includes 8 functional advisory departments, 8 specialized audits, 13
regional audits, and 3 administrative and non-business units.

Figure 2.2: Organizational model of the State Audit

2.2.4. Activities of the State Audit of Vietnam in recent years and

achievements
Over the past 27 years, thanks to the attention and direction of the Party, the
National Assembly, and the Government, the legal corridor for the organization
and operation of the State Audit has been improved and synchronized since the
Constitution in 2013, the Law on Auditing State in 2015, and the State Auditing
Standard. This is the legal basis for the development of the State Audit in the
future. At the same time, it also sets out new requirements and tasks for the State
Audit to strive and strive to become a reputable and responsible public financial
and asset inspection agency, serving the development of the country.

The State Audit with the principle of independent operation and compliance
with the law, honesty, objectivity, publicity, and transparency, together with the
function of examining, evaluating, commenting, concluding, and recommending

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for management and use of public finance and public property, is stipulated in the
Constitution and the Law on State Audit.

Over the course of its many years of operation, the State Audit has
repeatedly reaffirmed the importance of its role in the inspection and control
system of the State of Vietnam. As a result, the State Audit has been required to
assume greater responsibility, carry out high-quality activities, and continuously
raise the value and benefits of its activities. State Audit activities contribute to
national financial transparency by improving legal policies and preventing
corruption and waste. The development motto of the State Audit is to improve the
operational capacity, legal validity, quality, and operational efficiency of the State
Audit as an effective tool of the State in auditing and management supervision and
use of public finance and public property. The results of the State Audit's activities
are not only represented and recorded by the data of financial handling
recommendations, but also in recommendations to enhance legal policies, adhere
to financial discipline, and prevent corruption; help audited units, and state
management agencies, to rectify financial-budgetary and accounting management,
prevent negative acts, embezzlement, waste, and loss of money and assets; help
units perfect management mechanisms and policies, ensure the management and
use of money and state assets in accordance with law and effectively. In addition,
the State Audit has coordinated and provided authentic information on the
management and administration of the state budget, money, and assets. The State
Audit has made many recommendations to the National Assembly and the
Government to contribute to amending and perfecting legal mechanisms and
policies in order to increase the effectiveness and efficiency of state management.

In the period 2018-2021, audit activities contribute to building a stable and

transparent financial environment. Through the audit activities for the period 2018-

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2021, the State Audit of Vietnam has pointed out many shortcomings and
inadequacies in the documents on budget management and administration;
discovered many limitations in the mechanism of public financial management and
public assets at the audited units, thereby proposing the competent authorities to
promptly issue, cancel, amend, and replace 563 documents that are not suitable for
practice; 332 times to review collective and individual responsibilities; made many
recommendations to improve the internal control system of the audited units,
contributing to improving transparency and accountability in the management of
public finance and public assets; and improving efficiency and effectiveness in
mobilizing, managing, and using national resources to implement the Sustainable
Development Goals.

In particular, in the period 2018-2021, the State Audit of Vietnam promoted

environmental auditing, a new field of auditing in Vietnam. The State Audit of
Vietnam has planned to carry out over 32 audits, of which: 8 audits of specialized
activities on environmental issues such as environmental management and
protection in industrial parks and thermal power plants; audits of the management
of medical waste, import approval, the management of water resources in the
Mekong basin in association with the Sustainable Development Goals; audit the
implementation of solutions to reduce the use of plastic bags; 21 thematic audits,
financial audits incorporating environmental factors.

2.3. Models of state audit organizations of some countries in the world and
lessons learned for the State Audit of Vietnam
2.3.1. The State Audit of China
The State Audit in China has a long history of development, but it was not
until August 1983 that the national audit office was officially established.
Overcoming the initial difficulties, China's internal audit has made rapid, strong,

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and steady development steps, becoming an indispensable inspection and control
tool for enterprises in the market economy's current integration school.

The State Audit Office of China (China National Audit Office CNAO) is a
ministerial-level agency, under the State Council, under the direct leadership of the
Prime Minister, exercising supervision rights through independent audit activities
in accordance with regulations of the law and reporting the audit results to the
Standing Committee of the National People's Congress.

Currently, CNAO has 21 functional departments, including 16 specialized

audit departments and 5 advisory and administrative departments. In addition,
CNAO also has 10 affiliated agencies, 20 satellite offices, and 18 regional offices
located in major cities. The satellite offices and regional offices are under the
direct management of CNAO in terms of expertise, human resources, finance,...

CNAO is under the State Council, performing the task of auditing financial
receipts and expenditures, the CNAO's role is to supervise and inspect financial
revenues and expenditures, and can open a special investigation when necessary. It
also has a professional supervisory role through CNAO's internal audit, which is
submitted to CNAO at higher levels. Thus, the role of the state budget audit of the
State Audit of China is less represented by the role of performance audit, but more
in favor of compliance audit, accountability audit, and anti-corruption audit,
negative in financial management, public property.

In Vietnam, the State Audit is organizing an audit of the economic

responsibility of the head and managers rather than the anti-corruption
organization. Particularly for the performance audit, it has not been effectively
applied.

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2.3.2. The State Audit of the Federal Republic of Germany
The German Federal Audit Office is the supreme federal authority as an
independent institution of financial control, operating only in accordance with the
law. The status and duties of the Federal State Audit are guaranteed by the
Constitution. The Federal State Audit is not an agency of the Government,
National Assembly, or a judicial body. That position ensures independence and
objectivity in the operations of the State Audit agency.

The Federal Audit Office is composed of regional audit agencies and audit
divisions, which may form audit teams to perform specific functions. It is
necessary to establish a separate audit department at the Presidential Palace
responsible for office services in the States to establish a separate audit agency
according to the laws of each State. Currently, the State Audit of the Federal
Republic of Germany includes the Federal Audit and 9 subordinate regional state
audits, and 2 sub-institutes.

Thus, the role of the State Audit in the Federal Republic of Germany is very
clear and independent, the Federal State Audit has the role of inspection and
supervision according to federal law, and the State Audit also has the role of
inspection and supervision according to the law of the state. In Vietnam, the role of
the State Audit in majors and regions is completely dependent on the general role
of the State Audit through the Auditing Council, which has not been performed
independently like the State Audit Office of Vietnam and the Federal State Audit
of Germany. The type of operational audit applied is still not as focused as in the
German Federal State Audit.

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2.3.3. The State Audit of Republic of Korea
The Audit Committee of Korea was established in 1948. In 1963, Korea
merged the Audit Committee with the Inspection Council under the new name of
the Board of Audit and Inspection of Korea (BAI).

According to the Constitution of the Republic of Korea, the Board of Audit

and Inspection of Korea (BAI) is subordinate to the President and examines the
state's financial statements, revenues and expenditures, and other statements of the
state and other agencies established by law, as well as the activities of the State
administration.

Although under the President, BAI independently carries out its activities
from recruiting, firing employees, organizing agencies, planning budgets, etc.
BAI's independence in recruitment and dismissal of employees, agency
organization, and budget planning must be respected to the highest degree.

BAI is organized vertically, on the principle of unified centralization,

including functional departments and specialized audit departments at the central
level. BAI does not have a regional state audit but has internal audits and local
inspection organizations and administrative agencies. BAI has the highest position
and role in the state apparatus, based on its role and authority in inspecting,
supervising, and controlling the state budget, BAI fully grasps the fluctuations and
development of the economy.

In addition to the role of inspecting and controlling the state budget, BAI can
also conduct administrative inspections at local state agencies and inspect the
responsibilities of heads, civil servants, and managers. The forms of audit applied
are called direct test and indirect test.

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 In contrast to Korea, in Vietnam, the Inspectorate operates independently of
the State Audit, when allocating the state budget, the State Audit only has opinions
to participate in the budget discussion on audit-related content and cannot make an
absolute decision like BAI.

CHAPTER 3: Assessments and recommendations

3.1 Assessment of the State Audit in VietNam
3.1.1. Advantages
Regarding the position, functions, and powers of the State Audit

Over the course of more than 27 years of establishment and development, in

general, the position of the State Audit has been continuously improved; and the
functions and missions of the State Audit have been gradually expanded to help the
National Assembly. The government shall closely inspect the management and use
of the state budget and state assets.

On December 16, 2019, at the 5th session, the National Assembly XIV
voted to approve the Law on State Audit (amended), officially taking effect from
July 1, 2020. In general, the regulations on the position and function of the State
Audit in the Law on State Audit are consistent with the birth and development of
the State Audit and are more and more consistent with international practices. The
audit results are reported to the Government, the National Assembly, and other
competent agencies for use in the management and administration of the economy,
which shows that the State Audit is an important tool in a system of institutions

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state inspection, and control agencies, affirming the indispensable role in the rule
of law state apparatus.

The organizational model

Along with the enhancement of legal status, the organizational structure of

the State Audit of Vietnam has been gradually consolidated and developed
according to the unified centralized organization and management model. Up to
now, basically, the organizational structure of the State Audit has been completed
in the direction of specialization by specialization or field; consolidating and
strengthening the capacity of the advisory sections; establishing more regional
State Audit to step by step annually audit the budget settlement reports of the
provinces and centrally-run cities.

After more than 27 years of operation, it can be affirmed that the

organization of the State Audit apparatus according to the unified centralized
model is completely consistent with the actual situation of our country, meeting the
basic requirements of a State Audit agency in accordance with international
practices. The establishment of specialized audit units to specialize in auditing
activities brings high efficiency.

Regarding the operation and management of the apparatus and

function of the units

In general, the units have organized and operated relatively well according
to their assigned functions, missions, and powers. The organizational structure,
capacity, and scale of operation of the State Audit now have significantly
developed; the audit scale has been expanded, the audit quality has been improved,
and the management capacity of the industry has been enhanced one step.

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 The State Audit of Vietnam has closely followed the guidelines and
guidelines of the Party and the laws of the State of Vietnam to develop an audit
plan to best support the Government and the National Assembly in socio-economic
development activities.

3.1.2. Disadvantages
Besides the advantages mentioned above, disadvantages are inevitable for a
state agency like the State Audit.

Regarding the organizational structure model: The organizational model

of the State Audit has some limitations:

The concretization of the Law on State Audit is still slow, in fact, the
National Assembly still intervenes and develops the annual audit plan. The
establishment and operation of advisory departments, as well as specialized and
regional audits, are still slow, not keeping up with the requirements of practice,
reducing the influence of audit activities, many where there is still no knowledge
of the organizational structure as well as the operation of the State Audit, thereby
reducing the preventive effect in the economic and financial management of the
State. The division of audit fields is not highly specialized and overlaps, making it
difficult to plan and perform audits.

Regarding the operation and management of the apparatus and

function of the units

Some units have not really paid attention to and effectively used their
apparatus, assigning tasks to parts that are still arbitrary, and not functioning
properly in each structure. General departments in auditing units tend to participate
more in audit activities but pay little attention to the general work, so advising
management on the planning of activities or audit plans is not very important

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passive math. The work of synthesizing, making audit reports, appraising audit
reports, or controlling audit quality is neglected, affecting the overall quality of
work.

There is also overlap when assigning functions, missions, and audit scope
among specialized auditors and between advisory departments. Decentralization of
functions and missions of superiors to subordinates, the balance between
responsibility and authority still has some shortcomings and has not fully promoted
the initiative and responsibility in the work of individuals and organizations
offices.

3.2 Recommendations to improve the organizational model of the State Audit

apparatus of Vietnam
On the guiding principle that the organization and management are
centralized, unified and thrifty and efficient, the improvement of the organizational
model of the State Audit apparatus must overcome limitations and inadequacies in
operational practice revealed, at the same time must meet the mission requirements
and priority goals in the upcoming operation time.

The completion of the organizational model of the State Audit apparatus in

our country needs to ensure:

First, consolidate the organizational apparatus, develop the human resources

of the State Audit in the direction of streamlining and in-depth; develop a
contingent of sufficient numbers and reasonable structure, in line with the
guidelines of the Party and State in order to meet the audit requirements for socio-
economic development activities from the central to local levels. There is no
overlap in functions, missions, or scope of departments performing the same
function or between departments with different functions. Ensure the objective of

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the audit reports must be of high quality according to a standard quality control
process, and at the same time save time and human resources for the issuance of
audit reports.

Second, it is necessary to decentralize maximum authority and responsibility

in controlling and issuing audit reports to subordinates, ensuring the independence
of conclusions and recommendations of professionals; promoting creativity and
initiative in formulating, performing, and issuing audits; and checking and
implementing audit recommendations from the lowest management level.

Third, fully implement all 3 types of audit in the annual audit program,
namely financial statement audit, compliance audit, and operational audit, to fully
perform the functions of the State Audit, confirm the legality of documents and
data on the financial statements, and at the same time evaluate the effective and
efficient savings in the use of state money and assets for all entities that use the
financial statements using public funds of the state.

Moreover, promote research and application of science and technology in

audit activities to enhance audit quality and effectiveness. Focus on developing
new methods of collecting audit evidence, in line with audit requirements and
objectives for the implementation of future development goals.

Finally, strengthen international cooperation activities to consult and share

experiences on audit activities; learn from the experiences of international
organizations and supreme audit agencies with experience in the field of auditing.

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 ● CONCLUSION

Difficulties are a given in every operation or development process, however,

the State Audit has made significant progress in its activities thanks to the proper
leadership of the Party and State, the efforts of the administration and the National
Assembly, and the never-ending efforts of the cadres and public workers. The State
Audit has so far maintained its place as an essential tool in the state's inspection
and control system after more than 27 years of operation.

The essay primarily provided general theories about the organizational

structure of the State Audit apparatus of various nations and examined the actual
situations of the organizational structures of the three countries that represent
positions in international development, drawing lessons for Vietnam. The essay's
chapter 3 offers evaluations and recommendations for enhancing the structure of
the State Audit apparatus in Vietnam.

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 To conclude this essay, I would like to express my heartfelt gratitude to
teacher Le Quang Dung for guiding and assisting me. However, due to a lack of
time and knowledge, my writing cannot avoid many errors and flaws. I look
forward to receiving the comments from my supervisor, Mr. Le Quang Dung, to
make the essay more complete.

My best regards!.

● REFERENCES

1. Co-editors Prof. Dr. Nguyen Quang Quynh and Asso. Prof. Dr. Nguyen Thi
Phuong Hoa (2017) “Theory of Auditing” Financial Publishing House in
2017.
2. Law on Auditing 37/2005/QH11
3. Ph.D Nguyen Thi Thu Nga and M. Fin. Le Xuan Thien (2018) “Role of
State Audit of Vietnam for ASOSAI and internal experience in Management
controls State budget”
4. Websites:
http://www.sav.gov.vn
http://thuvienphapluat.vn
http://moj.gov.vn
https://www.sav.gov.vn/Pages/chi-tiet-tin.aspx?
ItemID=117&l=Traodoikinhnghiem

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