Request the Ministry of Public Security to clarify the responsibility of auditors at SCB

The trial panel requested the Ministry of Public Security to clarify the responsibilities of the three "Big 4" firms that audited SCB and handle them if there is sufficient evidence.

This recommendation was made by the Trial Panel (PC) of the Ho Chi Minh City People's Court after the first phase of the trial of the case at Saigon Bank (SCB) and Van Thinh Phat.

Accordingly, the People's Court requested the Department of Investigation Police on Crimes of Corruption, Economy, and Smuggling (C03, Ministry of Public Security) and the Supreme People's Procuracy to continue clarifying the roles and responsibilities of auditing companies at SCB during the second phase of the investigation and handle violations if there is sufficient evidence.

In the post-merger period, from 2012 to 2020, three major auditing firms from the world's leading prestigious "Big 4" group, including Ernst & Young Vietnam (EY Vietnam), Deloitte Vietnam and KPMG Vietnam, were hired by SCB as annual independent auditors.

Specifically, EY Vietnam was the auditor for this bank for 5 years, from 2012 to 2016. After that, SCB changed its auditor to Deloitte Vietnam for 3 years, from 2017 to 2019. In 2020, KPMG Vietnam was the auditor for this bank.

Over the past decade, three Big 4 auditing firms have given their unqualified opinions on SCB's financial statements and found no abnormalities in the bank's financial situation. As of June 2021 - the most recent audit review before the case, the bank had a pre-tax profit of more than VND450 billion for the first 6 months and equity of nearly VND22,000 billion.

But when the incident "broke out", SCB was put under special control by the State Bank from October 2022. The re-audit results showed that as of September 30, 2022, the bank had accumulated losses of nearly VND 465,000 billion, with negative equity of about VND 444,000 billion.

The three auditing firms KPMG, EY and Deloitte Vietnam have not yet responded to this information. However, the leader of one of these units said that the auditing unit relied on data and documents provided by banks and third parties without the function of re-evaluation. For example, they do not have the function of re-evaluating the collateral of loans that have been "falsely declared" by valuation companies. Therefore, the bank must be responsible for the completeness, accuracy and honesty of the records and documents provided to the auditor.

According to regulations, the responsibility of the auditing company is to give an opinion on the financial statements of the enterprise based on the results of the audit according to Vietnamese auditing standards. That is, auditing firms must comply with this standard, as well as regulations on professional ethics in planning and performing the audit. This is to detect whether the financial statements of the bank and its subsidiaries are reasonable and have any material errors.

Regarding this incident, answering questions at the National Assembly Standing Committee meeting in mid-March, Finance Minister Ho Duc Phoc said that the world's leading auditing companies audited SCB but all violated the law. According to him, this violation was caused by the auditors and appraisers, not by management.

He added that the violations of independent auditors in criminal cases are due to many factors, such as the capacity and sense of responsibility of auditors. Mr. Phuc also said that he does not rule out collusion and intentional violations of the law by auditors.

The Finance Minister said that the agency will continue to tighten the operations of auditing companies, re-examine documents and will strictly handle any violations found.

Quynh Trang

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