Wednesday, August 15 2018


Call to audit public projects

Update: August, 09/2012 - 10:07


A view of Nhieu Loc-Thi Nghe Canal in HCM City after being cleaned and upgraded as part of a $317million environment project funded by the World Bank and the City's budget. —VNA/VNS Photo Hoang Hai
HA NOI — The State Audit of Viet Nam (SAV) should shift its focus to conducting operational audits of public projects to help increase the efficiency of public investments, instead of just checking their compliance with regulatory guidelines.

This point was stressed at a workshop yesterday in Ha Noi jointly held by the SAV and the Association of Chartered Certified Accountants (ACCA), which aimed to figure out measures for the SAV to raise the quality of public project audits.

An operational audit is a comprehensive review of an entity's operating procedures and methods to evaluate its economy, efficiency and effectiveness and provide recommendations for improvement. In contrast, a compliance audit only determines whether the entity is adhering to regulations.

Deputy general director of KPMG Viet Nam, Dam Xuan Lam, said that operational auditing was a very important tool for the Government to maximize the efficiency of its investments, adding that this type of audit was popular among developed countries in the world and proven to work.

"However, operational audit is just in its beginning stages in Viet Nam. The SAV conducts audits mostly on finance and compliance," said Tran Quang Huy from the SAV's Centre of Science and Staff Fostering.

Lam said that one challenge for the application of operational audits was that Viet Nam lacked criteria to evaluate operating efficiency, causing difficulties for auditors.

"Creating a set of criteria for measuring and evaluating operating efficiency is critical for every State agency, public project and State-owned enterprise," he said.

Vice chairman of the National Financial Supervisory Commission Ha Huy Tuan agreed, adding this would help prevent wastes of public investment while making auditing easier and more efficient.

"The capacity of auditors also needs to be enhanced regularly with the provision of on-the-job training or continuing professional development," Lam added.

According to deputy director of the SAV's Department of General Services Vu Thanh Hai, the quality and scale of the SAV's auditing of public investments also needs to be addressed.

Hai said that the SAV has failed to meet the auditing demand nation-wide due to limited human resources. So its contribution to preventing violations in the public investment remained limited.

Statistics show that every year, the SAV staff, which numbers 29,000, has the capacity to audit about 50 per cent of provinces and cities, 40 per cent of ministries and organisations under the central management and about 200 projects.

In addition, SAV often conducts auditing of only one phase of the project, not the whole implementation process, and often only after it is completed.

"Violations, wastes and losses can occur at all times, so ongoing auditing is necessary," Hai said .

According to Huy, experiences from Germany and Japan showed that the earlier audits were conducted, the more efficient the public projects would be. "Audits of public projects should be conducted right from their preparation stages."

Early auditing would also help eliminate impractical and infeasible projects and prevent the dispersal of the public investment, said Tran Dinh Thien from the Viet Nam Institute of Economics.

Thien said that the public investment of Viet Nam has been inefficient for years, stirring up concern throughout society.

He pointed out that the country of gross domestic product estimated US$130 billion has 100 sea ports, 28 airports, 100 commercial banks, 35 coastal and border economic zones, and 280 industrial zones. Yet few of those can operate at full capacity and many remained unfinished due to the lack of capital, thus wasting public investment.

"Enhancing the auditing of public investments helps, but only a thorough restructuring of State-owned enterprises will ensure a true healthy competitive market," he said.

Experts at the workshop also called for the promulgation of the Law on Public Investment and Law on Public Procurement together with the enhancement of the practice of public-private partnership to make public investment more efficient. — VNS

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