When a multinational group consolidates its accounts, the group auditor does not personally audit every subsidiary in dozens of countries — they rely on the work of auditors at each component (component auditors). That relationship is governed by the group-audit standards: Vietnamese Auditing Standard No. 600 (VSA 600 — audits of group financial statements, including the work of component auditors) on the Vietnamese side, and ISA 600 (Revised) internationally on the group’s side. An FDI subsidiary in Vietnam sits at the intersection of both.
How VSA 600 works: undivided responsibility and component materiality
The foundational principle of a group audit is that the group auditor bears sole responsibility for the group audit opinion — they may not “refer to” component auditors to share that responsibility in the consolidated audit report. The whole machinery flows from that principle: the group auditor assesses group-level risks, determines which components are significant (by financial size or by specific risk), and decides the type of work at each component — a full audit of the component’s financial information, an audit of specific account balances, or only analytical/review procedures. The group auditor also sets component materiality — always lower than group materiality, to reduce the risk that small misstatements aggregate into a material one at consolidation level — and sends the component auditor a set of group instructions: the assigned materiality, group-level significant risks relevant to the component, the group’s related-party list, the reporting-package templates and the timetable. Internationally, ISA 600 (Revised) is effective for periods beginning on or after 15 December 2023, tightening the risk-based approach and raising requirements on oversight and two-way communication with component auditors. A component auditor in Vietnam working on a group reporting package must satisfy the group’s standards and — for the Vietnamese statutory part — the VSA system simultaneously.
How it differs from the statutory audit, and what the subsidiary must prepare
Three differences FDI subsidiaries commonly confuse. First, two different products: the statutory audit under Article 37 of the Law on Independent Audit produces an audit report on financial statements under Vietnamese law for state authorities; component work produces a reporting package (usually under the group’s accounting standards, e.g. IFRS) and clearance communications to the group auditor — for consolidation. The two “audits” can be performed by the same Vietnamese firm but are two scopes, two instruction sets, usually two different contracts or annexes (see FDI-LC-2025 on writing scope into the engagement letter). Second, the group timetable is always earlier than the Vietnamese statutory deadline: reporting-package deadlines for consolidation typically fall in January–February, while statutory filing allows 90 days — the subsidiary’s closing calendar must be designed around the earlier date (see FDI-LC-2023). Third, the group auditor has rights over the component auditor: they may require direct discussions, inspect relevant working papers, or — if dissatisfied with independence or competence — require additional procedures or changes; the subsidiary should not be surprised to receive questions directly from the group auditor. Good preparation on the subsidiary side: obtain the group instructions early and reconcile them with the closing calendar; a mapping between the Vietnamese chart of accounts and the group’s chart; a list of intra-group transactions and balances for consolidation eliminations; and one contact person fluent in “both languages” — the Vietnamese accounting regime and the group’s standards.
Frequently asked questions
Which standards govern a group audit of a Vietnamese subsidiary?
Two parallel layers: the group auditor applies their system’s group-audit standard (internationally ISA 600 (Revised), effective for periods beginning on or after 15 December 2023); in Vietnam, component work and the statutory audit follow VSA 600 and the VSA system, on financial statements prepared under Vietnamese accounting law.
Does the group auditor audit the subsidiary directly?
Usually not directly: they direct, supervise and use the work of the component auditor in Vietnam under group instructions, while bearing sole responsibility for the group opinion. They may discuss directly with the component auditor and require additional procedures where needed.
How does a group audit differ from an ordinary financial statement audit?
In object and responsibility: a group audit serves the opinion on the group’s consolidated statements, with component materiality set by the group auditor (below group materiality) and the subsidiary-side product being a reporting package under group standards — unlike the statutory audit that produces a Vietnamese audit report for state filings.
What must an FDI subsidiary prepare for the group’s consolidation audit?
Early group instructions reconciled with the closing calendar; a Vietnam-to-group chart-of-accounts mapping; the intra-group transaction and balance list for eliminations; readiness for a lower component materiality than local staff are used to; and one contact who can work in both accounting frameworks.
This article has been quality-reviewed by the FLAW AI Legal Council