Financial statements are the legal document with which an enterprise “speaks” to the State, banks and investors about its health. When those statements are untruthful — fabricated figures, inflated or concealed revenue, phantom costs — the violation leaves accounting technique behind and reaches both administrative sanctions and, at a serious level, criminal liability. This article draws the line between those two sanction tiers.
The administrative tier: fines under Article 12 of Decree 41/2018/ND-CP
At the administrative level, conduct involving untrue financial statements is fined under Article 12 of Decree 41/2018/ND-CP: preparing statements inconsistent with ledger and voucher figures falls in the VND 20–30 million bracket for organisations; heavier conduct at the top of the article’s scale — fabricating false statements — reaches VND 40–50 million; with remediation: compelled re-preparation and re-filing of correct statements, and in many cases a compelled re-audit. In parallel, where false statements were used to under-declare tax, the tax part is handled independently under Decree 125/2020/ND-CP (clawback, the 20% incorrect-declaration fine or 1–3 times for evasion — topic FDI-LC-2047), and statements used by banks for credit decisions carry separate civil and credit consequences.
The criminal tier: Article 221 of the Penal Code — when is the threshold crossed?
Where accounting violations cause serious consequences, the actor is prosecuted under Article 221 of the Penal Code (the crime of violating accounting regulations causing serious consequences) — the listed typical acts include forging, falsifying, agreeing or coercing others to falsify accounting documents; deliberately keeping assets and capital sources off the books; destroying or forging accounting documents before their deadlines. Penalty brackets follow the damage: damage from VND 100 million to under VND 300 million (or below that where the person was already disciplined/fined and re-offends) — non-custodial reform up to 3 years or imprisonment of 1 to 5 years; damage of VND 1 billion or more — imprisonment of 10 to 20 years; intermediate levels and circumstances (abuse of position, organised commission, recidivism) lie between these poles. Where false statements were used for tax evasion reaching the criminal threshold, the conduct may additionally be handled as tax evasion (Article 200 of the Penal Code) with its own brackets.
Who bears criminal liability — the director or the chief accountant?
Criminal liability is personal, determined by the actual role in the conduct: the person who directed, decided or coerced the falsification (often the legal representative/director where they ordered or knowingly approved it) and the person who directly performed it (the chief accountant, the accountant fabricating figures) can both be prosecuted, each by degree of participation; a person who signed the statements without fault (did not know and could not have known of the forgery) is not automatically liable. Conversely, a director cannot “push” all liability down to the accountant with a claim of ignorance about their own approval signature — investigators examine the chain of direction, signatures and the benefit obtained. For the enterprise: the legal person bears administrative, tax and civil consequences; corporate criminal liability applies only to offences separately listed in the Penal Code.
Discovering an old untruthful report: can it be self-corrected?
Yes — and it should be done before discovery. The self-handling route has three synchronised steps: (1) accounting correction: treat the material prior-year error by retrospective adjustment in the current year’s statements under accounting standards, retaining the explanation file; (2) tax correction: file supplementary declarations for affected periods before the tax authority announces an inspection decision — the mechanism avoiding the 20% incorrect-declaration fine where fully paid (topic FDI-LC-2045); (3) internal handling: review control processes and personal responsibility, and notify the current year’s auditor. Full voluntary remediation before any violation minutes are drawn is an important mitigating circumstance at the administrative tier (topic FDI-LC-2062) and in the authorities’ assessment of the case — whereas concealing or continuing to use statements known to be false forfeits that opportunity.
Frequently asked questions
What is the administrative fine for untruthful financial statements?
Under Article 12 of Decree 41/2018/ND-CP: statements inconsistent with ledger/voucher figures — VND 20–30 million for organisations; fabricated statements in the top bracket of VND 40–50 million, plus re-preparation/re-filing. Any tax shortfall is handled separately under Decree 125/2020/ND-CP.
When is financial statement fraud criminally prosecuted?
When accounting violations cause serious consequences under Article 221 of the Penal Code: forging/falsifying accounting documents, keeping assets off the books, destroying/forging documents early, with damage from VND 100 million (or recidivism); damage from VND 1 billion carries 10–20 years’ imprisonment.
Who bears criminal liability — the director or the chief accountant?
Both can, by actual role: whoever directed/decided/coerced the falsification and whoever directly performed it are personally prosecuted by degree of participation. A signer without fault is not automatically liable; a director cannot shift liability where they directed or approved.
Can an old untruthful report be self-corrected when discovered?
Yes: retrospective adjustment of the material error in the current year’s statements, supplementary tax declarations before an inspection decision is announced (avoiding the 20% fine where fully paid), and internal control handling. Full voluntary remediation before minutes are drawn is an important mitigator.
This article has been quality-reviewed by the FLAW AI Legal Council