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1© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
2© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
01
02
Topical overview
03
New SectionQuestion & Answer session
Regulatory landscape in Vietnam
Three Lines of Defense (3LoD)
04
Governance, Risk and Compliance Webinar Agenda
10 minutes
30 minutes
10 minutes
10 minutes
3© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Question and Answer Session
Please submit questions in the chat window (bottom right corner of the screen) at any time during the presentation.
Don’t forget to hit SEND.
I will compile the questions and submit them to the speaker in the last 30 minutes of the webinar, as time permits
4© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Key Presenter
Trang has more than 17 years of experience, and has been at KPMG Vietnam since 2009.
She currently leads the Internal Audit, Risk andCompliance practice for Vietnam and Cambodia. Herareas of focus and expertise include corporategovernance, internal audit, enterprise riskmanagement and internal controls. Her clientelerange across numerous sectors including financialservices, FMCG, healthcare and life science,construction and real estate, telecom, tech, andeducation.Nguyen Anh Xuan Trang
Director, ConsultingKPMG Vietnam
Governance, Risk, and
Compliance – Overview
6© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Top concerns of Audit Committees
Source: KPMG 2017 Global Audit Committee Pulse Survey
3%
3%
7%
8%
9%
11%
13%
13%
19%
21%
22%
24%
28%
28%
34%
41%
Other
Readiness for OECD country-by-country tax reporting
CFO succession planning
Assessing audit quality
Key assumptions underlying critical accounting estimates
Talent and skills in the finance organization
Fraud risk
Implementation of new accounting standards
Pressures of short-termism and aligning company's long-term…
Ensuring that internal audit maximizes its value
Maintaining internal controls over financial reporting
Tone at the top and organizational culture
Maintaining control environment on company's extended org
Managing cybersecurity risk
Legal/regulatory compliance
Effectiveness of risk management program
The survey was conducted from Aug-Oct 2016. Results shown are for 832 complete responses from 42 participating countries:
• 55% of respondents were Audit Committees Chairs; 45% Audit Committees Members
• Company types of survey : 63% were public companies, 25% private companies, 7% non-profits; and 5% other.
• Sectors: banking/ financial services, manufacturing, consumer goods, insurance, technology, RE, media, healthcare, not for profit, etc.
7© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Challenges in maintaining a robust 3 lines of defense (1 of 2)
Sector driven by regulatory requirementsThe Vietnam market is relativelyyoung, in comparison to others inAsia, like Singapore or Hong Kong,with evolving regulatory requirements.
Overlap in scope of work Confusion with regards to scope of
work between IC, IA, Risk, ISO Focus and scope of Internal Audit
similar to External Audit
Weak 1st & 2nd line of defenseIncomplete/weak 1st line and 2ndline of defense resulting in ineffectiveand inefficient internal audit – 3rdline of defense.
Perception as a ‘policeman’ & low value-add
Lack of knowledge about internalaudit: Internal Audit methodology is not
based on leading practices orprinciples;
Insufficent Internal Audit qualitymanagement
INTERNAL AUDIT (VIETNAM)
Technology and data analyticsData analytics and other technologyprocesses have not been leveragedto conduct root cause and trendanalysis
8© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Challenges in maintaining a robust 3 lines of defense (2 of 2)
Lack of awarenessAwareness is strong mainly amongcompanies in the Financial Servicessector, due to heightened regulationsand guidelines related to RiskManagement.
ENTEPRISE RISK MANAGEMENT
Lack of risk management professionals in non-FS sectorsRisk management professionals tendto be focused in the FinancialServices sector. In FMCG andmanufacturing sectors, riskmanagement positions aren’t asattractive due to low return andbenefits
Sector driven by regulatory requirementsImplementation of risk managementis for compliance purposes,especially in quality and safety forspecific sectors
Enterprise Risk Management is not independently establishedImplementation of risk management is for compliance purposes, especially in quality and safety requirement for specific sectors
9© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Current reporting lines for internal audit
SHAREHOLDERS
BOARD OF DIRECTORS/ MEMBERS’ COUNCIL
CEO INTERNAL AUDIT
Functional reportingAdministrative reporting
SHAREHOLDERS
BOARD OF DIRECTORS
CEO INTERNAL AUDIT
CONTROL BOARD
Banking, Joint-Stock Company and Public Company in Vietnam
Securities Brokerage, Investment Fund and Public Company in Vietnam
CONTROL BOARD
Regulatory Landscape in
Vietnam
11© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Key Regulations in Vietnam
INSURANCE Decree 73 / 2016 / ND-CP: Implementation of the Law on insurance
business and certain amended articles Circular 50 / 2017 / TT-BTC on guidelines for Decree 73
BANKING Law on Credit Institution 47 / 2010 / QH Circular 44 / 2011 / TT-NHNN on IC system and internal audit of
credit institutions, foreign bank's branches
SECURITIES BROKERAGE
Circular 210 / 2012 / TT-BTC guidance on the establishment and operation of securities company
INVESTMENT FUND
Circular No. 212 / 2012 / TT-BTC guiding the establishment, organization and operation of fund management company
PUBLIC COMPANIES
Decree 71 / 2017 / ND-CP on Corporate Governance applicable to public companies, effective 01 Aug 2017 to replace Circular 121 / 2012 / TT-BTC
JOINT STOCK COMPANIES Law on Enterprise 68 / 2014 / QH13
Draft Draft Decree on Internal Audit
12© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
New Decree No. 71 on Corporate Governance
13© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Draft Decree on Internal Audit
How can Vietnamese companies strengthen their CG practices to align with leading practices?
15© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
KPMG Governance Framework
Source: KPMG’s Board Advisory Services
Aims to help corporate leaders understand corporate governance responsibilities and improve their performance and governance standards
16© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
KPMG Governance Framework
Source: KPMG’s Board Advisory Services
Aims to help corporate leaders understand corporate governance responsibilities and improve their performance and governance standards
KPMG Management Assurance Framework focuses on 1.2 and 3.2
KPMG Management Assurance Framework focuses on 1.2 and 3.2
17© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
KPMG Management Assurance Framework
Source: KPMG’s Board Advisory Services
Utilizes a holistic methodology, proactive risk management (including fraud risk) with adequate and effective monitoring as key components.
18© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
Operationalising Management Assurance FrameworkOperationalising risk management
Management Self-Assurance
Almostcertain
Likely
Possible
Unlikely
Remote
Low Minor Moderate
Major Severe
R2
R1R4
R3
Audit Committee
Develop and update
Control Owners Self Assessment
Process Owners Self Assessment
Validation by IA; Reporting of results to
Management and AC
RCSA Test Results
(P&P 4)
Board Risk Committee
Governance Committee
Investment Committee Etc.
Board Oversight
2nd Line of Defense: Risk Profile (ERM) 1st Line of Defense: People, Processes & Systems
2nd and 3rd Line of Defense: RCSA + Internal Audit
Policy & Procedure 1
Policy & Procedure 2
Policy & Procedure 3
Policy & Procedure 4
Policy & Procedure 5
RCSA
Integrated Risk Assurance
19© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
KPMG Management Assurance Framework: 3rd Line of Defense Model
Tone at the Top Entity Level Management
Operational and Control
(First Line)
Policies and Procedures
Board Oversight
Business and Operational Processes
Reporting – Internal & External
Assurance(Third Line) Concurrent Audit Internal Audit Management Audit
Monitoring(Second Line) Compliance Risk Management
Operating Model
• Roles & Responsibilities
• IT Infrastructure
• Third Party Service
Document Classification: KPMG Confidential
© 2017 KPMG Tax and Advisory Limited, a Vietnamese limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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KPMG Tax and Advisory LimitedNo. 115 Nguyen Hue StreetBen Nghe Ward, District 1Ho Chi Minh City, VietnamTel: + 84 838219266
Markets GroupMs. Van LyMarkets ManagerVLy@kpmg.com.vn+84 90 780 9576
21© 2017 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Legal Limited, all Vietnamese limited liability companies and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
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