VietNamNet Bridge – Of the 155 independent auditing firms licensed by the end of February 2013, foreign invested firms or the subsidiaries of foreign groups, especially the “Big Four” have been dominating the market.

The playing field of foreigners

Deloitte, EY, KPMG and PwC all have been present in Vietnam. They are the rivals of the same ability, like “it’s six of one and half a dozen of the other.”

According to the Vietnam Association of Certified Public Accountants (VACPA), the Big Four led the top 10 auditing firms which had the highest turnover in 2011. The Number 1 position belonged to KPMG, followed by Ernst & Young, Deloitte and PwC.

If considering the number of clients, Ernst & Young had fewer clients than the other three. However, in 2012, while Ernst & Young, Deloitte and PwC all made profit, KPMG took loss due to the slight decrease in service turnover and the increased operation costs.

The reports from 147 auditing firms showed that they had 32,702 clients in 2012, an increase of 4.9 percent over 2011. The number of foreign invested clients increased by 1.110, or 10.8 percent. The considerable increase in the number of foreign clients has given more opportunities to foreign invested auditing firms.

In Vietnam, Deloitte is believed to have advantage in the legal consultancy service, because it has a law subsidiary which can provides legal advices to clients. Ernst & Young, KPMG and PwC are all the “big guys” in independent auditing. However, KPMG has been known as an expert in tax consultancy.

Regarding the client structure, 70 percent of listed companies use the services of the Big Four.

Deloitte’s biggest clients are the ones in the energy sector, including gas, petroleum and fertilizer. It is providing auditing service to the Phu My Fertilizer Plant and the subsidiaries of Petro Vietnam. Meanwhile, KPMG has been chosen by real estate firms, and PwC and Ernst & Young are the choices for fast moving consumer goods manufacturers.

Auditing market would be re-drawn?

Analysts believe that foreign invested auditing firms would still dominate the market, unless domestic firms can ensure the international quality of their services.

Le Chi Hieu, President of Thu Duc House, a real estate firm, said he chose KPMG as the independent auditing firm and the supporting partner in the ERP project kicked off in 2009, because of the good prestige of the auditing firm. He also believes that KPMG would help polish Thu Duc House’s image once the company becomes a public company.

Meanwhile, Le Quoc Binh, General Director of CII, thinks the other way. He does not think he needs to choose a foreign auditing firm, but he pays more attention to the quality of service.

Binh also said the service fee is a factor he would consider when choosing auditing firms. Foreign auditing firms may charge $35,000-40,000 for every auditing period, while domestic ones $10,000-12,000.

When asked about the opportunities for domestic auditing firms, Dang Van Thanh, Chair of VAA (Vietnam Accounting Association), Vietnamese firms still have great opportunities to develop to expand their domestic market share.

According to Thanh, only six foreign auditing firms have been operating in Vietnam. Four of them are really big, but two of the four mostly provide the training and consultancy services.

K. Chi