DECREE 228/2025/NĐ-CP AND ISQM 1–2: IMPACTS ON AUDIT FIRMS IN VIETNAM AND RECOMMENDATIONS FOR ENHANCING THE QUALITY MANAGEMENT SYSTEM

Abstract

Decree 228/2025/NĐ-CP, issued on August 18, 2025, establishes a new administrative sanctioning framework in the field of independent auditing, raising the maximum monetary penalty to VND 2 billion for audit firms. This study analyzes the key changes introduced by Decree 228 and assesses their impact on the practical operations of audit firms in Vietnam, particularly small and medium-sized firms (SMPs). By benchmarking against the newly issued international quality management standards (ISQM 1 and ISQM 2) and global best practices in quality control, the research shows that Decree 228 imposes higher requirements on compliance and audit service quality. Violations such as noncompliance with professional standards, lack of an internal quality control system, breaches in practice registration, audit contracts, or professional training obligations may now result in heavy fines along with remedial measures. Accordingly, the paper recommends that audit firms-especially SMPs-urgently review and strengthen their internal policies, regulations, and operational procedures to meet the requirements of Decree 228 and to enhance audit quality. Specific recommendations include implementing a risk-based quality management system aligned with ISQM 1, reinforcing training and compliance monitoring, ensuring full compliance with licensing requirements, and maintaining complete audit documentation, thereby mitigating violation risks and safeguarding the firm’s reputation.