When registering a business, it is not necessary to declare who the Chief Accountant is. For operating an enterprise, is it required to have a chief accountant? This is a frequent question asked by investors at the time of beginning their business operations. So, what does the law say about this? Is it mandatory for every business to have a Chief Accountant? This article gives the answers to these questions.
The role of Chief Accountant is an uncommon role in most countries, especially those which follow Common Law. The purpose and responsibilities of the appointed chief accountant are often misunderstood. Vietnamese law stipulates that the Chief Accountant is the “head of the accounting function” of a company.
As the head of the accounting apparatus of the company, he/she is responsible to organize the accounting work of the company. This includes guiding, directing, inspecting, and correcting the work that the accountants have done to ensure compliance with regulations. At the same time, they are also the person in charge of the advising the superiors on financial and accounting strategies of the business.
Standards and requirements of Chief Accountant
- Standards: the chief accountant is expected to have certain standards like having professional ethics, honesty, integrity, sense of law and professional qualifications in accounting.
- Requirements: a chief accountant is expected to have professional knowledge and skills in accounting from intermediate or higher level and must have certificates of training for chief accountants.
Currently, the law of Vietnam does not require that a Chief Accountant must be appointed after the establishment of an enterprise. The enterprise can arrange a ‘person-in-charge’ of accounting or hire a professional service to do the job of chief accountant as per regulations. However, the maximum duration for ‘person-in-charge’ of accounting is 12 months. After this period, the enterprise must arrange a person to act as the chief accountant.
Normally, depending on the needs of each business, the enterprise chooses the appropriate number of personnel. In the current context, most businesses are tending to cut personnel costs, and save management and recruitment time. Therefore, they attend to use of chief accountant service is paid more attention to ensure smooth and stable financial activities and compliance with tax and accounting laws.
However, not all enterprises are required to have a ‘person-in-charge’ of chief accountant, as in the following cases:
- Extra-small enterprises are allowed to appoint an in-charge of accounting without having to appoint a chief accountant.
- Accounting units in the state sector which include: An accounting unit with only one accountant or a part-time accountant, budget and financial accounting units of communes, wards, and townships which do not appoint chief accountants but only appoint accountants.
Therefore, not all businesses are required to have a chief accountant.
Why do businesses often look to chief accountant services instead of recruiting personnel to fill this position?
Here are a few reasons why businesses are more interested in using chief accountant services than recruiting a person directly:
- Firstly, work experience:
With the Chief Accountant service, accounting issues are handled and by a team of staff with many years of experience specializing in many different fields. This saves businesses a lot of time. This may not be the case when a chief accountant is hired by the company directly.
- Secondly, non-applicability of the provisions of labor law:
The relationship between a company and a chief accountant Service is similar to a relationship based on a specific contract for delivery of services. This makes it easy for businesses in quality control as well as binds the responsibility of the supplier. Recruiting a chief accountant into the company’s human resources requires compliance with the labor law which limits the business’ decision making ability. This makes it preferable to chief accountant service because.
- Thirdly, legal responsibility:
When using a chief accountant service, rights and obligations are mutually agreed upon by both parties. So, compliance and legal responsibilities are high. In addition, the responsibility of the service provider is not limited by law. In the case of hiring a chief accountant, the legal responsibility of the chief accountant is limited when it comes to compensating for damage.
Thus, enterprises need to consider their individual business plans while choosing between a service provider and a chief accountant. The contract established between the parties needs to record in detail, the scope of work and responsibilities therein. This helps in limiting the risks for businesses.
Dated: 13 July 2021
The article is based on applicable law at the time noted above and may no longer be relevant at the time the reader approaches this article due to the change in applicable law and the specific case in which the reader wishes to apply. Therefore, the article has only reference values.