The management of public debt plays a fundamental role in sustainable development of national finance. Therefore, the audit of public debt management also plays an equally important role in public debt audit activities of the SAV. By 2011, for the first time, the SAV has started and gradually introduced the audit of public debt management at Ministry of Finance as a detailed audit in the annual audit report on State budget settlement. Especially, since 2016, the SAV organized a public debt audit into an annual thematic audit. The conduct of an audit of public debt management is in accordance with international practice as well as regulations on public debt management under Vietnam’s Public Debt Management Law.

I. Current situation of the audit of public debt management in Vietnam
1. Objectives and focus issues of audit of public debt management
1.1 Objectives of audit of public debt management
The general objective of audit of public debt management is to confirm or test the truth or accuracy of public debt report; measure the economy, efficiency and effectiveness of public debt management activities to ensure that the management of public debt including formulation and excution of a strategy for managing the government’s debt is effectively conducted in order to raise the required amount of funding at the lowest possible cost over the medium to long run, consistent with a prudent degree of risk. It should also meet any other public debt management goals the government may have set, such as developing and maintaining an efficient market for government securities.
1.2 Focus issues of public debt management
Summary and preparation of public debt reports: the borrowings and repayments of debts by the Government: Foreign borrowing (for covering the State budget deficit, and on-lending); domestic borrowing (issuing bonds and treasury bills; on-lending loans from the government and borrowing balance of State Treasury..). Provision and management of government guarantee (foreign borrowing, borrowing from domestic credit institutions, bond issuance guarantee). Local government debt (signed loan amount, actually receiving loan, use of loan, debt repayments, debt balance); Elaboration, promulgation and implementation of legal documents on public debt; Compliance with and use of accrued funds to repay debt and others.
2. Contents and scope of audit of public debt management
2.1 Contents of audit of public debt management
The main contents of audit of public debt management include:
- Checking compliance with the Law on Public Debt Management and relevant laws, legal provisions and regulations on public debt management;
- Verifying public debt reports prepared by debt management agencies;
- Evaluating the economy, effectiveness and efficiency of public debt management activities. It includes trade-offs between expected costs and risks in the government debt portfolio and also the efficient operation of public debt management agencies;
- Conducting the specialized audit of management and use of public debts. It includes the audit of programs and projects using loans from public debt.
2.2 Scope of audit of public debt management
- Agencies auditing public debt management: Ministry of Finance, Ministry of Planning and Investment, on-lending agency;
- Agencies managing and using public debt: Ministries/ branches, localities and investors/ project management units.
II. Some results achieved in the audit of public debt management
With reference to public debt situation and indicators, the government debts as of December 31 were equivalent to 61% GDP in 2015, 63.7% GDP in 2016 and at 61.4% GDP in 2017, public debt continued to rise over the years. However, it was still maintained within the limits of public debt saftety approved by the competent authorities in each period¹.
The management of debts at the Ministry of Finance is aiming to identify public debt management functions in three lines. At the Department of Debt Management and External Finance, the departments are arranged and assigned with relatively appropriate functions and duties in accordance with the common approach in the world. The audit results showed that the Ministry of Finance gathered and synthesized public debt data in a relatively promptly and fully manner.
The results of public debt auditing over the years have shown a number of limitations in public debt management, namely: the organization and management of public debts have not been consistently focused in accordance with the Law on public debt management. Specifically: The Ministry of Planning and Investment shall preside over the mobilization and allocation of loan capital; The Ministry of Finance shall assume the prime responsibility for organizing the capital withdrawal, payment, debt recovery and debt repayment arrangements; localities and enterprises shall be responsible for the implementation of programs and projects using loans...The SAV also discovered and pointed out a number of shortcomings and loss of coordination in the management of public debts at present, causing a reduction in debt management efficiency. Based on the assessment of limitations and shortcomings, the SAV has proposed many recommendations and solutions for management of public debts. In addition, the SAV also pointed out the limitations and shortcomings in regulations and policies related to specific aspects of public debt management, as well as recommendations for amending and finalizing policies.
In general, in terms of the audit of public debt management, the SAV have given a number of warnings about the debt situation of the Government and local authorities despite modest gains. It has contributed to attrach the attention of the National Assembly, authorities and public opinion.  As a result, it contributes to provide information to warn the public debt management situation for promoting debt management agencies to have better management measures.
III. Development orientation of public debt audit in Vietnam
1. Basis of development
The legal basis and audit basis for auditing the management of public debt have been determined clearly through relevant legislations, specifically: Clause 12, Article 55 of the 2015 State Audit Law on Audited entities defines: "Agencies which are assigned to manage and use public debt"; Article 18, Law on Public Debt Management 2017 on Responsibilities and mandates of the SAV states that “Conducting audits of activities related to the management and use of public debt including mobilization, allocation, use of loan capital, debt repayment, on-lending, Government guarantee; report, publicize audit results in accordance with the Law on State Audit ”and other documents related to public debt management, etc. These provide basis for assessing compliance with laws and regulations, the efficiency and effectiveness of public debt management during the implementation of public debt audits. Along with that, the SAV has introduced training material on the public debt audits and organized trianings for the auditors. The SAV has also developed specific audit objectives, contents and methods which are consistent with its annual political missions regarding auditing the public debt management in Việt Nam.
2. Shortcomings and challenges affecting public debt audits
Although the SAV has conducted public debt thematic audits, the audit scope was limited within auditing public debt management. There has not been any separate comprehensive public debt audit being carried out since it has not examined the situation of using public debt in the form of Government debt, government-guaranteed debt, and local government debt due to the big scale and value of such debts. The fact brought about the lack of assessment of the economy, efficiency and effectiveness of public debt management and use. The public debt – related areas are largely extensive with the complicated involvement of units. In recent year, the SAV has just paid attention to the collecting the evidences to assess the follow-up, accounting and synthesisation of debt figures and certify them.
In addition, the SAV has not yet provided macro perspectives to inform government agencies to improve their debt management. Despite the fact that the management of public debt in Vietnam shows many shortcomings, the SAV has not given important ideas to enhance the management of public debt. While many issues of public debt management are far different from the standards of public debt management issued by the international organisations yet the SAV has not discovered and made corresponsive recommendations for improvement.
During the auditing process, the SAV only focused on the compliance of the loans, without giving comments on the management for the competent authorities of the Government, the National Assembly and even the public to take corrective measures.
The SAV has not gone deeply into assessing the situation, structure, costs and accounting of public debts to limit financial risks in debt. Many management issues have not been mentioned such as the structure of debts, the source of debts, the sustainability of the loans, the costs of debt, the accounting of debts and the debt management mechanism. The questions such as whether the debt figures are accurate; are fully accounted; the accounting practice has been in line with the commonly accepted international practices to ensure comparability; How to manage debts; How the debt management institutions are establishe; What the costs of the loan are and the purposes of the loan, have not fully covered. This is a gap in the public debt audit of the SAV in recent years that need addressing.
3. Solutions to enhance public debt audit
Firstly, the public debt audits should observe the principles of public debt control without compromising the interests of future generations. Public debt audits must be placed in the overall relationship of public finance reform to ensure national financial security and to ensure that public debts being used for the right purposes in accordance with the State Budget Law. Borrowing is only used for development investment purposes. The process of public finance reform towards publicity and transparency must be in line with the international standards and practices. Similarly, the audits of public debt must be carried out in accordance with generally accepted standards and the results of the annual audit should be made public.
Secondly, besides the thematic audits, the annual public debt audits should link to the state budget settlement audits. Through this connection, auditors can be able to assess the sustainability of the national budget and finance as well as detect the inadequacies in borrowing, repayment, accounting of public debts; the accounting of debts at central and local levels. This will help to show up the annual payment for borrowing costs, as well as serve as the basis for analyzing and evaluating the sufficiency of the state budget, as well as assessing situation of the state budget..
Thirdly, the thematic audit reports on public debt should be considered in relation to the management of national resources: The SAV needs to conduct a comprehensive thematic audit of public debt. Topics of the audit can range from borrowing, repayment, borrowing costs to debt management, debt management strategies, and loan – related risk management. Through such an audit, the SAV can identify shortcomings in debt management, then make recommendations for more sustainable debt management strategy./.

¹ The Strategy on public debts and national foreign debts in the period of 2011-2010 and visions to 2030 stipulates the limits of public debt safety, including: public debt level should be below 65% of GDP and government debt level should be below 55% of GDP.