On February 22nd, the workshop "Current Situation, International Experiences and Roadmap for Adopting International Financial Reporting Standards (IFRS) in Vietnam," jointly organized by the Ministry of Finance and the Japan International Cooperation Agency (JICA), took place in Hanoi. One of the important topics discussed was... Pilot implementation of International Accounting Standards in Vietnam for the period 2020-2025.
At the workshop, Mr. Do Hoang Anh Tuan, Deputy Minister of Finance, stated that to attract domestic and foreign capital, financial reporting should be transparent and adhere to international standards as essential requirements. To date, Vietnam has participated in more than 14 free trade agreements, most of which contain provisions encouraging the attraction of investment capital, especially from the private sector. To increase investment, businesses are required to adopt international financial reporting standards. Furthermore, reforming national governance and management of the national and public finance sectors requires the Ministry of Finance and businesses to develop institutions and a roadmap for applying international accounting standards in Vietnam. As early as May 2017, the Minister of Finance instructed the establishment of a steering committee to draft a proposal, roadmap, and plan for implementing these standards.
According to expert analysis, countries often allow businesses to choose between national accounting standards or international accounting standards when preparing and presenting financial statements to suit the specific requirements of the business and investors. Indeed, statistics from the International Accounting Standards Committee show that, to date, 131 out of 143 countries and territories have declared that they allow the application of these standards in various forms.
Ms. Takahachi Atsuko, a representative of the Japan Financial Services Agency (FSA), stated that the stringent requirements for enhanced accountability, transparency, and comparability are necessary.International accounting standards provide useful information to users of financial statements before making management and investment decisions, thus improving the quality of a company's financial statements.Furthermore, the widespread recognition and application of these standards will facilitate the comparison of financial performance and results of businesses across countries for users of financial statements.
However, representatives from the Accounting and Auditing Supervision Department (Ministry of Finance) assessed that the process of applying International Accounting Standards in Vietnam also faces certain obstacles due to the underdeveloped capital market; financial instruments (convertible bonds or derivatives) are not widely traded, so most businesses lack experience in trading and accounting for related economic activities. Some businesses, even state-owned enterprises, find it difficult to apply and have not met the requirements of International Accounting Standards; the gap between taxable income and accounting profit may widen as businesses prepare financial statements according to international standards, making it difficult to determine taxable income.
Therefore, the Ministry of Finance has drafted a process and plan for applying the above standards to Vietnam. Based on the content, all state-owned enterprises with charter capital of VND 5.000 billion or more; listed companies; and public companies in the finance, banking, and insurance sectors are identified as mandatory to apply International Accounting Standards. For other sectors, enterprises are required to have charter capital of VND 3.000 billion or more.
Initially, in the phase from 2020 to 2025, the Ministry of Finance will select a number of large enterprises with sufficient resources to pilot the application of this accounting standard. Enterprises not selected will continue to apply the Vietnamese accounting standards. From after 2030, the Ministry of Finance will issue regulations on the mandatory and voluntary requirements for preparing financial statements according to the International Accounting Standards, based on the actual situation.
