- The first difference between VAS and IAS/IFRS is in the content of the Financial Statements
- No revaluation of assets and liabilities at fair value is allowed
- Financial reporting form and account system
- Method of calculating the cost of inventory
- Initial recognized value
- Allocation of goodwill
- VAS has no equivalent standards within IAS/IFRS
When developing Vietnamese Accounting Standards (VAS), Vietnam's overriding stance is to comply with the IAS system. VAS has basically been built based on IAS/IFRS, on the principle of selective application of international practices, in accordance with the characteristics of the economy and the management level of Vietnamese enterprises. Therefore, VAS has basically approached IAS/IFRS, reflecting the majority of transactions of the market economy, improving publicity, Transparency of information on financial statements of enterprises. However, at present, there are still many differences between VAS and IAS/IFRS. This is reflected in the following key points.
The first difference between VAS and IAS/IFRS is in the content of the Financial Statements #
VAS stipulates that financial statements are not required to have a statement of changes in equity as standard IAS 01. According to IAS, we have five components including: Statement of Financial Position, Statement of Comprehensive Income, Statement of Cashflow, Statement of Changes in Equity, and Notes to Financial Statement. While VAS has only four components of Balance Sheet, Income Statement, Cash Flow Statement and Notes to Financial Statements, the statement of changes in equity will be considered as a single component. part of the notes to the financial statements.
No revaluation of assets and liabilities at fair value is allowed #
The most basic difference is that VAS does not have a regulation to allow revaluation of assets and liabilities at fair value at the reporting time. This greatly affects the accounting of assets and liabilities classified as financial instruments – reducing the truthfulness and reasonableness of the financial statements and not conforming to IAS/IFRS – VAS 21 does not regulate present the Statement of Changes in Equity in a separate report such as IAS 1, which is required only in the notes to the financial statements.
Financial reporting form and account system #
The Vietnamese accounting system stipulates the reporting form rigidly, reducing the flexibility and diversity of the financial reporting system, while IAS/IFRS does not give a specific form of the report or an account code. Financial statements are prepared and presented depending on how the business is managed.
IAS/IFRS only regulates the form of financial statements according to IAS 1, not the accounting account system. Enterprises are allowed to create their own system of accounting accounts to better meet the requirements of financial statements as well as management reports.
Compulsory account system for businesses is sometimes detrimental to foreign enterprises in Vietnam because enterprises often face difficulties in conversion and reduce the consistency between companies in the country. same corporation. difference between VAS and IAS/IFRS
Method of calculating the cost of inventory #
IAS 2 allows the use of inventory valuation methods such as actual identification, first in first out, FIFO, and weighted average. And VAS 2, in addition to the three methods above, also allows the application of the "Last In - First Out" (LIFO) method while IAS/IFRS does not allow this method. However, Circular 3 issued in 200 removed the "Last In - First Out" (LIFO) inventory pricing method.
Initial recognized value #
VAS 03 only allows recording and reporting at cost. IAS 16 allows two ways of accounting (a) recognizing assets at cost or (b) revaluation at fair value.
- Cost Model: Assets are recorded at cost less accumulated depreciation and accumulated impairment losses.
- Revaluation model: Assets are recorded at the revaluation amount. The revaluation amount is the fair value at the revaluation date less accumulated depreciation and accumulated impairment losses. IAS 16 requires this model to be used only if the fair value of the asset can be measured reliably.
VAS 3 only allows revaluation of fixed assets such as real estate, factories and equipment in case there is a decision of the State, bringing the assets to contribute capital to joint ventures, associations, splits and mergers of enterprises. and no annual property loss is recognized. Meanwhile, according to IAS 16, enterprises are allowed to choose the model of revaluation of assets at fair value and determine the annual loss of assets, and at the same time, record this part of the loss in accordance with the provisions of Clause 36 of this Article. IAS XNUMX.
Allocation of goodwill #
According to VAS 11, when there is a business combination transaction, goodwill will be amortized over a period not exceeding 10 years from the date of acquisition. Meanwhile, according to IFRS 03, the lost goodwill values must be reassessed.difference between VAS and IAS/IFRS
VAS has no equivalent standards within IAS/IFRS #
Many international reporting standards do not have an equivalent VAS standard. As follows:
- IAS 19: Regulations on accounting and presentation of employee benefits including short-term, long-term benefits, severance pay;
- IAS 20: Regulations for the accounting and presentation of grants and other forms of government funding;
- IAS 32: Presentation of financial instruments (Circular No. 210/2009/TT-BTC requires enterprises to apply the provisions of IAS 32 and IFRS 7 on presentation and disclosure of financial instruments from 2011);
- IAS 39: Establishing principles for recognition, derecognition and valuation of financial assets and financial liabilities (replaced by IFRS 9, effective January 01, 01);
- IFRS 09: Regulations on recognition and derecognition requirements, classification and measurement of financial assets and financial liabilities, impairment of general hedging accounting (effectively) force from January 01, 01);
- IFRS 14: Statutory deferrals (effective January 01, 01).
- IAS 26, 41, 06: Industry or performance-specific standards including accounting and reporting for pension funds, agriculture, and mineral resource exploration and assessment.
- IAS 29, 36, 02, 15: Specific event or transaction standards: Financial statements under conditions of hyperinflation, loss of assets, settlement on a stock basis, or assets held for sale and intermittent operation.
- IFRS 13: Measurement of fair value.
- IAS 27: Accounting method for investments in subsidiaries, joint ventures and associates in separate financial statements;
- IFRS 12: Disclosures of interests from other entities so that an assessment of the nature and risks associated with the entity's interests in other entities can be assessed and the effect of these interests on the financial position, results of operations and cash flows of the entity (the presentation of interests in subsidiaries, joint ventures and associates is governed by VAS 25, 08 and 07).
The information about the differences between VAS and IAS/IFRS above, EXPERTIS hopes to help readers have basic knowledge about IFRS standards. If you have problems with the conversion process, please contact our Consulting Department for assistance.