The application of International Financial Reporting Standards (IFRS) in financial reporting is becoming increasingly common globally, and Vietnam cannot be left out. Currently, Vietnam is entering a period of global economic integration, and the adoption of IFRS has become urgent. This is the first answer to the question of why IFRS should be adopted in Vietnam.
Here are some reasons why Vietnam needs to adopt International Financial Reporting Standards.
Vietnam's economy is increasingly integrating deeply with the global economy.
The adoption of IFRS is no longer limited to subsidiaries of multinational corporations in Vietnam but is beginning to affect Vietnamese companies as a whole. In the current era of strong globalization, through the application of IFRS, the Vietnamese economy in general and Vietnamese businesses in particular will benefit from economic integration, for example, access to capital, maintaining competitiveness and sustainable development, and developing a skilled workforce in accounting and auditing, etc.
Using financial reports with consistent and comparable preparation and presentation methods helps improve the position of Vietnamese businesses.
Preparing financial statements according to IFRS reflects the fair value of the business.
Vietnamese companies currently still apply Vietnamese Accounting Standards (VAS). However, understanding IFRS helps business owners gain a better understanding of their company's value, especially in cases of mergers and acquisitions, and the addition of new shareholders or investors. With the increase in foreign investors, and to attract investment capital, businesses need financial statements prepared according to IFRS that are complete, transparent, accurate, and highly reliable.
This helps markets improve their ability to attract foreign investment, and significantly reduces the cost of issuing stocks and bonds to raise capital for the economy, due to the increased credit rating.
IFRS has many guidelines that VAS and related regulations do not yet have.
Currently, many international reporting standards do not have equivalent Vietnamese Standards (VAS). For example, IAS 19: Accounting and Presentation of Employee Benefits, including short-term, long-term, and severance pay; IFRS 13: Fair Value Measurement;…
By adopting IFRS, businesses have greater access to relevant guidance. This leads to more accurate, clear, and transparent preparation and presentation of financial statements.
Vietnamese standards will change in line with international integration.
To keep pace with the global economy and the IFRS adoption roadmap, Vietnam will implement changes to its Vietnamese Accounting Standards. Accordingly, the adoption of IFRS This will help Vietnam stay on track with the Vietnam Vision 2035, ASEAN policies, and keep pace with the development of other successful economies in the region and around the world.
Why adopt IFRS? Because IFRS is a common, globally used language.
Understanding IFRS provides businesses with useful information about other businesses in the same industry with similar levels of operation in other countries. IFRS (International Financial Reporting Standards) These are known as International Financial Reporting Standards, aiming to set common rules for how financial reporting can be conducted. unified, transparent , and comparable Worldwide. Creating a global accounting language helps financial reports become transparent, consistent, reliable, and accessible across countries and regions, making them universally recognized and easily analyzed and referenced.
Therefore, the question of why IFRS should be applied in Vietnam seems like an obvious necessity, in order to have a common voice in economic integration.
Why apply IFRS? To facilitate the consolidation of financial statements at the parent company.
For foreign direct investment (FDI) enterprises where the parent company uses IFRS, the application of IFRS is a mandatory requirement for consolidating financial statements at the parent company. Subsidiaries adopting IFRS will save time in converting reports to IFRS, and will have consistently presented reports, enabling the parent company to quickly understand the business operations of its subsidiaries.
This helps to enhance the comparability and transparency of financial reporting.
The fact that financial statements are prepared and presented based on the same standards makes them non-distinguishable, comparable, and reliable. Relevant, comparable financial statements that accurately reflect an organization's financial position are what investors look for in making their investment decisions. IFRS helps ensure the global consistency of financial reporting standards applicable to organizations in different jurisdictions and countries in terms of measuring, disclosing, and ensuring financial transparency.
Increase the competitiveness of businesses.
The use of global accounting standards will create global operations, thereby increasing fair competition and boosting investor confidence in the market. Financial statements also provide comprehensive, accurate, and timely information, allowing businesses to compare themselves with competitors, identify their strengths and weaknesses, and thus enhance their advantages and address weaknesses to become more efficient and competitive.
With the numerous advantages of applying IFRS as described above, it's clear why it's necessary to adopt IFRS in Vietnam. In fact, Vietnam has been taking positive steps to prepare for widespread IFRS adoption. However, implementing IFRS is a complex and crucial issue, requiring consultation and support from the IASB and experts from international professional organizations, as well as appropriate transitional phases.