Việt Nam is expected to adopt International Financial Reporting Standards (IFRS) instead of the current Vietnamese accounting standards (VAS) by 2025 in its efforts to enhance comparability and improve transparency.
This information was revealed at a seminar held in Hà Nội yesterday with the theme: “IFRS – Trend and roadmap for adoption in Vietnam,” co-organised by Việt Nam Association of Accountants and Auditors (VAA), and the Association of Chartered Certified Accountants (ACCA) in collaboration with the Ministry of Finance.
VAS standards show some disadvantages when compared to IFRS, and VAS standards may create barriers and reduce confidence among foreign investors in Việt Nam, said Director of the Accounting and Auditing Policies Department under the Ministry of Finance, Vũ Đức Chính.
Chính said businesses’ financial statements under VAS standards cannot accurately reflect the value of assets and liabilities, thus the application of the international accounting system is crucial and inevitable.
“The financial statements under IFRS standards help investors compare the operational indicators of the listed company on the regional, as well as international, stock market due to the simultaneous application of international financial reporting norms, therefore helping them to make accurate assessments and have a more comprehensive vision on the operation of listed companies,” said Director of the State Securities Commission (SSC)’s Inspection Department, Nguyễn Thế Thọ.
According senior financial management specialist at the World Bank, Chris Fabling, IFRS standards are a single set of accounting standards, developed and maintained by the International Accounting Standards Board with the intention of those standards being capable of application on a globally consistent basis.
Fabling said IFRS Standards bring transparency, accountability and efficiency to financial markets around the world and added that IFRS adoption continues to gain momentum because they are globally accepted as accounting standards.
“Currently, 93 per cent (133 of 143 jurisdictions) around the world have publicly confirmed IFRS adoption and implementation, 83 per cent (119 of 143 jurisdictions) require all or most domestic public companies to comply with IFRS,” Fabling said, added that adopting IFRS standards in a comprehensive way often takes 5 to 10 years depending on the conditions and ability of each country.
During the seminar, Finance Ministry officials informed the seminar of the latest changes in accounting standards as contained in Circular 200/2014/TT-BTC, issued in December last year to replace Decision No 15/2006 and Circular 244/2009/TT-BTC on the corporate accounting regime.
Experts said the new circular was mostly up-to-date, practical and in increased accordance with international standards.
Regarding the roadmap for Việt Nam, seminar participants agreed that during 2018 – 2020, 10 to 20 simple IFRS standards will be selected to be put into practice, and officially applied for all the firms listed on the stock market from 2020.
All other businesses that have sufficient conditions and wish to apply IFRS are also encouraged to. But from 2023 to 2025, all firms within the country will have to complete their conversion process, the seminar heard.
Lưu Thị Thảo, Deputy CEO of VP Bank, one of the pioneering firms in adopting IFRS standards said the bank has been proactively applying IFRS standards for five years now, to enhance transparency and corporate governance capabilities of the companies as well as remove barriers to inward investment.
Thảo said the Ministry of Finance should consider a clear roadmap for the application of IFRS standards instead of VAS so that local firms can have an idea on the time and resources needed to be prepared.