Vietnam to apply international financial reporting standards by 2020
Updated at Wednesday, 30 May 2018, 14:07
The Hanoitimes - The government expects to approve the application of the International Financial Reporting Standards (IFRS) by 2020 to perfect the legal framework on accounting and increase the transparency of financial information.
Vu Duc Chinh, Director of the Accounting and Auditing Policies Department (AAPD) under the Ministry of Finance (MoF), said at a recent workshop themed: “Experience in applying IFRS in some countries and roadmap for adoption in Vietnam”, which was co-organized by the Japan International Cooperation Agency (JICA) in collaboration with MoF.
The event was aimed to share experiences on the application of IFRS standards in countries such as Japan, South Korea, the US, Malaysia and China to get recommendations on the draft project on application of IFRS in Vietnam.
Vietnam will replace the current Vietnamese accounting standards by 2020
According to Chinh, Vietnam is expected to adopt IFRS, replacing the current Vietnamese accounting standards (VAS), by 2020. Vietnam has established 26 accounting standards for over the past 10 years, but now these standards have disadvantages when compared to IFRS, and may create barriers and reduce confidence among foreign investors.
He said businesses’ financial statements under VAS standards cannot accurately reflect the value of assets and liabilities, so the application of the international accounting system is crucial and inevitable. However, the application of IFRS should be suitable to Vietnam’s condition as the country has many stakeholders in the accounting system because of different types of businesses.
The Ministry of Finance will gradually build a set of financial reporting standards and issue or recognize an international standard system, he said, adding that the application of IFRS means that the accounting and auditing system will have a common "language" for all businesses in all countries in the world, and this will be very beneficial when Vietnamese enterprises participate in the international capital market.
According to Chinh, after approval by the government, the MoF will translate IFRS into Vietnamese so that local firms can accurately and fully understand the contents of the new financial reporting norms.
Trinh Duc Vinh, Vice Director of AAPD, said the application of IFRS in Vietnam is to overcome the limitations of the VAS, perfect the legal framework on accounting, and increase the transparency of financial information.
This also aims to promote the accountability of businesses, helping Vietnamese businesses access more capital sources and list on the international market, so that Vietnam is internationally recognized as a full market economy, he added.
Regarding the roadmap for Vietnam, participants agreed that during 2018-2020, 10 to 20 simple IFRS standards will be selected to be implemented, and officially applied to all the firms listed on the stock market from 2020. All other businesses that wish to apply IFRS and find that the application is possible are also encouraged to do so.
Sekiguchi Tomokazu from KPMG Vietnam - the provider of audit services said the roadmap for the application of IFRS (or equivalent standards) in each country is different, stressing the need to make thorough plans before application.
In Korea, all listed companies, financial institutions, state-owned enterprises and other public interest entities are subject to the mandatory application of IFRS from 2011, he said.
Meanwhile, in China, firms are still required to apply the Chinese national accounting standards, so there are no specific rules for applying IFRS, Tomokazu added.
Tran Anh Quan, Vice Director of KPMG Vietnam, noted that the application of IFRS is a great challenge to any countries, even developed ones.
Vietnam is a country with low starting point for economic development, so the application of IFRS is more difficult, he said.
Representatives from JICA said the application of IFRS is very important and the agency can provide financial and technical assistance for Vietnam as well as share Japan’s experience in the work.