As Vietnam is strongly attracting foreign investment, especially from large multinational corporations, the application of IFRS will streamline the corporations’ financial reporting processes, enabling seamless integration with their global operations.
The application of International Financial Reporting Standards in Việt Nam will bring many benefits, including foreign investment attraction and deeply integration into the global value chain. — Photo thoibaotaichinhvietnam.vn
The Ministry of Finance is drafting a circular guiding the application of International Financial Reporting Standards (IFRS) in Vietnam.
According to Trịnh Đức Vinh, chairman of the Vietnam Club of Chief Accountants (VCCA), when domestic enterprises apply IFRS for their financial statements, they will no longer have to prepare financial statements according to Vietnamese Accounting Standards (VAS) that is currently applied.
The application of IFRS is considered an important step and brings many benefits to the economy, including foreign investment attraction and deeply integration into the global value chain.
Currently, IFRS is widely applied in 166 countries and territories around the world. In many countries, IFRS has replaced national accounting standards to attract foreign investors.
As Việt Nam is strongly attracting foreign investment, especially from large multinational corporations, the application of IFRS will streamline the corporations’ financial reporting processes, enabling seamless integration with their global operations.
This alignment can minimise the complexity of preparing consolidated financial statements and enhance consistency across different jurisdictions.
As IFRS is internationally recognised, the application of the norms in the country will help build the trust of foreign investors and create conditions for Vietnamese companies to list on international markets or receive preferential loans from international financial institutions.
Nguyễn Thị Thuỷ from AudiCare Việt Nam Training Centre said that financial reports which meet IFRS help increase transparency, professionalism and opportunities to compete in the global market, attract investments and expand opportunities for cheap loans as well as create favourable conditions for doing business globally.
In 2020, The Ministry of Finance approved a project on applying financial reporting standards which aims to apply IFRS compulsorily after 2025.
To meet the target, it needs efforts and close coordination between management agencies, the business community and professional organisations.
According to Thủy, applying IFRS can be complicated and costly in terms of training and changes in the system and constant compliance.
In addition, adjusting IFRS to ensure appropriateness to existing legal frameworks is not an easy job as VAS has 26 standards while IFRS has 41. It might take enterprises at least three or four years of training to prepare data for their first IFRS report.
According to the Ministry of Finance, it is promoting the coordination with international professional organisations such as the Association of Chartered Certified Accountants (ACCA), the Australian Association of Chartered Certified Accountants (CPA Australia), the Institute of Chartered Accountants in England and Wales (ICAEW), and the International Auditing and Assurance Standards Board (IAASB) to organise training courses and raise awareness about IFRS. — BIZHUB/VNS
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