Vietnam firms will adopt the IFRS standards by 2025

International Financial Reporting Standards (IFRS) will be adopted in Vietnam by 2025 to remove the current Vietnamese accounting standards (VAS).

This was heard at a seminar held in Hanoi on December 23 with the theme: “IFRS - Trend and roadmap for adoption in Vietnam,” co-organised by Vietnam Association of Accountants and Auditors (VAA), and the Association of Chartered Certified Accountants (ACCA) in collaboration with the Ministry of Finance. This step is the latest efforts to enhance comparability and improve transparency of Vietnamese enterprises.

Speaking at the seminar, Mr.Vu Duc Chinh, Director of the Accounting and Auditing Policies Department under the Ministry of Finance, said that when comparing to the IFRS, the VAS standards show some disadvantages and the VAS standard may create barriers and reduce confidence among foreign investors in Vietnam.

He also underlined that under the VAS standards, the businesses’ financial statements cannot accurately reflect the value of assets and liabilities. Therefore, it is crucial and inevitable to apply the IFRS.

Sharing the same view with Mr.Vu Duc Chinh, Mr.Nguyen The Tho, Director of the State Securities Commission (SSC)’s Inspection Department, said that the business’s financial statements under the IFRS standards help investors compare the operational indicators of the listed company on the regional as well as international stock markets due to the simultaneous application of international financial reporting norms. Hence, the investors can make accurate assessments and have a more comprehensive vision on the operation of listed companies.

Ms.Luu Thi Thao, Deputy CEO of Vietnam Prosperity JSC Commercial Bank, one of the pioneering firms in adopting the IFRS standards, said the bank has been proactively applying the IFRS standards for five years now. This adoption is to enhance transparency and corporate governance capabilities of the companies as well as remove barriers to inward investment.

Mr.Chris Fabling, according senior financial management expertfrom the World Bank, said that the 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. The IFRS standards provide transparency, accountability and efficiency to financial markets around the world, he underscored.

According to Mr.Chris Fabling, 93 percent (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 the IFRS standards. The adoption of the IFRS standards continues to gain momentum because they are globally accepted as accounting standards. He added that the adoption of the IFRS standards in a comprehensive way often takes 5 to 10 years depending on the conditions and ability of each country.

At the seminar, the Finance Ministry’s officials informed 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 Vietnam, 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. From 2023 to 2025, all firms within the country will have to complete their conversion process, the seminar heard.

According to Ms.Luu Thi Thao, the Ministry of Finance should consider a clear roadmap for the application of the IFRS standards instead of the VAS standards, so that local enterprises can have an idea on the time and resources needed to be prepared.