More than half of companies in Vietnam have been adopting international financial reporting standards to meet investors’ expectations and improve their corporate governance, a survey showed.
More than 50 percent of Vietnamese companies have adopted international practices in financial reporting. (Photo: tapchitaichinh.vn)
The survey was carried out between July 20 and August 15, 2020. It was a joint effort of the Ho Chi Minh Stock Exchange (HoSE), audit firm Deloitte Vietnam, the State Securities Commission (SSC), the Ministry of Finance, the Association of Chartered Certified Accountants (ACCA) and Deloitte’s clients.
The survey results will be officially released in late October.
According to the International Accounting Standards Board (IASB), IFRS are used by listed companies in more than 130 countries and territories. Of the figure, companies in around 90 countries have fully developed IFRS-based financial reports.
Regarding the countries and territories, where IFRS are not a must, the local governments have been changing the accounting system to match international practices.
The adoption of IFRS may depend on each country’s current socio-economic development and it is often applied to public companies while non-public firms may find it optional.
Vietnam’s Ministry of Finance in March has issued Decision 345/QD-BTC to encourage local companies to use IFRS when preparing their financial reports.
The survey studied the staff that have been key to make the companies adopt IFRS. Specifically, 53 percent of the responses came from chief accountants and a third came from senior managers.
The survey also pointed out that about 55 percent of the companies that have not adopted IFRS said they would do before 2025 – the deadline for local companies to willingly adopt IFRS under Decision 345.
The sectors in which companies have used IFRS or planned to do so included banking, energy and industrials, insurance, asset management, information and technology, media and telecommunication, the survey showed.
Foreign-invested companies accounted for the majority of all surveyed companies, followed by listed firms, large-cap public corporations and State-owned enterprises.
According to specialists, the number of companies willing to adopt IFRS in financial reporting will increase in the coming years, proving the business community is comfortable with the new requirement. The use of IFRS in Vietnam will also mushroom as many universities have imported IFRS-related content into their curriculum.
In Vietnam, the use of IFRS will boost the business transparency and creditability in the eye of investors. Local companies will have the chance to introduce their business to foreign investors and become more attractive in the international market.
But for foreign-invested and State-funded companies, the change in the accounting mechanism may affect their earnings records in coming years./.VNS