Roadmap for the implementation of IFRS in Vietnam:
Benefits and challenges 

Introduction

Along with the trend of globalization in cooperation and economic development, the scope of activities of investors spread around the world, accounting is no longer an intrinsic problem of each country. In 2001, the International Accounting Standards Board (IASB) issued a set of accounting principles with a new name, International Financial Reporting Standards (IFRS), focusing on presenting information on the financial statements for the international market. The purpose of the financial statements is to focus on the relationship between firms and investors regarding the information of the capital markets. This event marked a new era of global business management. The great benefits of IFRS include the improvement of the quality of the financial statements through corporate accountability, the enhanced transparency and comparability, providing users of financial statements with useful information regarding management and making investment decisions (Ashok, 2014; Siriyama & Fareedah, 2017). Although experience of other countries shows that immediate investment is needed, in the long term, the adoption of IFRS may reduce the cost of preparing financial statements for businesses, attracting resources from both domestic and foreign investments, raising capital at low costs (Odia & Ogiedu, 2013).Since 2005, many countries have officially adopted IFRS by establishing IFRS systems suitable for their countries such as Australia, Hong Kong, European countries (Merve, 2014).

Currently, IFRS is widely recognized by many countries. By 2016, there were 117 countries had started applying IFRS of which nearly 100 countries applied the original IFRS system. Even the United States, which has traditionally adopted its own accepted accounting principles (US GAAP), is in the process of consolidating US GAAP and IFRS (Winney et al., 2010). The African countries which apply the entire IFRS are Ghana, Botswana, Egypt, Ethiopia, Kenya, Lesoto, Malawi, Mauritius, Mozambique, Namibia, Sierra Leone, South Africa, Tanzania, Zimbabwe, Swaziland and Uganda. These countries require all listed companies, public organizations, banks and insurance companies to follow IFRS (Choi & Nam, 2020; Owolabi & Iyoha, 2012; Siaga, 2012). Currently, Japan allows listed companies to choose between applying Japanese standards, US GAAP or IFRS. In fact, the number of Japanese companies which choose to apply IFRS has been increasing – up to 30% of the market capitalization now. In addition, companies which account for about 19% of market capitalization are considering the adoption of IFRS (Joshi, 2016).

Vietnam has studied and issued 26 Accounting Standards based on International Accounting Standards (IAS) during the period 2001-2005. After more than 10 years of implementation, the Vietnam Accounting Standards (VAS) helped to improve the transparency and reliability of the financial statements, providing high-quality information which is consistent with the management proficiency and peculiarities of the economy. However, in the current period, due to the pressure from the market economy and economic integration, the Vietnamese Accounting Standards system has revealed many limitations. Many standards fail to keep up with the changes of the market economy, especially in the context of strong restructuring of enterprises, financial institutions, equitization of State-owned enterprises, and the appearance of many complex financial instruments. According to the assessment of enterprises, experts and researchers, there are substantial differences between VAS and IFRS which creates barriers and reduces trust of foreign investors (Tu Oanh et al., 2019). One of the key differences between the two systems is that many items on the financial statements need to be revalued using the fair value. Therefore, the value of assets and liabilities of enterprises do not reflect the reality of the market. The failure of including important standards such as financial instruments, recognition of loss on assets makes enterprises do not have a legal basis to record losses in a timely manner. In addition, derivative financial instruments have not been widely used to prevent risks for business activities. Vietnam has a large proportion of agriculture in the economy but there is no accounting standard for agriculture. Due to the need of integrating national accounting standards with the international accounting standards, the Ministry of Finance of Vietnam is developing an accounting strategy and roadmap to complete the legal framework of accounting by 2030 (KPMG, 2018). Accordingly, Vietnam is urgently conducting research on the contents of IFRS, examining the differences between VAS and IFRS and assessing the impacts, feasibility, benefits as well as possible difficulties and challenges when applying IFRS, thereby, developing a roadmap and orientations for the adoption of IFRS in Vietnam. The adoption of IFRS can help promote business environment, build trust in domestic and international investors as IFRS is considered a global language for accounting. Therefore, Vietnam needs to have a thorough assessment and specific plans on resources to invest in the implementation of IFRS. These resources include people and finance. Thereafter, in order to continue to keep up to date with IFRS changes, Vietnam needs a long-term mechanism and resources for that mechanism. This study was conducted to collect opinions on the benefits and difficulties of business managers and accountants regarding the implementation of IFRS in Vietnam. Therefore, the main purposes of this paper are:

• Investigating the benefits and difficulties of IFRS implementation in Vietnam
• Identifying differences in the benefits and difficulties by each type of enterprise and worker
• Proposing solutions to adopt IFRS in Vietnam effectively.

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