Adopting IFRS hinges on a visionary leadership approach
Vietnam is moving towards a nationwide adoption of International Financial Reporting Standards (IFRS), with the Ministry of Finance (MoF) and professional associations creating a legal corridor and providing adequate training for the transition. This makes it an opportune time for Vietnamese enterprises to embark on this strategic transformation.
Gradual and Phased Adoption
The International Financial Centers (IFC) framework is accelerating the transition by making IFRS preferred or required for entities within the IFC environment. Vietnamese enterprises should adopt IFRS gradually and in phases, staying updated on local regulations amending accounting regimes related to IFRS adoption.
Compliance with Local Amendments and Circulars
Enterprises, especially Small and Medium-sized Enterprises (SMEs), need to stay abreast of updates such as Circular 46, which amends Article 10 of Circular 133 concerning accounting method registrations, effective mid-2025.
Focus on Specific IFRS Standards Developments
Companies should keep track of changes like the IFRS liability classification amendments effective January 2024, IFRS 9 proposed amendments on settlement date accounting, and the new IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB).
Implement Accurate and Transparent Disclosure Practices
With evolving IFRS disclosure requirements, including sustainability and net-zero commitments, enterprises should emphasize high-quality financial and nonfinancial reporting that meets both IFRS standards and investor demands.
Leverage Professional Advisory and Training
Given the complexity of IFRS adoption and interpretation, Vietnamese companies are recommended to engage professional services (audit and advisory firms) to guide transition processes, classification of liabilities, and compliance with evolving IFRS interpretation and application.
Align Tax Incentives and Financial Reporting
Awareness of the tax environment, including implications of corporate income tax where SMEs have different CIT rates, may influence enterprise structuring alongside IFRS compliance efforts to optimize financial and tax positions.
In summary, Vietnamese enterprises should approach IFRS adoption as a strategic transformation, combining regulatory compliance, continuous monitoring of IFRS updates, capacity building, and professional guidance to ensure effective implementation and enhanced corporate reporting quality aligned with both global standards and local contexts.
The MoF is providing support for businesses to enter the IFRS application roadmap via the legal framework, including building a circular for the application of IFRS in Vietnam, creating favourable conditions for businesses to apply IFRS, and detailing each subject of its autonomous and voluntary application.
To support businesses in terms of human resources and technology, the MoF will continue to coordinate with professional associations and international organizations such as ACCA and the ICAEW to organize free training courses and improve the capacity of accountants, auditors, and business leaders.
IFRS application is an urgent requirement for Vietnamese enterprises, especially those mobilizing foreign capital and participating deeply in the global supply chain. The shift requires businesses to standardize data systems, upgrade technology, restructure processes, and train personnel.
The roundtable experts stated that IFRS is not just a change in accounting techniques but a comprehensive shift in financial management thinking. The Forvis Mazars office in Hanoi continues its monthly Dialogue series, creating opportunities for experts and businesses to meet, exchange ideas, and update important knowledge in finance, auditing, and business consulting.
On October 16, the Vietnam Federation of Accountants and Auditors (VAA), PwC Vietnam, and the Institute of Chartered Accountants in England and Wales (ICAEW) signed a cooperation agreement on the implementation of International Financial Reporting Standards (IFRS). Nguyen Thi Thuy, training manager of Auditcare & Partners Vietnam (ACV), assessed the current status of IFRS adoption in domestic businesses.
More than 160 countries and territories worldwide have adopted IFRS. The biggest difficulty in IFRS adoption, according to Nguyen Thi Thuy, is not cost or technology, but leadership thinking. IFRS are seen as an opportunity to increase transparency, standardize financial information, improve access to capital, and affirm a business's position in the international market.
Trinh Duc Vinh, deputy director general of the MoF's Accounting and Auditing Supervision Department, stated that the application of IFRS is no longer a desire but has become an inevitable requirement. Vietnam's GDP last year reached approximately $470 billion, and the import-export turnover reached $786 billion, equivalent to 165% of GDP, reflecting the deep integration of the Vietnamese economy into the global trade chain.
- As Vietnamese enterprises adopt IFRS gradually and in phases, it's crucial for them to stay updated on local regulations amending accounting regimes related to IFRS adoption, such as Circular 46, effective mid-2025, focusing on compliance with local amendments and circulars.
- To ensure effective IFRS implementation and enhanced corporate reporting quality, Vietnamese companies should leverage professional services (audit and advisory firms) to guide transition processes, classification of liabilities, and compliance with evolving IFRS interpretation and application, aligning tax incentives and financial reporting for optimized financial and tax positions.
