Present your knowledge about IFRS and the adoption of IFRS in Vietnam

Answer:

International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial
statements of public companies that are intended to make them consistent, transparent, and easily
comparable around the world. Previously, there was an international accounting standard (IAS) but
there was a transition to IFRS because IAS is mainly based on the historical cost principle, while IFRS is
more inclined to the fair value principle. IFRS is the current set of standards, reflecting changes in
accounting and business practices over the past two decades. IAS is what was used before the
introduction of IFRS. How Does IFRS Differ from GAAP? The two systems have the same goal: clarity and
honesty in financial reporting by publiclytraded companies. IFRS was designed as is a standards-based
approach that could be used internationally. GAAP is a rules-based system used primarily in the U.S.

On 23 March 2019, The Ministry of Finance (MoF) released the draft IFRS roadmap for public comments
before submitting to the Prime Minister for approval. The draft roadmap divides the IFRS
implementation into 3 stages:

Stage 1 – IFRS readiness preparation (from 2019 to 2021): The MoF will make necessary preparations for
the roadmap implementation in order to support businesses adopting IFRS from 2022 onwards.

Stage 2 – IFRS pilot implementation (from 2022 to 2025): The MoF will select certain companies, i.e.
state-owned enterprises, listed companies and large-scale unlisted public companies to put IFRS into
practice. FDI companies may adopt IFRS for their separate financial statements on a voluntary basis.

Stage 3 – IFRS compulsory implementation (from 2025 onwards): IFRS will be compulsory for
consolidated financial statements of all SOEs, listed companies and large-scale unlisted public
companies. Other businesses that operate as parent companies may create IFRS consolidated financial
statements on a voluntary basis.

IFRS is being applied in many countries around the world, in fact, assessing and considering the impact
of international financial reporting standards on Vietnamese enterprises is very necessary, in order for
large corporations and foreign enterprises to believe investment ideas. IFRS contributes great value to
the sustainability of the global economy, because IFRS increases transparency and helps improve
corporate accountability, thereby reducing information disparity between internal and outside the
company. Thus, the transition from Vietnamese accounting standards to Vietnam's IFRS is an important
factor for businesses in Vietnam to integrate and participate at a higher level with other markets.
international finance. In addition to the positive effects of applying IFRS on businesses, there will be
many challenges waiting for them ahead. According to survey documents on the transition to IFRS in
many countries around the world, many businesses have faced many difficulties during the transition
period. Because, applying IFRS is not entirely easy for businesses. Especially for businesses in Vietnam,
with foreign language and accounting skills, most of them are still low compared to other countries in
the world. One of those challenges is having a competent accounting and financial staff. This is
problematic because IFRS is considered to be very complex even for developed countries. The transition
to IFRS with a scientific and methodical plan and roadmap will clearly be one of the prerequisites for
enterprises to be able to deploy IFRS within the enterprise as well as in the whole group. group in a
lighter, smoother and more efficient way.