What should be prepared for the “Great Project” to apply the International Financial Reporting Standards (IFRS)?

In the context of current integration, many countries around the world have adopted the international financial reporting standards system (collectively called IFRS) to control information on financial statements.

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Overview of IFRS and the situation of applying IFRS in the world

Around the world, many countries have adopted the international financial reporting standards system (collectively called IFRS) to improve the quality and comparability of information on financial statements (financial statements). IFRS was developed and issued with three main components: – Conceptual framework – International Financial Reporting Standards (IAS / IFRS). – Guidelines for accounting standards interpretation (IFRIC / SIC). In general, since its inception, the IFRS standard system has played an important role in the development of international accounting. Up to now, the situation of IFRS application in 174 countries and territories around the world can be summarized as follows:

Table: Number of countries / territories where IFRS is applied

Nguồn: www.iasplus.com

There are 5 countries considering IFRS application are USA, Japan, India, Russia, Malaysia and Colombia.

Roadmap for applying international financial reporting standards (IFRS) in Vietnam

In Vietnam, the process of international economic integration puts Vietnam in the context of having to renovate the economy and approach international practices. In particular, renewing the accounting system is one of the important stages. In the past years, the Ministry of Finance has begun to build a roadmap for conversion from Vietnam accounting standards system to IFRS:

• July 2017: The Ministry of Finance issued a decision to set up an IFRS drafting committee
• March 2019: Publish the draft IFRS application on the Ministry’s website
• Expected in October 2019: The Prime Minister approves the IFRS application roadmap, in which:
  • 2022: Application of voluntary IFRS to large unlisted financial institutions / public companies, listed companies, foreign-invested enterprises, large state-owned enterprises with foreign loans
  • 2025: Required for the above voluntary subjects

From 2019 to the end of 2021, the Ministry of Finance shall prepare necessary conditions for the implementation of the Scheme to ensure support for enterprises starting to apply IFRS from 2022, such as announcing the translation of IFRS. Vietnamese, training human resources, developing guidelines for applying IFRS …

Also according to the Scheme, the scope and method of applying the IFRS international financial reporting standards are expected as follows:

– Enterprises subject to IFRS must apply all valid IFRS as prescribed. of the International Accounting Standards Committee at the same time.

– Units only have to prepare one set of financial statements to publish in Vietnam. Units that are subject to (compulsory or voluntary) preparation of financial statements (separately or consolidated) under IFRS are exempted from making financial statements according to VAS.

– When the International Accounting Standards Committee makes amendments and supplements to IFRS, Vietnam will apply them within 3 years from the time the IFRS amendments and supplements take effect.

What challenges will be faced?

Experience of countries applying for the first IFRS shows that there are many questions raised such as whether the application will bring success, what are the intangible benefits of applying IFRS and the costs. how to achieve these benefits … The transition to IFRS carries different risks for different entities.

– For companies preparing financial statements: the biggest difficulty is not having adequate knowledge about IFRS, nor measuring all the effects of IFRS application on changes in business results. Currently, human resources for accounting are limited in foreign language skills and understanding of IFRS, if they are not trained properly, the wrong application is inevitable. In fact, based on a survey of 149 financial institutions around the world in October 2004, KPMG audited that the lack of understanding of IFRS delayed the application of IFRS in many businesses.

– For investors: If the information on the report is erroneous or confused, it will lead to unreasonable investment decisions. Businesses may not disclose all necessary information so that investors can compare, compare and influence investment decisions. In addition, other users of information such as analysts, especially those in the field of business purchases, will face similar risks when they are unable to assess the effects of applying IFRS to business results will lead to unpredictable changes in stock prices and investments.

Businesses need to review and establish accounting systems, processes and technology infrastructure soon to ensure there is sufficient foundation to apply and comply with IFRS, ensure the integrity of financial statements. In particular, it is necessary to review human resources from financial – accounting personnel to management personnel, in order to plan training, updates and retrofit of IFRS knowledge.

Personnel in the field of accounting, auditing and finance need to be proactive in researching and learning, cultivating knowledge and skills to ensure adequate performance of the job. The necessary knowledge and skills include: English proficiency in accounting to read and understand the standards / instructions; knowledge of IFRS to apply IFRS properly; skills to analyze differences between IFRS and VAS to analyze changes in financial situation and business results of enterprises. In particular, the application of IFRS requires a deep understanding and flexible application of accounting principles as well as adherence to professional ethical principles. Therefore, the active research from now on is extremely necessary. Each person needs to have a time plan, as well as financial support for courses. This support may come from businesses themselves, or training centers.