Recently, the word “IFRS” has been mentioned a lot in the fields of accounting, auditing, corporate finance, and monetary - banking. In today's topic, we will learn about “IFRS”, and how “IFRS” is being applied in Vietnam.

So, what is “IFRS”?

“IFRS” is short for International Financial Reporting Standards. Currently, “IFRS” includes 16 standards.

“IFRS” are the International Financial Reporting Standards. The content is researched, and developed by an independent nonprofit organization, the International Accounting Standards Board (IASB).

“IFRS” provides an international framework for the preparation and presentation of financial statements for public companies. It can be said that this is the most general guide and explanation, latest updates on how to prepare financial statements.

The World Bank has accepted “IFRS”. At the same time, it is recommended that countries should give priority to adopting “IFRS”, rather than developing accounting practices, according to each country’s conditions.

General benefits of adopting “IFRS”

• “IFRS” is an international common language.
• “IFRS” is a framework for businesses of other countries to prepare financial statements and list on the international capital market.
• “IFRS” forms the basis for the presentation of the financial statements of customers using World Bank credits.
• “IFRS” is a standard to improve the transparency and honesty of financial statements of the enterprise for all countries.

Roadmap to apply “IFRS” in Vietnam

This application process consists of 3 phases:

Phase 1, the preparation phase, from 2019 to 2021.

During this period, the Ministry of Finance prepares necessary conditions for the implementation of the Scheme to ensure support for businesses to start applying “IFRS” from 2022, such as: publishing the translation of “IFRS” into Vietnamese, training human resources, developing “IFRS” application guidelines.

Phase 2, pilot phase, from 2022 to 2025.

The Ministry of Finance selects a number of enterprises, such as parent companies of State economic groups, listed companies, and large-scale public companies, to prepare consolidated financial statements under “IFRS”. FDI enterprises are allowed to voluntarily apply “IFRS” to their separate financial statements.

Phase 3, the mandatory period for applying “IFRS”, from after 2025.

Companies required to prepare consolidated financial statements under “IFRS” include all parent companies of state-owned economic groups, all listed companies, all large-scale public companies are unlisted parent companies. Other enterprises are also allowed to voluntarily prepare separate financial statements under “IFRS”.

However, this roadmap is likely to slow down due to the Covid epidemic situation and some requirements that need further research in Vietnam.