International Financial Reporting Standards (IFRS) represent the most significant shift in financial reporting and the biggest accounting change in a generation. IFRS has become the most common accounting language globally. A statistic by IFRS.org indicates that by April 2018, for 166 jurisdictions under the survey, 144 jurisdictions (87%) require the use of IFRS. The majority of the remaining 22 jurisdictions either permit the use or are in the process of adopting IFRS. Only seven jurisdictions including Vietnam are still using national standards.
As a global accounting language, IFRS helps to enable cross-border financial transactions at lower costs and greater transparency. When Vietnam is integrating more into the regional economics, there is an increasing need for both Vietnam as a country, and each Vietnamese enterprise to be familiar with IFRS and plan ahead for IFRS adoption in the near future.
Getting through the IFRS conversion process and initial reporting period is a great challenge. Companies converting to new accounting standards tend to underestimate what is involved, particularly in terms of time and resources.
Conversion to IFRS is much more than a technical accounting issue. IFRS may significantly affect the way in which a company’s day-to-day operations are handled or even impact the reported profitability of the business itself. Companies that have benefited most from the transition are those that have looked at this as a chance to make improvements to their systems and processes and have used it as a focus for more efficient, timely and meaningful internal and external financial information.
To assist companies to successfully complete the transition to IFRS, PwC published “A comparison of IFRS and Vietnamese GAAP” to provide a broad understanding of the major differences between IFRS and VAS.