Vietnamese Accounting Standards

Document Type:Essay

Subject Area:Accounting

Document 1

This paper, therefore, assesses the accounting environment in Vietnam and compares it with the International Financial Reporting Standards as advocated by the International Accounting Standards Board. Before 1986, Vietnam had a centrally based economy system modeled on the ideals obtained from the Soviet Union where the government controlled all the economic activities happening in the economy. The economy did not have room for private ownership of property or resources but permitted the collective type of ownership and state ownership. In addition to that, the state played a key role in this type of economy through resources allocation, targeting, and distribution of finished products to consumers among other roles. Therefore, the existent accounting system served the purpose of auditing and checking a centrally based economy (Alpert, 2015). However, after 1986, this type of Vietnamese economy was reformed and it started to change gradually into a market economy with an orientation towards socialist and integration of the area economy with the global one. This opened the economy to further expansion and growth due to increased foreign investment and progressive rapid growth of the private sector. Up to the present, the Vietnamese economy has experienced three spheres of market change with the recent being a market economy oriented towards internalization. The various phases of economic reform have impacted on the accounting system, with the recent transition leading to rising of groups with interests in the accounting industry such as foreign investors, entrepreneurs, and bankers. This calls for the financial statements being prepared in the new era to conform to the international standards of producing useful and accurate financial data that is suitable for providing analysis and future prediction on the performance and position of a company.

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The first area is compliance with outdated standards. The international accounting standards are updated regularly and are clarified often. VAS was lastly updated in 2000, meaning that the subsequent updates of the IAASB regulations of the later years have not been utilized. This creates an accounting system that is deceptive and not reflective of the required information (Praquin, & Bensadon, 2016). The second area is an ineffective implementation where the VAS systems being used in the country deviate from the international standards due to slow adoption and slow pace in implementing the proposed global accounting standards. Such companies will have a hard time convincing the stock market regulators of their conformity and providing that the liability lies with the government (Sale, Salter & Sharp, 2013). The third implication of this difference in accounting systems of Vietnam to those of the world is on the workforce and executives working in the accounting industry.

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The workforce employed in the production of the different financial information will face a challenge of practice while working for companies situated in countries that conform to the updated accounting standards. There is a difference in the financial documents prepared in Vietnam and those from other IFRS conforming countries. Workers from Vietnam will raise issues of their training and certification when they prepare less, wrongly formatted financial statements. Currently, the financial analysts and policy developers in the financial industry are focused on ensuring the economy conforms towards internalization and achieves autonomy from the government. All the resources are channeled on this drive and by the time, they are done with the creation of market economy the country will have a backlog of pending IFRS standards that need to be put in place.

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The accounting industry practitioners will have a hard time in fast-tracking of the reforms and ensuring they are in place not to frustrate the existing companies in their audit and financial reporting (Vo, 2014). The other emerging issue is chaos and confusion among the various companies while complying with the international accounting standards. In my prediction, the government in near future will form a task force that will adopt the lagging policies and accounting standards all of them at a go. Sharpe. International Business Publications, U.  Doing business and investing in vietnam: strategic, practical information, regulations, contacts. Place of publication not identified], Intl Business Pubns Usa. Praquin, N. Salter, S. B. Sharp, D. J.  Advances in international accounting. com/id/10834257.

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