Simplification in financial systems is key for sustainable and inclusive development
Vietnam is embarking on a process of implementing a broad range of reforms designed to realize its aspiration of becoming high-income country.
The Reports on the Observance of Standards and Codes (ROSC) is a joint World Bank and International Monetary Fund (IMF) initiative that helps member countries strengthen their financial systems by improving compliance with internationally recognized standards and codes.
As outlined in the recently published World Bank report ‘Vietnam 2035’, Vietnam compares well with upper-income-countries in Government effectiveness and political stability, but still comes short in accountability and regulatory quality (which measures the perceptions of the capacity of the state to formulate and implement policies aimed at private-sector development).
Despite the Vietnam government’s effort in introducing international practices and issuing Vietnamese accounting standards over the past 20 years, the quality of corporate financial reporting by Public Interest Entities (PIEs) in Vietnam is not consistent with international good practice. While there are examples of very good practice, the overall standard is adversely impacted by the following: Vietnam Accounting Standards (VAS) have not been kept up to date with developments in International Financial Reporting Standards (IFRS); Prudential and other regulatory financial reporting requirements for financial sector entities and SOEs take precedence over accounting standards; Monitoring and enforcement of compliance with the accounting standards is lacking, as the regulator is more focused on issuing policies rather than monitoring and enforcement.
The result is that the financial statements are not prepared on a basis comparable with those in other jurisdictions. Many PIEs in Vietnam are audited by local firms with capacity and resources much more limited than international firms. Smaller local audit firms often face difficulties in establishing appropriate internal quality assurance arrangements and do not have the benefit of international network quality assurance and technical support. These aspects are both important in ensuring that firms are able to fully comply with International Standards on Auditing (ISA) and the requirements of the International Standard on Quality Control (ISQC1), particularly for audits of more complex PIEs. The criteria for an audit firm’s acceptability to audit the PIEs, are still focused on the quantitative measures (such as the size of the firm) rather than measures of audit quality (such as whether the firm has the audit methodology and quality control procedures in place to ensure the firm is able to conduct a high quality audit).
As such, Vietnam should fully adopt IFRS and the related International Financial Reporting Interpretations Committee (IFRIC) interpretations (a combination known as “VFRS”) in full for PIEs. A phased approach should be taken to setting the effective dates for the implementation of VFRS for different entity types and sectors. Once full alignment of VFRS with IFRS has been achieved, a mechanism should be put in place to ensure it is maintained.
A revised Accounting Law should further clarify that VFRS/VAS takes precedence over specialized laws or other decisions or instructions for the preparation of the general purpose financial statements. Vietnam needs to develop a strong and independent valuation profession and a set of international-equivalent valuation standards. The demand for independent valuations is already increasing as more entities, particularly SOEs, undertake revaluations as part of their equitization process.
15:51, 2025/02/24
Vietnam set to have digital banks within financial centers
Credit institutions headquartered in these financial centers will not be bound by restrictions on to foreign ownership or foreign investment conditions when providing services there or across borders.
14:30, 2025/02/15
Hanoi expands cashless parking pilot program
Hanoi is advancing its efforts to integrate technology into urban management by expanding the pilot program for cashless parking payments throughout the city.
16:58, 2025/02/11
Prime Minister urges banks to prioritize economic support over profits
One of the key priorities for the banking sector is to support small and medium-sized enterprises (SMEs), as they generate a large number of jobs and contribute significantly to the economy.
17:23, 2025/02/07
Vietnamese Gov’t forecasts CPI growth of up to 4.5% in 2025
With the goal of at least 8% GDP growth, the money supply in the economy will be significantly larger than in 2024. This will have an impact on price indices, particularly consumer prices.
17:51, 2025/01/07
Vietnam prioritizes agriculture and renewable energy for access to green loans
The move is part of the government’s effort to accelerate economic restructuring and build resilience to climate change while protecting the environment.
16:49, 2025/01/06
Vietnam GDP expands by 7.09% in 2024
The 2024 growth rate is considered positive amidst global uncertainties and domestic challenges such as natural disasters.
- Vietnam stock market set to accelerate in 2025: Experts
- Vietnam stock market aims for emerging status by 2025: Finance minister
- Vietnam set to extend VAT cut for six months
- Vietnam’s credit growth projected to expand by 16% in 2025
- Regional, international financial centers mean boosters to Vietnamese economy: Deputy PM
- IFC sets record with US$1.6 in climate financing to support Vietnam’s green transition