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PwC workshops emphasize need to adopt IFRS

Released at: 16:11, 12/11/2018

PwC workshops emphasize need to adopt IFRS

Photo: PwC

Early adoption of International Financial Reporting Standards of great benefit to enterprises, workshops hear.

by Doanh Doanh

PwC Vietnam organized a workshop on the topic “Conversion of VAS financial statements to IFRS and new key points of IFRS in 2018/2019” in Ho Chi Minh City on November 6 and in Hanoi on November 9, to support Vietnamese companies on best converting their financial statements from Vietnamese Accounting Standards (VAS) to International Financial Reporting Standards (IFRS) for compliance with the planned roadmap of the Ministry of Finance (MoF).

The workshop attracted more than 250 finance directors, heads of finance and accounting departments, chief accountants, and finance and accounting experts operating in Vietnam. PwC experts and a speaker from the MoF’s Department of Accounting and Auditing Regulations shared their knowledge and offered practical experience on coping with the challenges of converting from VAS to IFRS and also provided updates on new key points in IFRS in 2018/2019.

“In the era of globalization, by adopting IFRS, Vietnam’s economy and Vietnamese companies will gain from deeper integration into the region in terms of capital and investment cooperation opportunities,” said Mr. Tran Hong Kien, Deputy General Director of PwC Vietnam.

More importantly, he added, when Vietnamese companies adopt IFRS, it will have a wider impact on improving corporate governance, financial data transparency, and the healthy development of Vietnam’s capital market. “With strong resources and experience in Vietnam and in the region, PwC Vietnam is actively cooperating with the MoF and professional organizations on Vietnam’s IFRS roadmap proposal,” he said. “At the same time, we are supporting companies in designing their own IFRS roadmap.”

While IFRS is not yet mandatory in Vietnam, according to experts, many companies have already converted their financial statements from VAS to IFRS. The adoption of IFRS is expected to become more common in Vietnam’s business community, not only to align with the IFRS roadmap in Vietnam but also for Vietnamese companies to attract foreign investors that may expect international accounting standards.

By actively preparing in advance of the Vietnam IFRS roadmap, Vietnamese companies will have sufficient time to analyze and prepare for the relevant processes. Early preparation will also enable companies to assess the challenges properly and at the same time better control costs, thus ensuring a smooth transition. The conversion experience in Europe, Asia, and Australia shows that conversion projects often take more time and resources than anticipated. If not well prepared, some companies will be rushed when the conversion deadline approaches, leading to increased costs for compliance actions and an inability to manage any negative impacts.

At the same time, conversion brings a one-time opportunity to comprehensively reassess financial reporting and take “a clean sheet of paper” approach to financial policies and processes. Such an approach recognizes that major accounting and reporting changes may have a ripple effect that impact many aspects of a company’s organization.

Adopting IFRS will likely impact key performance metrics, requiring thoughtful communications roadmap plans from the Board of Directors, shareholders, and other key stakeholders, especially impacts that could have negative financial effects. Internally, IFRS can have a broad impact on a company’s infrastructure, including underlying processes, systems, controls, and even customer contracts and interactions.

Companies will face many challenges they cannot avoid when adopting IFRS, so early adoption would help companies gain a better understanding of the changes and select the most appropriate solution.

Besides the benefits of converting to IFRS financial statements, many companies have encountered a number of difficulties and challenges in doing so, largely due to the significant differences between VAS and IFRS and the requirement to have timely decisions from the Board of Management to control the impacts.

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