Vietnam will officially adopt International Financial Reporting Standards (IFRS) from 2016 in its efforts to enhance comparability and improve transparency.

This information was revealed at a seminar held in Hanoi on April 21 on accounting standards updates for businesses. The seminar was organised by the Hanoi and Hochiminh stock exchanges in collaboration with the Ministry of Finance.

"Shortening the gap between Vietnamese and international accounting standards is part of the country's consistent policy of deeper integration into ASEAN and world markets," said Vu Thi Kim Lien, Chairwoman of the Corporate Governance Advisory Council on the Hanoi Stock Exchange.

She said that the new standards would drive Vietnamese companies to enhance financial transparency and improve risk controls for better asset management.

This would not only generate profits for businesses but also contribute positively to the country's economic performance, she added.

Finance Ministry officials informed the seminar of the latest changes in accounting standards as contained in Circular 200/2014/TT-BTC, issued in December last year to replace Decision No 15/2006 and Circular 244/2009/TT-BTC on the corporate accounting regime.

Experts said the new circular was mostly up-to-date, practical and in increased accordance with international standards. The regulations are based on a flexible and open platform that is designed to meet the management requirements and decision making of businesses, as well as serve investors and creditors, but not made for taxing purposes, they said.

Five major changes were highlighted in the new rules in the areas of currency accounting, accounts, financial statements, accounting records and accounting books.

Businesses with many foreign currency transactions can now select one foreign currency for accounting purposes. However, their financial statements for publication and submission to the authorities must still be presented in Vietnamese dong.

In the accounts system, short-term and long-term assets will not be differentiated.

For financial reporting, "tax and other amounts payable to the State budget" will no longer fall under the mandatory information category.

The circular also has a new regulation on accounting principles and financial statements for companies that do not meet the continuous operation requirements.

Businesses can design templates for accounting records and accounting books for their own activities, but must comply with requirements in the Accounting Law and ensure clarity and transparency.

Interim reports will include quarterly financial statements, including the last quarter, and half-year reports.

Vu Duc Nguyen, Deputy General Director of Deloitte, said some of the differences between IFRS and the Vietnamese accounting standards (VAS) could be seen in the presentation of financial statements, fair value, financial instruments, impairment write downs, consolidated and separate financial statements, business combination, fixed assets, and revenue recognition.

"Vietnam has set a roadmap to adopt IFRS in 2016. This requires strong determination from businesses as IFRS not only provides rules on financial reporting and accounting, but also affects all business operations," Nguyen said.-VNA