Companies urged to apply IFRS to take opportunity for international expansion

Companies are urged to apply international financial reporting standards (IFRS) to improve transparency and increase the chances to expand globally. — VNA/VNS Photo

HÀ NỘI — Companies should apply international financial reporting standards (IFRS) to improve transparency and increase the chances to expand globally, experts have said.

IFRS is widely applied in more than 120 countries and territories around the world to ensure transparency and consistency but remains unpopular with enterprises in Việt Nam.

Việt Nam currently applies Vietnam Accounting Standards (VAS).

The Ministry of Finance in 2020 approved a project on applying financial reporting standards in Việt Nam which aims at applying IFRS and new Việt Nam Financial Reporting Standards (VFRS). Accordingly, IFRS is expected to be made compulsory after 2025.

According to Phan Hữu Thắng, president of the Việt Nam Industrial Park Finance Association (VIPFA), financial reporting and accounting are necessary for enterprises, especially those in industrial zones looking to attract foreign investment inflows.

Nguyễn Thị Thuỷ from AudiCare Việt Nam Training Centre said that financial reports which meet IFRS help increase transparency, professionalism and opportunities to compete in the global market, attract investments and expand opportunities for cheap loans as well as create favourable conditions for doing business globally.

In fact, few Vietnamese firms have thorough understandings about IFRS while there are still gaps in compliance with financial reporting standards, Thuỷ said.

Applying IFRS can be complicated and costly in terms of training and changes in the system and constant compliance, she pointed out. In addition, adjusting IFRS to ensure appropriateness to existing legal frameworks is not an easy job.

She pointed out that VAS has 26 standards while IFRS has 41. It might take enterprises at least three or four years of training to prepare data for their first IFRS report.

Companies should select professional consultants to improve transparency and trustworthiness for their financial reports, Thuỷ said.

Nguyễn Chí Dũng from EY Việt Nam said that tax authorities tend to apply risk-based management principles in tax inspection and change their approaches in inspecting.

Around 90 per cent of enterprises in the inspection plan are automatically selected through the risk assessment system which assesses the risk level through enterprises’ financial reports, customs declarations, banking transactions and e-invoices, he said.

The focus of 2024 tax inspection includes enterprises operating in sectors which have high risks for tax evasion such as real estate, construction, raw material trading, retail, plastic product manufacturing and trading, communication, advertising and e-commerce.

It is necessary for enterprises to improve their internal processes, comply with tax laws and regularly update tax policies, Dũng said.

In addition, enterprises should improve compliance with international standards to take opportunities for international expansion. — VNS