Converting financial reports from VAS (Vietnamese Accounting Standards) to IFRS (International Financial Reporting Standards) helps businesses integrate more rapidly into the global economy, enabling them to access foreign sources of capital, enhance competitiveness, and provide more accurate financial and accounting information about the company's financial position.
Benefits of converting financial reports to IFRS
The conversation of financial reports from VAS to IFRS brings several key benefits to businesses, including:
1. Enhanced Transparency
IFRS facilitates easier access to foreign capital and improves accountability by reducing information gaps between the internal and external aspects of the company. This, in turn, increases the transparency of information, allowing companies to access international sources of funding and enhance their credibility and brand.
2. Cost savings on capital and reporting
IFRS supports cost reduction in terms of capital and reporting. By increasing the reliability of financial information, businesses can enhance their ability to attract foreign investment capital and minimize the costs associated with issuing securities to raise funds. Furthermore, when adopting IFRS, multinational companies can consolidate their financial reporting into a single set of financial statements in one common language, which helps save costs associated with reporting.
IFRS enables businesses to demonstrate their commitment to the highest standards of financial information and investor protection, providing them with a passport to enter nearly any global capital market.
3. Enhancing Business Competitiveness
The application of IFRS helps standardize the performance metrics within a company according to a common standard, rigorously enforced due to high compliance. Financial reporting in global standards, therefore, provides comprehensive, accurate, and timely information. This allows businesses to compare themselves with their competitive peers, identifying strengths and weaknesses, and finding ways to improve their competitive advantage in the market.
Guidelines for converting financial reports from VAS to IFRS
Financial reporting standards are considered a powerful tool that helps businesses and investors obtain transparent, consistent, and easily comparable financial statements across countries. Below are the 10 key steps that businesses need to consider in the process of converting financial reports from VAS to IFRS:
Gain a general understanding of IFRS standards and their main content. For IFRS standards that are frequently used or have equivalent VAS standards, conduct a more detailed study.
Understand VAS standards to identify differences with IFRS standards. This helps identify the specific items that will differ when converting from VAS to IFRS in your company's financial reports.
Analyze and evaluate financial reports prepared and presented according to VAS to identify transactions and items that differ between VAS and IFRS.
Collect the necessary data and documentation to measure the differences between VAS and IFRS. Notably, pay attention to the concept of "fair value" in accounting. In IFRS, fair value is used relatively consistently and has specific guidance for valuing and recognizing various elements in financial reporting, whereas VAS typically records values based on historical cost.
Design an accounting system, templates, and calculation formulas to account for the differences between VAS and IFRS for each item and transaction, ensuring the process of information retrieval and report generation.
Create adjusting journal entries for the differences in the financial statements when converting from VAS to IFRS.
Post adjusting entries into the VAS financial statements, making necessary adjustments to arrive at the balances per IFRS.
Check the balance and coherence of the data after incorporating the adjusting journal entries.
Adjust the explanatory notes on the financial report, which may change after the adjusting journal entries, and provide additional explanations if required by IFRS standards.
Review the entire financial report to ensure that the presented information is accurate and in compliance with IFRS standards.
Về lâu dài, để đảm bảo cho việc lập và trình bày BCTC theo IFRS, doanh nghiệp cần:
Analyze business operations and review, audit, and establish the company's systems, processes, and infrastructure to lay the foundation for building and selecting financial models that align with IFRS requirements.
IFRS standards are built on a framework of principles that allow companies to choose accounting policies, accounting estimates, and financial models in line with IFRS requirements that suit their specific business operations. Therefore, businesses can establish accounting systems that best suit their unique business characteristics.
Companies should assess their existing information infrastructure. Implementing technological solutions to support data collection, data standardization, data processing, and integration of all activities from various departments within the company or related external parties is essential. Therefore, businesses need to plan software upgrades, if necessary, and reflect the differences between VAS and IFRS in the system.
The transition from Vietnamese Accounting Standards (VAS) to International Financial Reporting Standards (IFRS) requires establishing new processes and a new vision to change the traditional financial management and accounting methods. Companies converting their financial reports from VAS to IFRS need to equip themselves with the necessary knowledge to handle transaction information for more detailed recording and disclosure, in accordance with the stricter requirements of international reporting standards. While the transition may require time and effort, successfully applying IFRS can bring various benefits to businesses.
How does RSM support businesses in IFRS conversion?
At RSM Vietnam, we have a team of experts to support businesses in transitioning to IFRS, some of whom are directly involved in drafting, researching, implementing, and reviewing IFRS projects in Vietnam under the guidance of the Ministry of Finance as per Decision 345/QD-BTC. Additionally, we have IAS/IFRS experts who have been converting financial reports to IAS/IFRS for large state-owned enterprises since 1999.
The IFRS expert team at RSM Vietnam will support and guide your business in addressing a range of complex and potential IFRS issues. Our IFRS services include:
Conversion of reports from VAS to IFRS
IFRS report audits
Complex accounting advisory
IFRS training and updates
Please contact our advisory department to receive assistance and answer to any IFRS-related questions your business may have.
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