The transition to IFRS is a journey that requires a well-planned and strategically executed roadmap for success. It's a process laden with numerous challenges and complexities for businesses. The initial question that concerns most enterprises is where to start to progress towards the ultimate goal of a comprehensive transition from VAS to IFRS after 2025. In this blog, RSM Vietnam aims to assist businesses in preparing to initiate the IFRS conversion process successfully.
1. What stages does the IFRS conversion roadmap include?
The stages of the IFRS conversion process consist of four key phases: scoping, resource preparation, implementation, and monitoring. Completing these four stages is crucial for a successful IFRS conversion solution.
Scoping
In this preliminary phase, businesses need to identify the scale and complexity of the conversion, including seven main challenges, to establish prioritized milestones for effectively assigning tasks.
Resource Preparation
The IFRS conversion process demands significant resources in both human capital and finances. A specialized IFRS conversion project team is necessary because this journey requires coordination across various departments and leadership roles. Businesses need to equip responsible financial reporting personnel with the knowledge and skills to execute tasks promptly and accurately. Additionally, they must prepare financial reports that meet IFRS standards.
Implementation
Businesses need a clear and detailed plan for data collection, transaction analysis, measurement, classification, and interpretation of transactions according to IFRS standards. This phase requires meticulousness and precision to ensure smooth. execution while meeting the requirements.
Monitoring
Monitoring progress and outcomes throughout the conversion process is vital. Businesses should establish mechanisms to track progress, address challenges, and make necessary adjustments to ensure the successful completion of the IFRS conversion.
Standards for internal control must be ensured throughout the conversion process by the company's reporting system under IFRS standards.
2. How should work priorities be arranged?
Businesses should prioritize addressing challenging factors first. Then, they can identify which factors need an implementation plan for preparation and data collection before 2025. The starting point is the Vietnamese accounting standards as this is where the conversion process begins. To optimize the conversion timeline, businesses should consider three points:
Immediate resolution factors
Factors requiring immediate attention are those standards that exhibit significant differences between VAS and IFRS, requiring time and preparation to meet the standards' requirements. These standards will have a certain impact on specific industries.
Factors needing attention but not immediately necessary
These factors are important but do not have a significant impact or ripple effect. These standards can be implemented after the critical standards have been prepared.
Focused factors
These encompass simpler scopes with a conversion plan in place before 2025. These factors depend on the pace of conversion of other elements.
3. The significance of a successful IFRS conversion
A successful transition to IFRS brings numerous benefits to businesses:
Enhanced information transparency
IFRS Facilitates easier access to foreign capital, enhancing information transparency. This allows companies to access capital in the international market, ultimately boosting the credibility and brand of the enterprise.
Cost savings in capital and reporting
IFRS supports the reduction of capital and reporting costs. Moreover, when applying IFRS, multinational companies consolidate financial reporting into a single language, thus saving expenses in reporting.
Improved competitiveness of a businesses
Implementing IFRS standardizes operational performance across companies, strictly enforced through high compliance. Therefore, businesses can compare themselves with competitors, identifying strengths and weaknesses to strategize and enhance their competitive advantage in the market.
4. How can RSM Vietnam support businesses in IFRS conversion?
At RSM Vietnam, we have a team of IFRS experts actively involved in drafting, researching, implementing, and reviewing IFRS projects in Vietnam under the Ministry of Finance's guidance per Decision 345/QD-BTC. Additionally, our IAS/IFRS experts have conducted financial reporting conversion to IAS/IFRS for major state-owned corporation since 1999.
Our team of IFRS experts at RSM Vietnam provides guidance and assistance to resolve various complex underlying IFRS issues for your business. Our IFRS services include:
Conversion of reports from VAS to IFRS
IFRS report auditing
Complex accounting consultancy
IFRS training and updates
>>> Read more Our IFRS support services
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