APPROVING SCHEME FOR APPLICATION OF FINANCIAL REPORTING STANDARDS IN VIETNAM

Article 1. To approve “Scheme for application for financial reporting standards in Vietnam” attached to this Decision containing following basic contents:

Develop financial and accounting legal framework; create effective and capable management tools for management, operation in enterprises and management, supervision of regulatory agencies in the new phase in order to successfully implement socio-economic development objectives.

Increase transparency, effectiveness of financial information and accountability of enterprises, protect business environment and legal benefits of investors and promote integration of Vietnamese economy with regional and international economy.

Specific objectives applied to financial reporting standards in Vietnam consist of 2 contents below:

(1) Develop measures and route, publicize and provide assistance regarding application of international financial reporting standards (IFRS) in Vietnam for each defined entity satisfactory to international regulations to enhance transparency and trustworthiness of the financial statements and raise accountability of the enterprises.

(2) Issue anew and organize implementation of Vietnamese financial reporting standards (VFRS) following the principles of acknowledging international practices to the maximum satisfactory to characteristics of Vietnamese economy and enterprise demand while ensuring feasibility during implementation.

(1) Enterprises including: enterprises having the need for, with sufficient capacity and resources for application of IFRS which are determined from time to time according to publicized roadmap; and other enterprises operating in all economic sectors in Vietnam applying VFRS.

Medium, small and very small enterprises which do not have the need for and requirements for application of IFRS or VFRS are not regulated by the Scheme.

 (2) Training facilities, vocational associations and service providers including: entities conducting joint research, training, providing services and assistance in applying IFRS and VFRS.

(3) Regulatory agencies including: Ministry of Finance and relevant entities in developing measures and roadmap, publicizing and providing assistance in applying IFRS; conducting research, developing, issuing, training and providing guidelines for implementation of VFRS.

- Develop and issue Scheme for application of financial statements standards in Vietnam Deadline: Before March, 2020.

- Establish Boards of translation and review to translate the IFRS into Vietnamese. Deadline: Before December, 2020.

- Ministry of Finance shall develop, issue or request competent authorities to issue appropriate legislative documents to publicize the Vietnamese translation. Deadline: Before March, 2021.

- Minister of Finance shall develop, issue or request competent authorities to issue legislative documents on methods of applying IFRS; Amend and issue anew financial policies related to application of IFRS. Deadline: Before November 15, 2021.

- Provide personnel training and implementation procedures for enterprises.

(1) With respect to consolidated financial statements:

Enterprises below having the need and resources shall inform Ministry of Finance before voluntarily apply IFRS to prepare consolidated financial statements:

- Parent companies of state-owned economic groups operating on a large scale or having loans funded by international financial institutions;

- Parent companies which are listed companies;

- Large-scale public companies which are unlisted parent companies;

- Other parent companies.

(2) With respect to separate financial statements:

- Foreign-invested enterprises which are subsidiaries of parent companies located overseas having the need and resources shall inform Ministry of Finance before voluntarily apply IFRS to prepare separate financial statements.

- Upon applying IFRS, the enterprises must fully provide information and explanation with coherence and transparency for tax authorities, agencies managing, supervising and legally responsible for determining obligations to state budget.

(1) With respect to consolidated financial statements:

- Based on assessment of application of IFRS in Phase 1, Ministry of Finance shall rely on demands and readiness of enterprises and current conditions to specify methods and initial period of compelled application of IFRS to enable following enterprises to prepare consolidated financial statements:

+ Parent companies of state-owned economic groups;

+ Parent companies which are listed companies;

+ Large-scale public companies which are unlisted parent companies;

+ Other large-scale parent companies.

- Other parent companies not specified above which have the need and capacity shall inform Ministry of Finance before voluntarily apply IFRS to prepare consolidated financial statements.

(2) With respect to separate financial statements:

- Based on assessment of application of IFRS in Phase 1, Ministry of Finance shall rely on demands and readiness of enterprises, relevant law provisions and current conditions to specify methods and initial period of compelled or voluntary application of IFRS to enable entities to prepare separate financial statements.

- Upon applying IFRS, the enterprises must fully provide information and explanation with coherence and transparency for tax authorities, agencies managing, supervising and legally responsible for determining obligations to state budget.

- An enterprise must present and provide detailed explanation in their financial statements regarding any discrepancies between accounting profit and taxable income (if any). Enterprises performing declaration and submitting tax according to tax laws.

- Enterprises compelled to apply IFRS must simultaneously apply all effective IFRS according to the international accounting standards board (IASB). When the IASB amends or replaces the IFRSs, promptly publicize translations to enable joint implementation by all regulated entities.

- Enterprises shall voluntarily or compulsorily apply IFRS consistently throughout the financial year.

- Ministry of Finance shall issue criteria and guidelines for assessing financial information of enterprises and ensure emphasis on differences between enterprises that apply IFRS and enterprises that do not apply IFRS.

- Ministry of Finance shall publicize list of enterprises subject to voluntary or compelled application of IFRS for preparation of consolidated or separate financial statements on websites of the Ministry.

- Develop and issue Scheme for application of financial statements standards in Vietnam. Deadline: Before March, 2020.

- Establish VFRS Drafting boards and Editors. Deadline: Before June, 2020.

- Conduct research, develop and issue VFRS, including newly issued financial reporting standards and financial reporting standards replacing respective accounting standards in the applicable Vietnam accounting standard systems. Deadline: Before November 15, 2024.

- Conduct research, develop and issue documents providing guidelines for VFRS and replacing current documents. Deadline and issuance of IFRS: Before November 15, 2024.

- Organize application of VFRS for enterprises operating in all fields and economic sectors in Vietnam, except for enterprises subject to application of IFRS or accounting policies applied to very small enterprises.

- During implementation, Ministry of Finance shall regularly review VFRS and keep up to date with the IFRS to ensure maximum consistency with international practice.

- VFRS is developed based on the IFRS following the principles of acknowledging international practices to the maximum satisfactory to characteristics of Vietnamese economy and enterprise demand while ensuring feasibility during implementation.

- Ministry of Finance shall provide separate accounting guidance for very small enterprises that do not have the need nor capacity for application of IFRS and VFRS.

The Translation board and Translation review board consist of representatives of entities affiliated to Ministry of Finance, training facilities, vocational associations and accounting enterprises specialized in accounting operations and proficient in English.  The Director General of the Department of Accounting and Auditing Regulations shall act as the Chairperson of the Translation board and Translation review board.  Number of members of the Translation board and Translation review board shall be decided by Minister of Finance.

VFSR Drafting board consists of representatives of ministries, vocational associations, training facilities, accounting companies, entities affiliated and non-affiliated to Ministry of Finance. Deputy Minister of Ministry of Finance shall act as the Head of the VFSR Drafting board while Director General of the Department of Accounting and Auditing Regulations shall act as the Vice. Number of members of the Drafting board shall be decided by Minister of Finance.

The Director General of the Department of Accounting and Auditing Regulations shall act as the Head of the VFSR Editors while Deputy Directors General of the Department of Accounting and Auditing Regulations shall act as the Vices; Members of the Editors include officials of the Department of Accounting and Auditing Regulations and representatives of ministries, vocational associations, training facilities, enterprises, accounting companies, entities affiliated and non-affiliated to Ministry of Finance. Number of members of the Editors shall be decided by the Head of the Editors.

a) Issue legislative documents providing guidelines on implementation and publicizing Vietnamese translations of the IFRS;

b) Conduct research and issue the VFRS system satisfactory to international standards and regulations and Vietnamese conditions;

c) Develop documents providing instruction on specialized and accounting operations for relevant entities to enable access, research and implementation of IFRS and VFRS;

d) Review and issue financial legislative documents in order to reform and create equality in application and implementation of the law by economic sectors; determine and distinguish scope of financial reporting standards, financial mechanisms and difficulties in preparing, presenting financial statements and implementing obligations of enterprises;

e) Issue documents and conduct examination and inspection regarding compliance with regulations and law on accounting and financial reporting standards.

a) Conduct research, issue policies and facilitate voluntary application of IFRS by enterprises having the need and sufficient capacity.

b) Conduct survey on demands and readiness of enterprises to come up with revisions regarding regulated entities, roadmap and methods of applying IFRS satisfactory to practical conditions of each phase.

c) Organize conferences and seminars and suggest measures to deal with difficulties and complaints during application of IFRS.

d) Provide necessary technical assistance to enable enterprises to convert to applying IFRS according to plans.

a) Develop master plans and implement personnel training according to demands and roadmap for application of IFRS.

b) Provide IFRS training for members of the Board for research and drafting standards; enterprises, accounting companies, training facilities, vocational associations and other relevant entities during application period.

a) Increase coordination among regulatory agencies, vocational associations, domestic and international organizations in: Translating, publicizing and assisting in applying IFRS; drafting, issuing and providing guidelines for implementation of VFRS; conducting survey and assessing implementation of financial reporting standards in each field and sector to come up with effective solutions.

b) Utilize resources namely technical assistance and experience of experts in conducting research on international experience, personnel training and other activities related to implementation of the Scheme.

a) Publicize benefits of IFRS, encourage and recommend enterprises to apply IFRS.

b) Conduct communication activities on mass media regarding roadmap and methods of applying VFRS and IFRS and assist relevant entities in preparing for application.

c) Raise awareness of foreign investors, international financial organizations and institutions regarding contents of the Scheme and objectives of financial management reform aiming towards market economy and international economic integration.

- Approving schemes for application of financial statements standards in Vietnam;

- Establishing and organizing operations of Editors and Translation review board;

- Establishing and organizing operation of the VFRS Drafting boards and Editors;

- Issuing or requesting competent authorities to issue legislative documents publicizing Vietnamese translations of the IFRS and providing guidelines on application of the IFRS; Conducting research and keeping up to date in case of changes to the IFRS, ensuring consistency of the standard systems with international practice.

- Issuing or requesting competent authorities to issue legislative documents on implementing VFRS as similar to the IFRS and international practice as possible and satisfactory to conditions of Vietnam, replacing current accounting standards;

- Reviewing and issuing financial legislative documents in order to reform and create equality in application and implementation of the law by economic sectors; determining and distinguishing scope of financial reporting standards, financial mechanisms and difficulties in preparing, presenting financial statements and implementing obligations of enterprises;

- Issuing documents within their competence to deal with any discrepancies between financial reporting standards and financial mechanism; discrepancies between IFRS and VFRS;

- Taking charge and cooperating with relevant entities in assessing impact and results of applying IFRS in enterprises;

- Publicizing documents providing specialized, technical and professional instructions to assist access, research and implementation of the IFRS and VFRS;

- Providing training and cooperating in organizing IFRS and VFRS training for members of Standard research and drafting board and relevant enterprises, organizations;

- Publicizing orientations and policies on financial management reform of Vietnamese government, which includes application of the IFRS and VFRS by relevant entities and organizations;

- Consulting State Bank of Vietnam to determine roadmap and methods of applying IFRS in commercial banks and credit institutions satisfactory to requirements of each phase; Concluding and assessing results of applying IFRS in commercial banks and credit institutions;

- Cooperating with ministries and local government in conducting research, implementing, providing guidelines for application of IFRS and VFRS, proposing methods of develop legal framework in managing and organizing implementation to ensure feasibility of activities related to application of IFRS and VFRS;

- Issuing documents and conducting examination and inspection on compliance with regulations and law on accounting and accounting standards;

- Developing master plans and implementing personnel training according to demands and roadmap for application of IFRS and VFRS; Assisting enterprises and training facilities during application of IFRS and VFRS;

- Concluding and assessing results of applying IFRS and VFRS; Managing and supervising financial statements of public interest enterprises;

- Promoting cooperation with vocational associations, experts, domestic and international organizations, utilizing technical assistance and studying from international experience and other activities in applying IFRS and VFRS;

- Fully complying with procedures specified in the IASB to ensure consistency between application of IFRS in Vietnam and international law; Participating in development and issuance of IFRS of the IASB;

- Allocating estimates of expenditure on research and implementation of the Scheme.

- In case of consolidated financial statements: The State Bank of Vietnam shall conduct research and determine roadmap for compelled application of IFRS to produce consolidated financial statements for each enterprise categorized as commercial banks and credit institution after receiving response from Ministry of Finance.

- In case of separate financial statements: The State Bank of Vietnam shall conduct research and determine roadmap for compelled or voluntary application of IFRS to produce separate financial statements for each enterprise categorized as commercial banks and credit institution after receiving response from Ministry of Finance.

- Actively implementing management-related activities, developing legal framework to ensure feasibility and organizing activities related to application of financial reporting standards.

- Cooperating with Ministry of Finance in publicizing and guiding application of IFRS; conducting research, issuing and implementing VFRS.

- Actively implementing management-related activities, developing legal framework to ensure feasibility and organizing activities related to application of financial reporting standards.

- Determining objectives, demands and plans for application of IFRS;

- Actively developing detailed plans and organizing implementation satisfactory to roadmap for application of IFRS and VFRS publicized by Ministry of Finance.

- Actively organizing training programs regarding accounting, and based on roadmap, methods of application, and providing IFRS and VFRS training;

- Organizing personnel and developing appropriate teaching materials and methods satisfying IFRS training contents according to approved roadmap.

- Cooperating with Ministry of Finance in conducting research, training, publicizing and assisting enterprises and members in IFRS application;

- Cooperating with Ministry of Finance in publicizing documents providing specialized, technical and professional instructions to enable relevant entities to access, research and implement IFRS and VFRS.

Actively developing plans and requirements, and organizing resources in order to adequately provide services related to application of IFRS and VFRS of organizations and enterprises provided with the services.

Ministry of Finance shall allocate concurrent expenditure as per the law for:

- Exercising obligations to the IASB, purchasing copyrights to enable application of IFRS and paying annual fees for IASB for utilizing, translating and using documents;

- Activities of Board of translation and Translation review board;

- Activities of VFRS Drafting board and Editors;

- Developing legislative document systems related to providing guidelines for application, publicizing and assisting implementation of IFRS;

- Developing legislative document systems related to publicizing, issuing and organizing implementation of the VFRS;

- Organizing, participating in domestic conferences and seminars serving research and information exchange to enable IFRS application;

- Providing IFRS training for officials of Ministry of Finance and other members of VFRS Drafting board and Editors;

- Paying consulting fees during application of IFRS in Vietnam as per the law.

Expenditure from domestic and international sponsors shall be managed and used as per the law for activities agreed upon by sponsors.

Article 2. This Decision comes into effect from the day of signing.

Article 3. Director General of Department of Accounting and Auditing Regulations; Director of Department of Personnel and Organization; Director of Department of Legal Affairs; Chief of the Ministry Office and relevant entities are responsible for implementation of this Decision./.