Speakers at the roundtable on IFRS (Photo: tapchitaichinh.vn)

At a roundtable on IFRS held by the Economic–Financial Magazine in Hanoi last week, experts discussed the urgency of IFRS adoption for Vietnamese businesses in international integration.

Tran Hong Kien, Deputy General Director of PwC Vietnam, said that IFRS is a global accounting language built on principles designed to ensure clarity, comparability, and broad international acceptance.

“Adopting IFRS enables businesses to present financial information that is more transparent and comparable to global partners. This will boost credibility in the market and help companies raise capital from international markets at lower costs,” said Kien.

Trinh Duc Vinh, Deputy Director General of the Accounting and Auditing Supervision Department of the Ministry of Finance, said IFRS adoption is a requirement for global integration and a strategic step in upgrading Vietnam’s securities markets.          

"Businesses need to adopt IFRS to improve transparency, which in turn fosters more positive investor perception,” said Vinh, adding, “IFRS also raises the bar for corporate governance and internal controls, helping companies operate in a more disciplined and structured manner. It aligns enterprise management practices with international standards, safeguards investor interests, unlocks foreign direct investment flows, and accelerates efforts to upgrade Vietnam’s stock market classification."

But there are obstacles to adopting IFRS, particularly for small and medium-sized enterprises. According to Nguyen Thi Thuy, Training Director of Audit Care and Partners Vietnam, the biggest obstacle is not cost or technical capacity, but leadership mindset.

"The real challenge here isn’t the cost, because training programs are already supported by the Ministry of Finance, especially exam fees being heavily subsidized. The real issue lies in leadership mindset. Many business leaders are reluctant to embrace financial transparency, which makes them hesitant to adopt IFRS,” Thuy explained.

“That’s why we urgently need a shift in thinking. Stronger communication efforts from the government, the Ministry of Finance, and business associations are essential to help leaders recognize the long-term benefits of IFRS and its role in fostering sustainable development," Thuy added.

While some larger enterprises like banks, FDI firms, and listed companies have begun transitioning to IFRS, a majority of SMEs lack the human resources, technology, and expertise required, resulting in sluggish adoption.

To address this, the Ministry of Finance has issued Decision 345, outlining an IFRS adoption roadmap under which the shift from voluntary to mandatory is gradual. According to Vinh, IFRS training programs and Vietnamese-language certification courses have been launched nationwide.                 

"The National Assembly recently issued Resolution 222 on establishing an international financial center in Vietnam, under which entities operating within such centers, and those in free trade zones and export processing zones, will likely be among the first to implement IFRS,” according to Vinh.

“We strongly encourage FDI enterprises to adopt IFRS early, as it can help reduce their reporting costs. Many FDI companies need to change their local financial statements to IFRS to be consolidated with their parent companies abroad. So our priority is to target businesses that engage with foreign investors and are closely connected to international markets," said Vinh.

Experts advise companies to begin preparing by investing in internal training, aligning current accounting procedures with IFRS, and upgrading IT systems to meet reporting demands.

"When advising on IFRS transition, PwC wants to help businesses shift their mindset, revamp internal processes, and identify the areas most affected by the change to maximize potential benefits,” Kien said.

Companies need time to review and align their workflows, as IFRS is principle-based and may lead to unexpected outcomes if procedures aren’t well structured. Business leaders must also be prepared to adjust their strategies and product portfolios to meet new requirements, for example, adopting more prudent credit limits to better manage bad debt.

Software selection should not be rushed, since extensive customization may be needed to align with internal systems. While small and medium-sized enterprises can start with basic tools like Excel, large corporations should invest in international ERP systems capable of broad integration, Kien noted.

Digital transformation and technological innovation also play a crucial role, said Thuy, adding, "Robotic automation is simply a supporting tool. The most important thing is that businesses have well-structured processes and sound expertise in place, for example, correctly applying the five-step revenue recognition model in contracts.”

“Once those foundations are set up, automation can significantly reduce manual effort by streamlining data validation and processing in a transparent and efficient way," Thuy concluded.

Adopting IFRS isn’t an easy task. But for Vietnamese businesses seeking to go global, it’s a necessary step. If Vietnam takes the initiative to adopt IFRS and the execution is professionally conducted, international accounting standards can be a strong foundation for improving governance, attracting capital, and building long-term trust with investors, partners, and markets.