The Ministry of Finance on Monday issued a decision regulating the roadmap for the application of International Financial Reporting Standards (IFRS), replacing the current Vietnamese accounting standards (VAS).

Under the Decision 345/QD-BTC on the development of plans, roadmaps and support the application of IFRS, the roadmap for adopting IFRS in Viet Nam would be divided into phases – from 2022 to 2025 and after 2025.

In the first phase, the adoption of IFRS would be encouraged. It could be adopted by certain subjected companies which were capable of making financial reports following international accounting rules or selected by the Ministry of Finance for pilot implementation.

The subjected businesses wishing to apply IFRS notify the Ministry of Finance before voluntarily applying IFRS. They include the parent companies of a large State-owned corporation, parent companies which are listed on the stock market, large-scale public companies which are unlisted parent companies.

After 2025, IFRS would be compulsory for consolidated financial statements of SOEs, listed companies and unlisted public companies, except for those which were subject to accounting rules for small and medium and micro sized enterprises.

Necessary preparations such as translations, training and instructions would be made before 2021.

Firms in Viet Nam currently apply Vietnamese accounting standards (VAS) which were established more than a decade ago in making financial reports.

The ministry, however, said that VAS with 26 standards was now outdated, compared to IFRS with 40 standards.

Demand for adopting IFRS in Viet Nam was significant, the ministry said, which came mainly from listed companies and foreign-direct-investment firms.

Improving accounting rules had become vital for Viet Nam, which would contribute to speeding up the country’s institutional reforms and international integration, the ministry said.

It added that the adoption of IFRS in Viet Nam would help improve transparency in accounting and create favourable conditions for firms to access international capital sources as well as contributing to leveraging the level of the securities market.