BENEFITS OF INTERNATIONAL FINANCIAL REPORTING STANDARDS AND SUCCESSFUL APPLICATION IN VIETNAM.

Abstract

Currently, the application and convergence of IFRS - International Financial Reporting Standards with local reporting standards has become a common action and criterion in the field of finance and accounting. IFRS aims to unify a common accounting and reporting language that can be understood and practiced worldwide. IFRS includes a system of professionally designed standards, providing a comprehensive set of rules with high practical application to ensure transparency, improve comparability and accuracy of indicators in financial statements.

Some breakthrough advantages brought by IFRS to Enterprises that they quickly know how to apply and adjust to IFRS such as deep penetration into the world capital market, diversifying the choice of strategic shareholders, receiving many new sources of technology, increasing export market share through improving transparency and quality of financial statements, improving the quality of financial statements, standardizing accounting practices. All of these help businesses in different countries to understand financial information from the same perspective and eliminate the barrier of financial language.

In reality, accounting standards are different in emerging economies, which makes it more difficult to consolidate and compare financial statements between businesses. At the same time, legal institutions, social culture, and the starting point of the economy also create many sets of rules and local accounting standards that are different between countries. Should we establish a common set of accounting rules like IFRS, which helps investors and stakeholders have a unified view and the ability to compare financial information of businesses in many different countries, supporting the making of more correct and accurate business decisions?

In Vietnam, the roadmap for adopting International Financial Reporting Standards (IFRS) has been issued by the Ministry of Finance. However, implementation has been slow, and to date, the number of enterprises applying IFRS remains limited, resulting in inconsistent and suboptimal financial statement quality. This study aims to examine the impact of IFRS adoption on the quality of financial statements, including changes in transparency, comparability, and accuracy. Additionally, the study highlights the challenges and barriers that Vietnamese businesses face in implementing IFRS. Based on these findings, recommendations will be provided to accelerate the adoption of IFRS in the future.