Vietnam Still Slower Than Other Regional Countries in IFRS 9 Application

10:32:52 AM | 23/8/2019

According to the draft roadmap for application of the International Financial Reporting Standard (IFRS) submitted by the Ministry of Finance to the Government for approval, IFRS 9 is expected to be applied in Vietnam after 2022. Currently Singapore, the Philippines and Malaysia have full compliance to this standard.

This information is shared by Ms. Nguyen Phuong Nga, Deputy General Director of Banking and Financial Services - EY VN, at the seminar on the next financial crisis prevention and the future of currency. The event was held in Hanoi by the Institute of Chartered Accountants in England and Wales (ICAEW).

She said, some other countries have voluntarily deployed it at some banks and will require for the sector application in the coming time: Thailand (2020), Laos (2021) and Indonesia (2020). In Vietnam, IFRS 9 will be enforced in 2022.

Regarding its benefits, IFRS 9 application is an economic benefit, not only for the goal of financial reporting. Some clear practical benefits include making provisions for recession, increasing coordination among departments, introducing better information for decision-making, and enhancing credit risk management.

Mr. Luu Duc Tuyen, Deputy Director of the Accounting and Auditing Department under the Ministry of Finance, said, Vietnam is actively advancing its international economic integration, including the financial, auditing and accounting field. For many years, the ministry has cooperated with international organizations to gradually apply international accounting standards in Vietnam.

Specifically, on August 15, the ministry submitted to the Government a project on application of IFRS in Vietnam. This project, once approved by the Government, will help the implementation of accounting and auditing operations in Vietnam to meet target groups of Vietnamese economy. Accordingly, the project is divided into three groups: (1) companies seek to apply the original version of international accounting and auditing system; (2) companies apply Vietnamese accounting standards together with an IFRS application roadmap; and (3) companies apply a separate accounting regime specified in guiding circulars issued by the Ministry of Finance.

In spite of having many benefits, IFRS 9 application in Vietnam is still challenging due to high costs, including investment for information technology systems, preparatory cost for project launch, recruitment cost, human resource maintenance cost and training cost, said Ms. Nguyen Phuong Nga.

In addition, one major difficulty is policies and procedures. A series of policies and procedures should be created, revised or updated, for example, product development; investing, book closing and financial reporting; individual credit risk assessment, model administration or identification of phase-shifting signs.

Therefore, banks need to quickly analyze situations and utilizing available resources to speed up IFRS 9 implementation, she added. Specifically, steps that will be necessarily taken include setting up project management structure and promoting the participation of senior leaders; conducting a preliminary impact assessment; identifying accounting policies and identifying areas of judgment.

Besides, banks need to check their dependence on the information technology system; take advantage of available models; establish information exchange structures to engage and assess resources; and opt for best application methods.

Speaking at the seminar, Mr. John Mongelard, a professional director at ICAEW, shared about the world currency trend in the past few years, especially the emergence and advantages of cryptocurrency and bitcoin. He also presented and discussed ways to approach and develop electronic currency management regulations of different countries around the world as well as mindset on how to settle accounting, tax and basic technology.

In fact, electronic currency is the next step of currency evolution as cash use is declining and new forms of payment such as mobile payment are increasingly popular. Electronic currency also features financial security and interactive advantages.

In Vietnam, there are no official legal documents on virtual assets, virtual currency and there are wide gaps in this issue. Therefore, according to Mr. Nguyen Canh Thang, Deputy Director of Economic Law Division, Civil Economic Law Department under the Ministry of Justice, said that Vietnam needs to perfect sanctions, formulate a legal framework and penal regulations.

Thu Ha