JICA and MoF sign R/D to enhance Vietnam's International Financial Reporting Standards

The Japan International Cooperation Agency (JICA), together with the representative of Vietnam's Ministry of Finance (Accounting and Auditing Supervisory Department), signed a Record of Discussions (R/D) for the Project of Technology Cooperation named “Strengthening the capacity of the Accounting and Auditing Supervisory Department to promote the application of International Financial Reporting Standards in Vietnam” on December 22 in Hanoi.
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Chief Representative of JICA Vietnam (left) Shimizu Akira, and Director of Accounting and Auditing Supervisory Department Vu Duc Chinh, Ministry of Finance (right) signed the Record of Discussions.

The Project's overall objective is to improve the transparency, truthfulness and reliability of corporate financial statements and to facilitate the application of International Financial Reporting Standards (IFRS) through supporting the development of applicable rules and legal frameworks to apply IFRS in Vietnam, enhancing government agencies' capacity and understanding of IFRS as well as businesses and stakeholders, at the same time, assessing the impact of IFRS voluntary application.

The project contributes to the implementation of the objectives in Decision No. 345 / QD-BTC dated March 16, 2020 issued by the Minister of Finance approving the scheme on applying financial reporting standards in Vietnam.

In the context that many businesses facing the need to access the international capital market and countries around the world are gradually turning to apply international financial reporting standards, it is necessary to create and complete a legal framework in accounting field by bringing IFRS into Vietnam, creating a healthy business environment by enhancing the transparency of the economy, improving the investment environment, protecting people's legal rights, contributing to the stock market upgrade as well as the sustainable development goals.

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The Record of Discussions' signing ceremony of the Project "Strengthening the capacity of the Accounting and Auditing Supervisory Department to promote the application of International Financial Reporting Standards in Vietnam". Photo: JICA.

Therefore, the Ministry of Finance was assigned by the Vietnamese Prime Minister to approve the Project of applying International Financial Reporting Standards in Vietnam, with the application roadmap including: the period of IFRS voluntary application from 2022 to 2025, the period of mandatory application after 2025 and specified solutions to plan implementation including the IFRS introduction in Vietnam.

Along with improving the legal environment for IFRS application in Vietnam, by taking advantage of unique Japanese knowledge and experience in “IFRS voluntary application”, the project is expected to support enhancing the reliability and transparency of financial statements, thereby increasing Vietnamese businesses's accountability to investors.

Project components

Component 1: Develop a legal framework for IFRS application based on consultation with relevant parties (Government agencies, enterprises).

The output of this component is to develop a forum for stakeholder exchange by Japanese and local experts with the aim of promoting the IFRS smooth application. The expected implementation time is from Quarter II / 2021 to the end of Quarter I / 2024.

Component 2: IFRS capacity building and understanding of the Accounting and Auditing Supervisory Department.

The output of this component includes: - IFRS training activities conducted by Japanese or international experts, expected execution time from Q2 / 2021 to Q4 / 2023 -

Guidelines for the development of training documents and IFRS practice manuals, expected implementation time from Quarter II / 2021 to the end of Quarter IV / 2022 3.

Component 3: Impact assessment in the phase of IFRS voluntary application.

The output of this component is the research, evaluation, analysis and report on analysis of the impact of IFRS application on pilot enterprises as a basis for expanding the IFRS application. Expected implementation time is from Quarter II / 2021 to Quarter III / 2023.

Project structure and management are implemented in accordance with the donor's agreement for the project effectiveness, the tasks of the concerned parties are specified in the project document and expected components including representatives from the Accounting and Auditing Supervisory Department and related agencies, representatives of JICA in Vietnam, representatives of the Embassy of Japan in Vietnam, and the related Japanese personnel.

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Tarah Nguyen

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