Decision No. 345/QD-BTC 2020 Scheme on application of financial reporting standards

DECISION

On approval of the Scheme on application of financial reporting standards in Vietnam

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THE MINISTER OF FINANCE

Pursuant to the Law on Accounting dated November 20, 2015;

Pursuant to the Decree No. 87/2017/ND-CP dated July 26, 2017 of the Government on defining functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the request of the Director of the Department of Accounting and Auditing Regulations,

DECIDES:

Article 1.To approve “ The Scheme on application of financial reporting standards in Vietnam” attached to this Decision the following major contents:

I OBJECTIVES OF THE SCHEME

1. General objectives

To complete financial and accounting legal framework; to create an effective and valid management tool for governance and administration in enterprise as well as management and supervision of state competent authority in the new stage, contribute in successfully implement national socio-economic development goals.

To participate in improvement of the transparency, efficiency of financial information and accountability of the enterprise, to protect business environment and legal benefits of investor, contribute in integration of Vietnam economy with regional and international economy.

2. Specific objectives:

Specific objectives applied to financial reporting standards in Vietnam consist of 02 contents as follow:

(1) To develop measures, roadmap and publicize, provide assistance on application of international financial reporting standards (IFRS) in Vietnam for each defined group of subject in accordance with international practice so that participate in improvement of the transparency, truthfulness of financial information and accountability of the enterprise to the receiver of financial report.

(2) To issue anew and organize the implementation of Vietnamese financial reporting standards (VFRS) base on the principles of internalized international practices to the maximum in conformity to characteristics of Vietnamese economy and enterprise demand, guarantee feasibility during the course of implementation.

II. CONTENT AND SOLUTION

1. Subjects of application

(1) Enterprises including: enterprises having the demand of, with sufficient capacity and resources for application of IFRS which are determined in each period in accordance with publicized roadmap; and other enterprises operating in all economic sectors and economic components in Vietnam applying VFRS.

Extra small-, small and medium-size enterprises which do not have the demand of and requirement for application of IFRS or not eligible of application VFRS by the Scheme.

(2) Training institutions, vocational associations and service providers including: units conducting joint research, training, services provision and assistance in applying international financial reporting standards and Vietnam financial reporting standards.

(3) State management authorities including: The Ministry of Finance and relevant agencies in developing measures and roadmap, publicizing and providing assistance in applying IFRS; conducting research, developing, issuing, training and giving guidelines for implementation of VFRS.

2. Implementation methods

2.1. Methods of publicizing and applying IFRS

2.1.1. Roadmap for application

a) Preparation stage (2020 – 2021):

- To develop and issue the Scheme for application of financial reporting standards in Vietnam. Implementation period: Before March, 2020.

- To establish the Boards of translation, examination and completion the IFRS transcript into Vietnamese. Implementation period: Before December, 2020.

- The Ministry of Finance shall develop, issue or request competent authorities to issue appropriate legislative documents to publicize the Vietnamese translation. Implementation period: Before March, 2021.

- The Minister of Finance shall develop, issue or request competent authorities to issue legislative documents on methods of applying IFRS; Amend and issue anew financial policies related to application of IFRS. Implementation period: Before November 15, 2021.

- To implement personnel training and implementation procedures for enterprises.

b) Phase 1, Voluntary application (from 2022 to 2025):

(1) With respect to consolidated financial statement:

Enterprises below having the demand of and sufficient resource shall inform the Ministry of Finance before voluntarily apply IFRS to prepare consolidated financial statement:

- Parent companies of state-owned economic groups operating on a large scale or having loans funded by international financial institutions;

- Parent companies which are listed companies;

- Large-scale public companies which are unlisted parent companies;

- Other parent companies.

(2) With respect to separate financial statement:

- Foreign-invested enterprise with 100% foreign direct invest capital which are subsidiaries of parent companies located overseas having demand of and sufficient resource shall inform the Ministry of Finance before voluntarily apply IFRS to prepare separate financial statements.

- On applying IFRS, the enterprises must fully provide information and explanation with coherence and transparency for taxation authorities, managing, supervising agencies, and legally responsible for   determining obligations to state budget.

c) Phase 2, compulsory application (after 2025)

(1) With respect to consolidated financial statement:

- Based on the assessment of application of IFRS in Phase 1, the Ministry of Finance shall rely on demands and readiness of enterprises and actual conditions to stipulate methods and required time for compulsory application of IFRS to the following enterprises for preparing consolidated financial statements:

+ Parent company of state-owned economic group;

- Parent company which are listed company;

- Large-scale public company which are unlisted parent company;

+ Other large-scale parent company.

- Other parent company not specified above which have demand for and capacity shall inform the Ministry of Finance before voluntarily apply IFRS to prepare consolidated financial statements.

(2) With respect to separate financial statement:

- Based on the assessment of application of IFRS in Phase 1, the Ministry of Finance shall rely on demands and readiness of enterprises, relevant law provisions and current conditions to specify methods and require time of application of compulsory or voluntary application of IFRS to each group of subject to prepare separate financial statements, ensure efficiency and feasibility.

- On applying IFRS, the enterprises must fully provide information and explanation with coherence and transparency for taxation authorities, managing, supervising agencies, and legally responsible for determining obligations to state budget.

2.1.2. Requirements and methods of IFRS application:

- An enterprise must present and provide detailed explanation in their financial statements regarding any discrepancies between accounting profit and taxable income (if any). Enterprise shall perform declaration and tax remittance according to law provisions on tax.

- Enterprise subjected to the application of IFRS must simultaneously apply all effective IFRS according to the international accounting standards board (IASB) at the same time. When the IASB amends or replaces the IFRSs, promptly publicize translations to enable joint implementation by all regulated subjects of application.

- Enterprises shall voluntarily or compulsorily apply IFRS consistently throughout the financial year.

- The Ministry of Finance shall issue criteria and guidelines for assessing financial information of enterprises and ensure emphasis on differences between enterprises that apply IFRS and enterprises that do not apply IFRS.

- The Ministry of Finance shall publicize the list of enterprises subjected to voluntary or compulsory application of IFRS for preparation of consolidated or separate financial statements on websites of the Ministry.

2.2. Methods of developing, issuing and applying VFRS

2.2.1. Roadmap for application

a) Preparation phase (2020 – 2024):

- To develop and issue the Scheme for application of financial reporting standards in Vietnam. Implementation period: Before March, 2020.

- Establish Drafting boards and Editors for financial reporting standards in Vietnam. Implementation period: Before June, 2020.

- To conduct research, develop and issue VFRS, including newly issued financial reporting standards and financial reporting standards replacing respective accounting standards in the applicable Vietnam accounting standard systems. Implementation period: Before November 15, 2024.

- To conduct research, develop and issue documents providing guidelines for VFRS and replacing current documents. Deadline and issuance together with the IFRS: Before November 15, 2024.

b) VFRS application phase (from 2025):

- To organize application of VFRS for enterprises operating in all fields and economic sectors in Vietnam, except for enterprises subject to application of IFRS or accounting policies applied to very small enterprises.

- During the course of implementation, the Ministry of Finance shall regularly review VFRS and keep up to date with the IFRS changes to ensure maximum consistency with international practice.

2.2.2. Requirements and methods of VFRS application:

- VFRS is developed based on the IFRS following the principles of acknowledging international practices to the maximum satisfactory to characteristics of Vietnamese economy and enterprise’s demand while ensuring feasibility during implementation.

- The Ministry of Finance shall provide separate accounting guidance for very small enterprises that do not have the demand nor capacity for application of IFRS and VFRS.

3. Implementation solutions

3.1. Establish IFRS Translation board and Translation review board

The Translation board and Translation review board consist of representatives of entities affiliated to the Ministry of Finance, training facilities, vocational associations and accounting enterprises specialized in accounting operations and proficient in English. The Director of the Department of Accounting and Auditing Regulations shall act as the Chairperson of the Translation board and Translation review board, number of members of the Translation board and Translation review board shall be decided by the Minister of Finance.

3.2. Establishment of VFRS Drafting boards and Editors

The VFSR Drafting board consists of representatives of ministries, vocational associations, training facilities, accounting companies, agencies affiliated and non-affiliated to the Ministry of Finance. The Deputy Minister of the Ministry of Finance shall act as the Head of the VFSR Drafting board while the Director of the Department of Accounting and Auditing Regulations shall act as the Deputy Head. Number of members of the Drafting board shall be decided by the Minister of Finance.

The Director of the Department of Accounting and Auditing Regulations shall act as the Head of the VFSR Editors while the Deputy Directors of the Department of Accounting and Auditing Regulations shall act as the Deputy Heads; Members of the Editors include officials of the Department of Accounting and Auditing Regulations and representatives of ministries, vocational associations, training facilities, enterprises, accounting companies, agencies affiliated and non-affiliated to the Ministry of Finance. Number of members of the Editors Board shall be decided by the Head of the Editors Board.

3.3. Development and perfection of financial and accounting legislative document systems

a) To issue legislative documents providing guidelines on implementation and publicizing Vietnamese translations of the IFRS;

b) To conduct research and issue the VFRS system satisfactory to international standards and regulations and Vietnam’s conditions;

c) To develop documents providing instruction on specialized and accounting operations for relevant subjects to enable access, research and implementation of IFRS and VFRS;

d) To review and issue financial legislative documents in order to reform and create equality in application and implementation of the law between economic sectors; determine and distinguish scope of application between financial reporting standards and financial mechanisms, reduce difficulties in preparing, presenting financial statements and implementing obligations of enterprises;

e) To issue documents and conduct examination and inspection regarding compliance with regulations and law on accounting and financial reporting standards.

3.4. Assistance, encouragement and facilitation for enterprises to apply IFRS

a) To conduct research, issue policies and facilitate for voluntary application of IFRS by enterprises having the demand of and sufficient capacity.

b) To conduct survey on demands and readiness of enterprises to come up with revisions regarding regulated entities, roadmap and methods of applying IFRS satisfactory to practical conditions of each phase.

c) To organize conferences and seminars and suggest measures to deal with difficulties and complaints during application of IFRS.

D) To provide necessary technical assistance to enable enterprises to convert to applying IFRS according to plans.

3.5. Human resource training

a) Develop master plans and implement personnel training according to demands and roadmap for application of IFRS.

b) Provide IFRS training for members of the Board for research and drafting standards; enterprises, auditing companies, training facilities, vocational associations and other relevant entities during application period.

3.6. Increased coordination among state agencies, vocational associations and other organizations

a) Increase coordination among state agencies, vocational associations, domestic and international organizations in: Translating, publicizing and assisting in applying IFRS; drafting, issuing and providing guidelines for implementation of VFRS; conducting survey and assessing implementation of financial reporting standards in each field and sector to come up with effective solutions.

b) Utilize resources in technical assistance and experience of experts in conducting research on international experience, human resource training and other activities related to implementation of the Scheme.

3.7. Popularization regarding roadmap and methods of applying IFRS and VFRS

a) To conduct meeting with enterprise to publicize benefits of IFRS, encourage and recommend enterprises to apply IFRS.

b) To conduct communication activities on mass media regarding roadmap and methods of applying VFRS and IFRS and assist relevant entities in preparing for application.

c) Raise awareness of foreign investors, international financial organizations and institutions regarding contents of the Scheme and objectives of financial management reform aiming towards market economy and international economic integration.

III. IMPLEMENTATION ORGANIZATION

1. Responsibilities of the Ministry of Finance

- To approve of the Scheme on application of financial reporting standards in Vietnam

- To establish and organize operations of Editors and Translation review board for translation of international financial reporting standards in to Vietnamese;

- To establish and organize operation of the VFRS Drafting boards and Editors of Vietnam financial reporting standards;

- To issue or request competent authorities to issue legislative documents publicizing Vietnamese translations of the IFRS and providing guidelines on application of the IFRS; Conducting research and keeping up to date in case of changes to the IFRS, ensuring consistency of the standard systems with international practice.

- To issue or request competent authorities to issue legislative documents on implementing VFRS as similar to the IFRS and international practice as possible and satisfactory to conditions of Vietnam, replacing current accounting standards;

- To review and issue financial legislative documents in order to reform and create equality in application and implementation of the law between economic sectors; determine and distinguish scope of application between financial reporting standards and financial mechanisms, reduce difficulties in preparing, presenting financial statements and implementing obligations of enterprises;

- To issue documents within their competence to deal with any discrepancies between financial reporting standards and financial mechanism; discrepancies between IFRS and VFRS;

- To take charge and cooperating with relevant entities in assessing impact and results of applying IFRS in enterprises;

- To publicize documents providing specialized, technical and professional instructions to assist access, research and implementation of the IFRS and VFRS;

- To provide training and cooperating in organizing IFRS and VFRS training for members of Standard research and drafting board and relevant enterprises, organizations;

- To publicize orientations and policies on financial management reform of Vietnamese government, which includes application of the IFRS and VFRS by relevant entities and organizations;

- To consult the State Bank of Vietnam to determine roadmap and methods of applying IFRS in commercial banks and credit institutions satisfactory to requirements of each phase; To coordinate in concluding and assessing results of applying IFRS in commercial banks and credit institutions;

- To cooperate with ministries and local government in conducting research, implementing, providing guidelines for application of IFRS and VFRS, proposing methods of develop legal framework in managing and organizing implementation to ensure feasibility of activities related to application of IFRS and VFRS;

- To issue documents and conduct examination and inspection on compliance with regulations and law on accounting and accounting standards;

- To develop master plans and implementing personnel training according to demands and roadmap for application of IFRS and VFRS; To assist enterprises and training facilities during application of IFRS and VFRS;

- To conclude and assessing results of applying IFRS and VFRS; To manage and supervising financial statements of public interest enterprises;

- To promote cooperation with vocational associations, experts, domestic and international organizations, utilizing technical assistance and studying from international experience and other activities in applying IFRS and VFRS;

- Fully complying with procedures specified in the IASB to ensure consistency between application of IFRS in Vietnam and international law; To participate in development and issuance of IFRS of the IASB;

- To allocate estimates of expenditure on research and implementation of the Scheme.

2. Cooperation and implementation of agencies and units

a. The State Bank of Vietnam

- In case of consolidated financial statements: The State Bank of Vietnam shall conduct research and determine roadmap for compelled application of IFRS to produce consolidated financial statements for each enterprise categorized as commercial banks and credit institution after receiving response from the Ministry of Finance.

- In case of separate financial statements: The State Bank of Vietnam shall conduct research and determine roadmap for compelled or voluntary application of IFRS to produce separate financial statements for each enterprise categorized as commercial banks and credit institution after receiving response from the Ministry of Finance.

- Actively implement management-related activities, developing legal framework to ensure feasibility and organizing activities related to application of financial reporting standards.

b. Ministries and People s Committees of provinces and central-affiliated cities

- To cooperate with the Ministry of Finance in publicizing and guiding application of IFRS; conducting research, issuing and implementing VFRS.

- To actively implement management-related activities, developing legal framework to ensure feasibility and organizing activities related to application of financial reporting standards.

c) Regulated enterprises subjected to application

- Determining objectives, demands and plans for application of IFRS;

- Actively developing detailed plans and organizing implementation satisfactory to roadmap for application of IFRS and VFRS publicized by Ministry of Finance.

d) Training facilities

- Actively organizing training programs regarding accounting, and based on roadmap, methods of application, and providing IFRS and VFRS training;

- Organizing personnel and developing appropriate teaching materials and methods satisfying IFRS training contents according to approved roadmap.

e) Vocational associations

- Cooperating with Ministry of Finance in conducting research, training, publicizing and assisting enterprises and members in IFRS application;

- Cooperating with Ministry of Finance in publicizing documents providing specialized, technical and professional instructions to enable relevant entities to access, research and implement IFRS and VFRS.

f) Service providers

Actively developing plans and requirements, and organizing resources in order to adequately provide services related to application of IFRS and VFRS of organizations and enterprises provided with the services.

3. Expenditure on Scheme implementation

3.1.Regulation expenditure or state budget:

The Ministry of Finance shall allocate regulation expenditure in accordance with state regulated regime for the following activities:

- Exercising obligations to the International Accounting Standards Board (IASB), purchasing copyrights to enable application of IFRS and paying annual fees for IASB for utilizing, translating and using documents;

- Activities of Board of translation and Translation review board for translating IFRS in to Vietnamese;

- Activities of VFRS Drafting board and Editors;

- Developing legislative document systems related to providing guidelines for application, publicizing and assisting implementation of IFRS;

- Developing legislative document systems related to publicizing, issuing and organizing implementation of the VFRS;

- Organizing, participating in domestic conferences and seminars serving research and information exchange to enable IFRS application;

- Providing IFRS training for officials of Ministry of Finance and other members of VFRS Drafting board and Editors;

- Paying consulting fees during application of IFRS in Vietnam in accordance with law provisions.

3.2.Funding sources

Expenditure from domestic and international sponsors shall be managed and used as per the law for activities agreed upon by sponsors.

Article 2.This Decision takes effect from the date of its signing.

Article 3.The Director of the Department of Accounting and Auditing Regulations; The Director of Department of Personnel and Organization; Director of Department of Legal Affairs; Chief of the Ministry Office and relevant entities are responsible for implementation of this Decision./.

For The Minister of Industry and Trade

The Deputy Minister

Do Hoang Anh Tuan