The implementation of International Financial Reporting Standards (IFRS) will make Vietnamese enterprises become more financially transparent and better at financial risk management so as to efficiently manage their corporate's assets.
On the occasion of the workshop co-hosted by Ministry of Finance and CPA Australia on 28th May in Hanoi about "International experience sharing on the implementation of IFRS in Asia Pacific countries", Vietnam News has interviewed Ram Subramanian - Policy adviser in Reporting and Auditing, External Positioning, CPA Australia.
Is there a need for a globally consistent financial reporting framework?
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| Ram Subramanian |
Yes most definitely. The unstoppable growth of global capital markets, the proliferation of multinational corporations and advancements in information technology have all driven the significant flow of capital and resources between and across nations. Financial reports are a major source of financial information for investors in capital markets when making investment choices. The International Financial Reporting Standards (IFRS) framework has been developed with the primary purpose of ensuring financial reports based on IFRS provide consistent and comparable financial information to assist with investment decision making. Many countries around the world have recognised the need for consistency and comparability of the financial reports prepared by companies in their jurisdiction, and have adopted the IFRS framework to achieve these objectives.
How well has the International Financial Reporting Standards (IFRS) framework been received in other Asian neighbours of Viet Nam?
At the last count, 114 countries around the world have chosen IFRS for financial reporting by companies operating in their jurisdiction. Countries including Singapore, Malaysia, Hong Kong, Cambodia and China have all incorporated IFRS into their financial reporting frameworks either entirely or to a great extent. Other countries such as Indonesia, India and Japan are committed to a move to IFRS adoption in the near future.
What are the opportunities and challenges for Viet Nam in deciding to adopt IFRS?
Change is never easy, but absolutely vital for a rapidly growing economy such as Viet Nam. The inflow of capital into the Vietnamese capital market is essential for sustained economic growth. IFRS based financial reporting by Vietnamese companies will provide comparable, consistent, high quality information to foreign investors looking to invest in Viet Nam. Adopting IFRS will also assist in showcasing Viet Nam's corporate regulatory framework as meeting the highest international standards in global economic forums.
As with any investment in infrastructure development that contributes to economic growth, there is a cost involved in implementing IFRS in Viet Nam. The regulatory framework for financial reporting will have to be modified to accommodate IFRS. Training and education in IFRS will be required for both financial report preparers, and their auditors.
How do you see CPA Australia assisting with the implementation of an IFRS based financial reporting framework in Vietnam?
As one of the world's largest professional accounting bodies, CPA Australia is well placed to assist the accounting profession in Viet Nam make the transition to IFRS.
The CPA Program, which is undertaken by those who wish to become a CPA, includes financial reporting segments that are entirely focused on IFRS. CPA Australia's continuing professional development offerings for CPA members include various IFRS based training solutions.
CPA Australia plays a significant role in advocacy and policy development for the accountancy profession. As part of this remit, the organisation participates in the ongoing development of IFRS through regular liaison with international and national standard-setters.
My visit to Viet Nam is part of CPA Australia's commitment to the country's transition to IFRS, through sharing experiences and expertise in financial reporting and IFRS. CPA Australia has a long and fruitful relationship with the Ministry of Finance, enabling mutual learning and cooperation. — VNS