Promulgation of Vietnamese public accounting standards is necessary

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Public accounting standard system need to be promulgated

According to Director of Department of Accounting and Auditing Supervisory (under the Ministry of Finance), Vu Đuc Chinh, in recent years, international economic integration has strongly taken place in Vietnam. The participation in international economic organisations and implementation of commitments with other international financial institutions requires Vietnam to provide financial information that is standard, comparable and recognised by international organisations. The country needs to focus on the sufficiency and transparency of accounting information, especially in the public sector.

Vietnam has issued regulations on public accounting towards integration with international practices. However, there is still a gap with international practices on recording and presentation of public financial information.

On the other hand, the requirement for the country's financial reporting needs being done in a complete, accurate and transparent manner in line with international practices is of interest to many people in society. Therefore, public accounting is in charge of providing information and auditing on the State’s economic-financial operation, Director Vu Đuc Chinh said.

"The State Treasury has implemented the project on the State accounting to build the financial statement system of the central Government and local government, ensuring timeliness, sufficiency, publicity and transparency. The development and announcement of the public accounting standard system in line with international and Vietnamese practices and as a basis for identifying subjects, scope, process, and content of financial reporting information is necessary," said Chinh.

Nearly 20 years ago, Vietnam developed and announced the corporate accounting standard system. The country has applied the International Financial Reporting Standards (IFRS). However, it only issues accounting regulations to guide accounting operations at accounting units in this sector. These regulations are mostly operational guidance and have not been consistent with international practices.

Many benefits for international integration activities

Recently, the Ministry of Finance approved a decision on promulgating five Vietnamese public accounting standards phase 1. According to a representative of the Ministry of Finance, public accounting units have applied accounting regime consistent with their operation. Thus, the promulgation of a public accounting standard system will help accounting principles and techniques be applied in a more accurate and reliable manner. The trend of expanding the operations of public service delivery units has required these units to apply accounting techniques in accordance with requirements on management autonomous operations.

In addition, although current circulars on accounting guidance have approached international practices, they are still different in some sectors. Moreover, the public standard system has not been published, affecting the ranking of Vietnam in the assessment by foreign organisations. Therefore, the publication and compliance with the system will bring many benefits to international integration activities, as well as improving the confidence of investors, domestic and foreign economic and financial institutions.

Director Vu Duc Chinh also said the development and promulgation of public accounting standards is an objective necessity, stemming from the need for unified finance management, gathering and providing information in a unified, accurate and transparent manner for the public finance management and making state financial statements in accordance with international practices.

It is also a basis for Vietnam to improve its rank and credit rating in economic relations with international organisations.

The promulgation of public accounting standards also stems from the situation on perfecting legal regulations to adjust and supervise accounting operation in the State accounting sector in Vietnam. It also meets requirements on accounting operation at units, audit, training and development of accounting and auditing human resources, and information technology application in the coming period.

“The public accounting standards also cover many issues of the financial mechanism. Therefore, the publication of Vietnamese public standards will be the basis and reference model for research related public financial mechanisms,” Chinh said.