SUBJECT PRINCIPLES OF ACCOUNTING ASSESSMENT difference between VAS and IAS IFRS

Enterprises must use the same financial reporting forms because companies have very different sizes and characteristics of business, so the account system, the documents systems, the boo

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

SCHOOL OF ECONOMICS SUBJECT: PRINCIPLES OF ACCOUNTING

INSTRUCTOR: NGUYỄN THỊ THU

CONDUCTED IN 2021

GROUP REPORT

Student’s

name Advantages Disadvantages Contribution %

Lê Đặng Hà An Lecture lessons are

Lê Hồng Minh

Duy All lessons are easy to understand None 20%

Lê Quang Minh

Nhật Theoretical lessons are combined with

many practical situations, the detailed information given by the lecturer was capable of being acknowledged by students

Huỳnh Nhật

Bảo Ngọc Many practical examples and cases

help students understand more easily

It is difficult to analyse business transaction and prepare financial statement

20%

Lâm Nhựt Phi All lessons are easy

to understand, practical examples

It takes time to prepare a journal, financial

statement, by writing on paper and hard to adjust

comprehensively

Less accuracy by writing on paper instead of using a computer

15%

Phan Thị Tú

Quyên Lecturer pays attention to students,

Lectures are quality

Table of Contents

Part I: Introduction……….………….4

Part II: Content……… 5

1 Difference between VAS and IAS/IFAS……….………

……….5

a Form……….…… 5

b Chart of account………….……….………6

c Financial statement system……….9

d Ledger……… 10

2 IFRS & VAS balance sheet compared……… 10

a Money (Cash)……….……….……….……10

b Trade receivables……….……….11

c Inventories……… …

…….11

Part III: Conclusion……… …….14

References……… 15

PART I: INTRODUCTION

IAS (International Accounting Standard) and IFRS (International Financial Reporting Standard) are both composed by ISRB (International Standard Reporting Board) Before 2003, all international accounting standards were announced under the name IAS After 2003, new Accounting Standards were renamed to IFRS

Nowadays, International Accounting Standards include a total of 41 IAS and 16 IFRS IASB (International Accounting Standards Board) gathers experts who are in different majors, from many nations and have the ability to read and understand Financial Reports by different aspects such as financial reporters, managers, financial report users as well as scholars

Composing and announcing procedures of IAS / IFRS are well-organized to assure their quality and practicality Nations worldwide who use IAS/IFRS as their national accounting standards are European countries, Singapore, Australia, and so on Besides, Vietnam is having their standards which is called VAS adjusted to reduce their differences with IFRS

PART II: CONTENT

1 Difference between VAS and IAS / IFRS

a Form

IAS doesn't recommend form (such as report forms, unified accounting system, accounting book format, uniform original documents form)

Unlike VAS, IAS, although detailed definitions, methods, presentation and information required to be presented in the financial statements, IAS, like most countries, does not require all Enterprises must use the same financial reporting forms because companies have very different sizes and characteristics of business, so the account system, the documents systems, the books Most and especially the unified financial reporting forms will not meet the diverse needs

of businesses and investors

Vietnamese accounting system offers a unified system of accounts, mandatory financial reporting forms for all applicable businesses (most countries in the world do not) A few countries like France have a unified system of accounts, but it is more instructive, less compulsory According to the Vietnamese accounting regime, companies opening more level 1 accounting systems outside the unified accounting system require permission from the Ministry of Finance Some industry professional associations may have a unified system of accounts, but it is purely instructive and not mandatory The Hotels Association of America and Canada, for example, offers a "unified accounting system for US and Canadian hotels" as an optional guide Actually, it is a set of financial statements, governance reports and the interpretation of the indicators of those reports In summary, for matters of appearance of the outside world, the Vietnamese accounting regime is highly compulsory

The IAS has a conceptual framework and a high coherence of standards

VAS still has many unclear issues, lacks many problems and especially contradictions between standards For example, in VAS 01, the general standard gives the accounting requirement as full, timely; comparing but in other standards the provision for impairment of inventories, impairment of securities,

or adjustments of profit and loss for investors in associates, joint ventures and

other events occurring after the balance sheet date re-adjusted at the end of the year That is, corporate annual reports do not have to address the above issues

So if these events arise during the interim reporting periods, but are not recorded in this report, wait until the end of the year Likewise, according to VAS, consolidated financial statements are only required at the end of the year

In mid-year reports, consolidation is not required, but only the parent company's separate statements are published In 2008, a real situation arose that the parent company VINASHINETRO had very good business results, but its 100% owned subsidiary Dai Nam had very bad business results and financial position According to VAS, this group only published mid-year financial statements of the parent company with very good business results, the share price of this group increased dramatically At the end of the year, when it was forced to publish the consolidated financial statements with very poor business results, the share price of the group fell sharply

b Chart of account

Is a unified accounting system necessary?

According to IAS or IFRS, IAS or IFRS only regulates financial statements, not accounting systems because it is the accounting means to meet the output of financial statements According to international accounting practice, enterprises design their own accounting account system from information requirements and require financial statements and management reports (not only the requirements

of financial statements The designer analyzes and comes up with a suitable account system that can handle financial and management reporting Note that fulfilling the requirements of the governance reports requires more accounts than is required by statutory financial statements In most countries, there is no concept of a unified accounting system for a country because each company has different information and governance needs, so it is the most appropriate for companies to build themselves Accounting academics draw on experience, management theory and accounting to provide instructional account systems for companies and to teach in accounting schools

According to Vietnam's accounting system, the Ministry of Finance issues a unified system of accounting for businesses However, it must be understood that this account system only meets the preparation of ordinary financial statements for investors, but does not meet the requirements of governance There are many people who think that a single accounting system in one

country is a great benefit because the common unity makes accounting, teaching and learning as well as using accounting in companies easier However, many people believe that teaching and learning a unified accounting system with pre-numbered accounts can make learners lack passivity and machines do not follow the nature of transactions

Accounts title

Base on international practice, account title is the abbreviation for the account balance or management requirement For instance, in order to monitor fixed assets we need information on historical cost of fixed assets as well as accumulated depreciation of fixed assets In Vietnam's system of accounts, now

it is refered to as fixed asset depreciation Its full name is derived from the international practice of "accumulated depreciation."

Do not incorporate several parameters into the same account Many accounts in accounting are not synonymous with complex journals, and few accounts are not plain Internationally different goals must be recorded and reported separately, should not be divided into multiple sections with very different content and meanings in one account For instance, as claimed by VAS, the main cost account includes many items of different nature, with different management such as loan expense, securities investment loss, foreign currency difference loss, provision stock price discounts According to international information, these goals must be reproduced and reported separately for administrative purposes, so these sections are segregated into separate accounts International financial cost includes only the cost of borrowing and the costs associated with borrowing money Securities loss, exchange rate difference loss, unrealized loss on investment (causing the market to decline, but not selling stocks, so this loss is not realized) these accounts are split into Special accounts not in the main account

Account recording techniques

According to international practice, accounts are designed so that the closing balances accurately reflect the amount that is required to be reported

According to the Vietnamese accounting system, the part of the accounting system is unified Balance of discount and discount accounts, at the end of the period, is directly transferred to the Debit of Revenue account to record revenue

decrease So the revenue account balance is the amount of net sales, not gross revenue Income statements need to show gross revenue and sales deductions, then the accountant needs some technique to take balances of these accounts before it can be transferred to the business account

Are there many Debits for many Credits in the same accounting statement?

According to international practice, it is allowed to allow more than one Debit

to many Credits in the same term, however, it is not advisable to abuse the recording of multiple Debits with many Credits counterparts to lose the clarity

of the accountant The concept of recording an account with a ledger, having a reciprocal account for each economic operation (as is the practice of Vietnam)

is unnecessary and impossible The famous accounting software and international practice are written according to the principle that allows many Debits to correspond with many Credits Allowing the recording of multiple counter liabilities with multiple Credits make it simple to book and in some situations it reflects the nature of the transaction rather than splitting it into many accounts Just to solve the concept of not recording many Debits with many Credits For example, for a month-end payroll, the company usually controls labor costs by:

(1) Nature of items of labor cost such as: (a) Salary for employees, (b) Overtime salary, (c) Social insurance expenses, (d) Health insurance

(2) By department or division, for example: (a) Direct employees (b) Sales division (c) Company management (d) Production management

(3) Under the liabilities, the company will manage under (a) Salaries payable, (b) Personal income tax payable, (c) Social insurance payable, (d) Health insurance payable, (e) Payable unemployment insurance

Vietnamese accounting practices: According to official accounting principles documents of Vietnam from ancient years (By the Finance and Accounting University under the Ministry of Finance and other universities and teaches accounting Publication) has given the principle of recording an account is not recording multiple Debits with respect to many Credits in an accounting system

So far we have not found a legal document prohibiting the recording of multiple Debits against multiple Credits On the other hand, in the current accounting regime documents issued by the Ministry of Finance, there are many terms with many Debits, for many Credits in the same term It is understood that the

current accounting regime of Vietnam allows many credit entries to be recorded with many Credits in one item However, due to the habit of previous accounting recording principles, in fact, many companies also have the principle

of not recording a lot of counter-debt with many Credits in the same term, but only recording a counter-debt for multiple Credits or in contrast a Credit is for many liabilities Most of Vietnam's accounting software in Vietnam are also written according to that principle However, it should be said that many foreign companies in Vietnam still have a lot of counter-debt with many Credits in the same term as international practice That does not reduce the transparency of the accountant because it has an accompanying original document to prove it

c Financial statement system

The enterprise's financial statement

system includes:

(a) Balance sheet at the end of the

period;

(b) The report on business results in

the period, which can present the

business results in two types of

reports: business result report and

income summary report;

(c) Report on change of equity;

(d) Cash flow statement; and

(e) Notes to the financial statements,

including those of major accounting

policies and other notes

(f) The balance sheet at the beginning

of the most recent period of

comparison when the enterprise

applies retrospectively an accounting

policy or makes a retroactive

The enterprise's financial statement system includes:

(a) Balance sheet of accounting;

(b) Report on business results;

(c) Cash flow statement;

(d) Notes to financial statements

The report on change of equity is presented in the notes to the financial statements

adjustment to a number of items in

the financial statements or when the

Enterprises reclassify the items on the

financial statements

Enterprises can give different names

to reports instead of using names in

standards

d Ledger

IAS / IFRS usually uses one type of ledger, which is general ledger On the other hand, VAS uses two types of ledger, which are general ledger and subsidiary ledger A subsidiary ledger contains detailed information on specific accounts in the general ledger Information systems often include several subsidiary ledgers Two of the most important are accounts receivable ledger, which stores transaction data of individual customers and accounts payable ledger, which stores transaction data of individual suppliers, Individual accounts

in subsidiary ledgers are often arranged alphabetically Accounts receivable subsidiary ledger are used for preparing bills sent to customers (one account for each customer), while general ledger is used for preparing financial statements and controlling account balance equals sum of subsidiary account balances There are at least four benefits to obtain from subsidiary ledger First of all, it removes excessive details, and details accounts, from general ledger Furthermore, it updates information readily available on specific customers and suppliers Subsidiary ledgers also aid in error identification for specific accounts and has potential efficiencies in record-keeping through division of labor in posting

2 IAS / IFRS & VAS balance sheet compared

A balance sheet (BSC) is an important financial statement that reflects the financial position of a business at a particular time Let us compare some of the major items that affect the financial statements under IAS / IFRS and VAS The left side presents items according to IAS and international accounting practice, the right side shows VAS and Vietnamese accounting practice

a Money (Cash)