Summary of PhD thesis: Transition of financial statements from Vietnamese accounting standard to international financial reporting standard - Experiental study for Vietnamese companies

The general objective of this thesis is to develop a framework for transition of financial statements from Vietnamese Accounting Standard (VAS) to Intrenational Financial Reporting Standard (IFRS) for Vietnamese companies. It is necessary to identify and measure factors that affect in transition of IFRS financial statements in the conditions of economic, political, cultural and social of Vietnam.

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY

-

By

NGUYEN NGOC HIEP

TRANSITION OF FINANCIAL STATEMENTS FROM VIETNAMESE ACCOUNTING STANDARD TO INTERNATIONAL FINANCIAL REPORTING STANDARD _ EXPERIENTAL STUDY FOR

VIETNAMESE COMPANIES

Major: Accounting Code : 8340301

SUMMARY OF PHD THESIS

HO CHI MINH CITY– 2018

Thesis is prepared at: University of Economics Ho Chi Minh City

Professional advisor:

1 Asso.Prof., PhD Ha Xuan Thach

2 Asso.Prof., PhD Bui Van Duong

At …, the day month year

The thesis can be found in Library

INTRODUCTION

Vietnam has become an official member of the World Trade Organization (WTO) Investment and capital activities in the capital market and securities market attract more and more foreign investors

To attract capital from foreign investors, Vietnamese companies will list their stocks on the International stock exchange One of conditions for listing stocks on the International stock exchange is to prepare financial statements in accordance with International Financial Reporting Standard (IFRS) In addition, with the progress of International economic integration, the level of competition among companies is increasing, more and more Vietnamese companies seek to increase exporting and set up their operations abroad Therefore, their financial statements must be prepared in accordance with the IFRS Accompanying with the process of International accounting convergence in 2020 and the vision 2030 in Vietnam, Vietnamese companies will need to transit their financial statements from Vietnamese Accounting Standard (VAS) to IFRS to meet the requirements of this convergence

Derived from the need of economic integration, from the trend

of convergence of International accounting in Vietnam and from difficulties and challenges faced by Vietnamese companies in transition of financial statements from VAS to IFRS and to help Vietnamese companies have more favorable in transition of financial

statements to IFRS The topic of this thesis is “Transition of

financial statements from Vietnamese Accounting Standard to International Financial Reporting Standard_Experimental study

of Vietnamese companies”

2 Reseach objectives

The general objective of this thesis is to develop a framework for transition of financial statements from Vietnamese Accounting Standard (VAS) to Intrenational Financial Reporting Standard (IFRS) for Vietnamese companies It is necessary to identify and measure factors that affect in transition of IFRS financial statements in the conditions of economic, political, cultural and social of Vietnam This will help to find out difficulties, challenges in transition of financial statements to IFRS In order to solve the general objective, the thesis needs to address two main objectives: 1/ Develop a framework for transition of financial statements from VAS to IFRS 2/ Identify and measure factors that affect transitions of IFRS financial statements

There are four questions to resolve the two main research objectives: (1) What are key differences of each items on financial statements between VAS / Vietnamese Circulars and IAS/IFRS?; (2) What are methods of transition financial statements to IFRS in Vietnam, currently? What are difficulities and challenges of IFRS transition?; (3) What are factors that affect of transition financial statements from VAS to IFRS? (4) How does each factor affect transition of financial statements form VAS to IFRS?

Recommendation

Based on the results of qualitative and quantitative research to recommend policies that impact and support by the Vietnamese Government, companies, training institutions to help Vietnamese companies have more favorable in transition of financial statements from VAS to IFRS

Status of transition to IFRS

of Vietnamese companies, Transition methods, difficulities and

challenges (Q2)

In-depth Interview

Idnetify factors that affect transition of financial statements from VAS to IFRS

(Q3)

Quantitative research

(i) Scale building and descreptions the observed variable

(ii) Develop questionnaries (iii) Collect data (iv) Process data (v) Analyze data

measure the affect of each factor on transition of financial statements from VAS to IFRS

(Q4)

Research objectives

- Developing a framework for transition of financial statements from VAS to IFRS

- Identify and measure factors that affect transition of financial statements from VAS to IFRS

- Analyze, discuss the results and compare to theoretical basis

- Identify factors that affect transition of financial statements form VAS to IFRS, based on the results for quantitative research

Research problems

- Trasition of financial statements from VAS to IFRS

Developing a framework for transition of Financial

statements from VAS to IFRS (Objective 1)

Identify and measure factors that affect transition of financial statements from VAS to IFRS (Objective 2)

Reseach Processes of Thesis

6 New contributes of thesis

Theoretical implications:

 Developing a framework for transition of financial statements from Vietnamese Accounting Standard to International Financial Reporting Standard with general principles that are scientifically based, helping all types of Vietnamese companies can apply

 Building a model by factors that affect transition financial statements to IFRS of Vietnamese companies in the conditions of economic, political, cultural and social of Vietnam and contribute

to International theoretical system on factors that affect of transition financial statements from national accounting standards

to International financial reporting standard

of financial statements from VAS to IFRS at their companies; Training institutions and Vietnamese Universities develop training programs on transition of financial statements to IFRS in order to improve IFRS knowledges for accountants in Vietnam, helping Vietnamese companies have more favorable in transition of financial statement sfrom VAS to IFRS

 Based on the results of identify and measurable five factors(Economic integration, Legal system, Cultural environment, Support of company’s Manager and Educational of accountant) that affect in transition of financial statement from VAS to IFRS, author recommends policies that impact and support by Ministry of Finance, State Securities Commission, training institutions as well

as management implications of Vietnamese companies, these will help more favorable in transition of financial statements from VAS

to IFRS for Vietnamese companies

The thesis is divided in five chapters Introduction; Chapter 1– Literature review; Chapter 2–Theoretical basis; Chapter 3–Reseach method, Results and discussion on developing a framework for transition of financial statements from VAS to IFRS; Chapter 4–Research method, Results and discussion on indentification and measurable factors that affect transition of financial statements from VAS to IFRS; Chapter 5–Conclusion and Recommendation

CHAPTER 1 LITERATURE REVIEW

1.1.1 Reseaches on transition of financial statements from

National accounting standards to IFRS

1.1.1.1 Reseaches on differences between national accounting

standards and IFRS

Reseached in this field in countries of the EU by Danuta Krzywda & Marek Schroeder (2007); Devalle & ctg (2010); Struharo

& Katerina (2010); Beuselinck & Ctg (2010); Stamatios Dritsas & ctg (2014); Michael E Bradbury & ctg (2017) The result of these

showed that there are differences between national accounting standards and IFRS

1.1.1.2 Reseaches on the first time adopt IFRS and IFRS’s

regulations

The differences between national accounting standards and IFRS are affected to the first time adopt IFRS, companies must abide IFRS’s regulations and rules (Eva K Jermakowicz & ctg, 2007), Demaria & Dominique (2008) in France; Soderstrom & Sun (2013) Saidu & Dauda (2014) in Nigeria; Eva K Jermakowicz & ctg (2014)

in United States

1.1.1.3 Reseaches on affecting financial statements of transition

and adopt IFRS

Reseaches in countries of the EU by Sally Aisbitt (2006); Susana Callao Gaston & ctg (2010); Achilleas Psaroulis (2011); Ioannis Tsalavoutas & ctg (2012); Vera Palea (2012); Irina-Doinaba (2012); Michela Cordazzo (2013); Helena Vojakova (2015) Chung-Hao Hsu & ctg (2013) in Taiwan; (Shu-hsing Wu, 2014; Johanna Forsberg & Johanna Ojala, 2014) in China; Bhanu Sireesha (2015) in India; Sylwia Gornik-Tomaszewski (2014) in the United States; Muhammad Nurul Houqe & ctg (2017) in Newzealand The results showed that IFRS transition affected companies’s financial statements results

1.1.1.4 Reseaches on benefits and challenges in transition and

adopt IFRS

Beside the benefits of IFRS transition, there are many difficulties and challenges for oprations of companies in transition and adopt IFRS, Jermakowicz (2004) in Belgium; (Weienberger &

ctg, 2004; Mary E Barth, 2008); Ormrod & Taylor (2004) in England; Costin A Istrate (2015) in Romania; Kavitha (2014) in India; (Hlaciuc Elena & ctg, 2009; Murphy Smith, 2015) in United States

M Shima & David C Yang (2012); Michael Neel & ctg (2017) countries adopted IFRS

 Legal system

Reseached by Adhikari & Tondkar (1992); Lei Cai & ctg (2009); Doupnik & Salter (1995); Jaggi & Low (2000); Christopher Nobes & Robert Parker (1995); Danuta Krzywda & ctg (2007);Elisavet Mantzari & ctg (2017) in countries of the EU (Abdulkadir Madawaki, 2012; Mohamed Abulgasem Zakari, 2014; Shigufta Hena Uzma & ctg (2016) in developing countries; in many countries adopted IFRS by Kim M.Shima & ctg (2012)

 Cultural enviroment

Reseached in this field by Zarzeski Marilyn Taylor (1996); Stulz & ctg (2003); Karahanna & ctg (2005); Sally Aisbitt (2006) in England; Demaria & ctg, 2008) in France; Kim M Shima & David

C Yang (2012); Mohamed Abulgasem Zakari (2014) in Libya; Sidney J Gray & ctg (2015) in the EU

1.1.2.2 Internal factors

 Support of company’s manager

Reseached in this filed by Weibenberger & ctg (2004); Vedran Capkun & ctg (2008); Van Tendeloo & ctg (2005); Callao & Jarne (2010); Top Robert Teller (2009); Hans B Christensen & Ctg (2015) in the EU (Evans O.N.D Ocansey, 2014) in developing countries, Martin & Donna (2003) in United States

 Education of accountant

Reseached on this filed by (Nobes & Parker, 1995); Kim M Shima & ctg (2012); Mohamed Abulgasem Zakari (2014); Costel Istratea (2015)

Reseached on differences between VAS and IAS / IFRS (Tang Thi Thanh Thuy, 2009; Nguyen Thi Phuong Thao, 2010; Nguyen Thi Kim Oanh, 2010; Tran Quoc Thinh, 2013; Le Vu Tuong

Vy (2017)

The fisrt time adopt IFRS and affecting IFRS to financial statements: Le Thi Kieu (2013), Đinh Minh Tuan (2013) and Nguyen Van Liem (2015)

Duc Hong Thi Phan, Mascitelli & Barut (2014): “Perceived toward adopt IFRS”; Le Vu Truong & Đinh Minh Tuan (2016):“Opportunities and challenges of adopting IFRS in VietNam”

Reseached on the factor that affect transition and adopt IFRS

in Viet Nam by Nguyen Thi Thu Phương (2014); Ha Xuan Thach &

Le Tran Hanh Phuong (2017), micro factors that affect adopting IFRS in Viet Nam and Do Duc Tai & Tran Thi Du (2017) cultural factor affected the differences financial statements prepared according VAS and IFRS

accounting standards to IFRS

+ There are differences between national accounting

standards / VAS and IAS/ IFRS, depended on the difference level of two accounting standards, these differences will affect IFRS transition on items of financial statements, overview of financial statements and informations on financial statements

+ The difficulities of the first time adopt IFRS are affected

by the financial statements prepared according national accounting standard It is necessary to comply the form, framework, policy and reporting requirements of IFRS

+ It’s significant affecting results of financial statements before and after adopt IFRS

+ Transition and adopting IFRS has many benefits, these benefits are the key motivation for adopting IFRS However, it has many difficulities and challenges for companies for thier IFRS projects

1.3.2 The factors that affect transition and adopt IFRS

Combined published researches of the world and Vietnam, there are five main factors discovered in this thesis

 External factors:

Economic intergation is one of the five factors that affect transition and adopt IFRS, IFRS financial statements help companies easier to attract foreign investors and this is a condition to list their shares or bonds on the International stock market

Legal system is one of factors that affect IFRS transition in the developing countries due to there are differences between National accounting standards and IFRS It is needed to develop a corresponding accounting system and accounting documents to guide adopting IFRS, it also needs to prepare IFRS financial statements per required by the government or financial institutions

Cultural environment affects transition and adopt IFRS due

to the influence of habit It is needed to develop appropriate regulatory systems to address national cultural issues The countries with low risk culture may attract to adopt IFRS, national cultural also affects the eaning management when companies adopt IFRS

 Internal factors:

Support of company’s manager: researches showed that the important role of company’s manager to made decision on transition and adopt IFRS, increasing supported adopt IFRS by managers in the

EU

Education of accountant, the previous researches said that companies need to increase IFRS training for accountants and

managements, with IFRS knowledge helps IFRS transit; it’s lack IFRS professional accountants in developing countries

thesis

Limitation of previous reseaches

Regarding transition of financial statements to IFRS:

+ The published researches of the world and Vietnam are mainly researched on adopting IFRS

+ There is no research on developing a framework for transition of financial statements from VAS to IFRS

Regarding factors that affect transition and adopt IFRS: + The previous researches focused on external factors that affect adopting IFRS, researched in the developed countries, it’s differences economic, political, cultural and social with Vietnam

+ Some previous researches use qualititave reseach without measuring the impact of factors in IFRS transition

The aim of this thesis

+ Developing a framework for transition of financial statements from VAS to IFRS with general principles that are scientifically based, helping all types of Vietnamese companies can apply

+ The results of thesis on identify and measurable five factors (Economic integration, Legal system, Cultural environment, Support

of company’s Manager and Educational of accountant) that affect in transition of financial statement from VAS to IFRS, thesis recommend policies that impact and support by Vietnamese state

management departments, training institutions as well as management implications of Vietnamese companies, these will help more favorable in transition of financial statements from VAS to IFRS

1.4 Conclusion

CHAPTER 2 THEORTICAL BASIS

The thesis presented the development processes of the 26 VASs and the Common standard (VAS1) and the Presentation of financial statement standard (VAS 21)

The development processes of IAS and IFRS, IASB framework and the Presentation of financial statement standard (IAS1)

and IAS/ IFRS

The recently issued circulars regarding accounting closer the IFRS but there are differences between the VAS / Circular 200/2014/TT-BTC / Circular 210/2014/TT-BTC / Circular 49/2014/TT-NHNN and IAS/ IFRS

General objectives, rules and user IFRS1 are very important for companies that transit and apply IFRS

acoounting standards to IFRS and affecting of IFRS transition

Transition of financial statements from national accounting standard to IFRS in many countries The transition to IFRS has many benefits for companies, the impact of IFRS transition depend on the differences between each country’s accounting standard and IAS/ IFRS

Author used five foundation theories for this thesis: Usefulness theory; Theory of culture’s consequences; Theory of legitimacy; Theory of competition and Theory of planned behavior - TPB

National accounting standards to IFRS from the foundation theories

Table 2.1: Summary of factors that affect IFRS transition from the foundation theories

STT Factor Foundation theory

1 Economic integration Usefulness theory

Theory of legitimacy Theoryof competition

2 Legal system Theory of legitimacy

3 Cultural enviroment Theory of planned behavior

4 Support of company’s

manager

Usefulness theory Theoryof competition Theory

of planned behavior

5 Education of accountant Theory of planned behavior

Source: Summary by author