Challenges in adopting International Financial Reporting Standards for banking sector in Vietnam

Abstract

International Financial Reporting Standards (IFRS) has increasingly been required and adopted globally. Furthermore, the rapid growth of Vietnamese financial market and banking sector has led to the need for improving the current accounting system to harmonize with the globalization trend of the world economy. This thesis aims at comparing IFRS and VAS in respect of presentation of financial statements and financial instruments, which is one of the major operations of credit institutions. Since Vietnamese market and accounting systems are still lacking in many aspects, advantages, disadvantages, and challenges of the adoption are identified based on the observation and interviews. The study applied inductive, qualitative research method to conduct the research. Primary data was collected from the author’s observation and interviews. Additionally, secondary data was acquired from accounting journals, books, government publications and newspapers. The comparison shows key differences between IFRS and VAS regarding presentation of financial statements and financial instruments. Later, through the conducted interviews, various advantages of IFRS adoption were revealed. Besides that, disadvantages and challenges of the adoption were addressed, in which transitional cost is one of the main disadvantages and challenges.