Professional Documents
Culture Documents
Article information:
Access to this document was granted through an Emerald subscription provided by 501757 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1321-7348.htm
ARA
21,1
Accounting in a developing
transitional economy: the case
of Vietnam
74
Duc-Tho Nguyen
Downloaded by DIPONEGORO UNIVERSITY At 20:38 11 September 2014 (PT)
1. Introduction
Vietnam is potentially of interest to the international reader for at least two reasons.
First, with a sizable population, a rapidly growing economy, and expanding
international trade and investment ties, it is emerging as an important market and
geopolitical player at the regional (Southeast Asia) level. Second, it is a developing
economy that has been on a transition path from central planning to the market
system, and its experiences may be of relevance to other developing and/or transitional
economies in their efforts to achieve faster and smoother development.
After two to three decades of economic liberalization and transition, there is by now
a substantial body of literature documenting and analyzing changes which have
occurred in the practice and profession of accounting in Central and Eastern
Europe (CEE) and in China. For just a small sample, see Bailey (1995), Richard (2003),
Sucher et al. (2005), Tyrrall et al. (2007), Huang and Ma (2001), Ezzamel et al. (2007),
Lawson et al. (2009), and the reference lists contained in these and associated
publications. Among the many insights which have emerged from these analyses
and reflections has been a recurrent theme, namely, that the ideal accounting system
in any given country must necessarily be framed within its economic, political, social,
and cultural context, and that, therefore, variations across national accounting systems
tend to persist.
A number of authors have also written about accounting in Vietnam. However, the
list of such writings which have appeared in English and are readily accessible in
the public domain is not a very long one. Notable contributions include studies by
Aleonard (1997), Narayan and Godden (2000), Yang and Nguyen (2003), Adams and
Do (2003); and Sarikas et al. (2009). Notwithstanding these, there remains a need for a
brief and accessible, yet comprehensive (in scope) and reasonably up-to-date, overview
of accounting development in this country.
Accordingly, this paper seeks to provide:
(1)
(2)
(3)
(4)
It is hoped that the paper will make a contribution by, among other things, providing
structured and consistent information about a country which is reported only
infrequently in the international literature.
The plan of the remainder of the paper is as follows. Section 2 provides some
brief background information which may facilitate understanding of the later sections,
especially where they touch upon local conditions and circumstances. Section 3
reviews the evolution of financial accounting in Vietnam during the past three decades.
Section 4 then focusses on the current financial accounting system, with issues
relating to international harmonization being analyzed in Section 5. MA is discussed
in Section 6, while Section 7 reviews developments in the accounting profession.
Finally, Section 8 presents a summary of some of the main points raised in the paper.
2. Background
Vietnam is located in Southeast Asia. Its nearest neighbors are China to the north, and
Laos and Cambodia to the west; to the east and the south lies the South China Sea. As
of 2010, its population was approximately 88 million (ranked 13th in the world). The
countrys land area is approximately 330,000 square kilometers about the same size
as that of Malaysia, but slightly smaller than Germanys.
Over the course of its history, which dates back to before the Christian era, Vietnam
has had to deal with numerous invasions by foreign armies. Its culture has been deeply
influenced by the Chinese culture for over 2,000 years despite the fact that it has
managed to remain independent for much of that time. During the latter part of the
nineteenth century, Vietnam fell under French domination, with the southern provinces
Developing
transitional
economy
75
ARA
21,1
76
becoming a French colony, while the northern and central provinces were administered
as French protectorates, and the Vietnamese king was allowed to maintain some
administrative authority in Central Vietnam only.
By the time Second World War broke out, the entire countrys administrative, legal,
and economic systems had been thoroughly modified by the French influence. After
the world war ended, the country had to endure another 30 years of warfare (including
the Vietnam War) and separation before being re-unified (under the Communist
system) in 1975. Despite recent economic liberalizations it is one of the few countries
where the Communist Party has continued to maintain political control.
Vietnam is a developing economy, with a gross domestic product (GDP) per-capita
level (in purchasing power parity terms and 2010 prices) of around US$3,100 in 2010
(CIA, 2011). It began to experiment with limited economic liberalizations from the
late-1970s; by the mid-1980s, these had deepened, thus placing the economy firmly on
a transitional path from the socialist planning model to the market system.
As part of this process, domestic private investors and foreign investors have been
allowed to own resources and participate in the economy. The number of state-owned
enterprises (SOEs) has been sharply reduced, although the authorities have made it
clear that the state would continue to play a major role in economic activities. Some
SOEs have been equitized; i.e. they have become joint-stock companies whose
shares may be owned by private investors and companies. Further, a large number of
private companies have been established, although most of them tend to be rather
small. Foreign investors and companies are allowed to own all or parts of enterprises,
subject to some restrictions.
Table I displays historical movements in the shares of GDP accounted for by the
three sectors of enterprise ownership. As can be seen clearly from the table, while
the foreign-invested sector more than doubled its share of total output (from 7.4 to
17.0 percent) between 1996 and 2006, much of this occurred at the expense of the
domestic private sector, whose share declined from 52.7 to 45.7 percent), while
the share of the state sector fell only slightly, from 39.9 to 38.3 percent.
The Vietnamese economy has made a number of noteworthy achievements during
the past two decades or so. Growth in real GDP was around 7.5 percent per year
during the period 1990-2008. As a result, real GDP per capita and living standards rose
substantially. The proportion of people living under the poverty line declined rapidly,
from around 37 percent in 1998 to around 15 percent in 2007 (CIA, 2011). Inflation
was brought down sharply, from triple-digit annual rates during the late-1980s to
a single-digit rate in 1993; it then remained quite well under control until 2007. The
value of international trade (in US dollars) grew by more than 20 percent per year
during the period 1992-2008. Foreign direct investment (FDI) inflows were
approximately US$11.5 billion and $10 billion in 2008 and 2009, respectively.
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Table I.
GDP shares by
ownership, 1996-2006
Public sector
39.9 40.5 40.0 38.7 38.5 38.4 38.4 39.1 39.2 38.4 37.3
Private domestic sector
52.7 50.4 50.0 49.0 48.2 47.8 47.8 46.5 45.6 45.6 45.7
Foreign-invested sector
7.4 9.1 10.0 12.3 13.3 13.8 13.8 14.4 15.2 16.0 17.0
GDP share (at current prices) 100 100 100 100 100 100 100 100 100 100 100
Source: IMF (2007)
Developing
transitional
economy
77
ARA
21,1
78
changes that the country had experimented with since the late-1970s. This economic
reform process placed the country on a transitional path toward a market-oriented
economy, and occurred against the background of major changes in the Chinese
economic system, which had been initiated around 1978 and which are still ongoing,
and the collapse of the socialist planning system in CEE in the late-1980s and
early-1990s.
Vietnams financial accounting system was modified to accommodate and address
newly allowed business activities, undertaken by newly allowed forms of business
enterprises. Not surprisingly, the changes occurring in the accounting system tended
to lag a little behind the reality of changes in the transitional economy. For example,
the ordinance (
) on accounting and statistics was not promulgated until
1988 (by the President of the State Council). This ordinance provided the basis for
regulations regarding the accounting information and statistics to be collected and
prepared for a variety of enterprises including not only SOEs and collectives (as
under the previous system) but also state-private joint ventures, and private
enterprises (Narayan and Godden, 2000).
Accordingly, new accounts and new procedures were introduced, while some
existing ones were revised. For example, under the old chart of accounts, issued in
1970, there had been only one single account for sales. To accommodate increasing
export sales, the updated chart of accounts, issued in 1989, introduced two new subaccounts: domestic sales and overseas sales. Conversely, while the old account
other bank deposits had comprised many sub-accounts to keep track of transactions
for various specific purposes such as bank deposits for major repairs and bank
deposits for grants received from the state under the new rules, these sub-accounts
were abandoned, and all transactions related to bank deposits were monitored through
the single, main account without references to their specific purposes. The system of
financial reports was also revised. As the old statement, profit/loss and balances
vis-a`-vis the state, had become inadequate for the new economic environment, it was
replaced by a new statement, business results report, which provided more detailed
information about revenues, expenditures, and profits.
In general, the 1989 chart of accounts and the accompanying regulations allowed
enterprises more (but still limited) flexibility in preparing accounting information for
their own management purposes. Nevertheless, the system continued to rely on
uniform charts of accounts and detailed, prescriptive rules to govern the way such
information was prepared. Thus it retained a key characteristic of the Soviet
accounting system (Nguyen, 2005). Further, the system continued to serve primarily
the states requirements, especially in the taxation area, rather than the information
needs of other stakeholders, such as management, investors, and creditors (Adams and
Do, 2003).
3.3 The period 1995-2012
As the economic reform process deepened, it became evident that the (incrementally)
revised accounting system, based on the 1988 ordinance of accounting and statistics,
was no longer adequate for the requirements of an economy in rapid transition, with
many new and complex business transactions, including transactions with foreign
investors and trading partners. Instead, it was considered (as was the case in Russia,
CEE, and China) that a suitable replacement system would have to be one which broke
more fundamentally with the old, fund-based accounting system. There was also
a desire to pursue greater economic integration at both the regional and global levels,
and it was thought that adopting western accounting principles and practices would
assist in achieving this goal.
The Vietnamese government established an Accounting Reform Committee in 1994.
Around this time, foreign countries and multilateral organizations also assisted the
government in developing and considering various options in this area[1]. Following
these deliberations and consultations, in 1995 the Ministry of Finance (MOF) issued
a new set of regulations on enterprise accounting, the 1995 Enterprise Accounting
System (EAS)[2], which was to apply in every type of enterprises and in every area of
business, except banks and financial organizations.
The promulgation of this set of regulations was arguably the most significant
landmark in the evolution of financial accounting in Vietnam during the past 25 or
so years. The basic philosophy underlying the new accounting system that
emerged in subsequent years was no longer in line with the old, Soviet-style socialist
planning instead, it was far more consistent with the market system and
western business practices and norms. Further (and rather smaller) changes in the
ensuing years have helped to clarify and consolidate this significant break with
the past, and to facilitate the gradual convergence of the Vietnamese accounting
system toward international practices. In 2006, MOF issued a new EAS, which
can be seen largely as an updated version of, rather than a break with, the 1995
EAS document.
Developing
transitional
economy
79
Accounting law
(2003)
Other laws
Vietnamese accounting
standards (2001-2005)
Enterprise
accounting system
(2006)
SME Accounting
system (2006)
Accounting systems
for special sectors
Figure 1.
Structure of Vietnamese
laws and regulations on
accounting
ARA
21,1
80
Developing
transitional
economy
81
VASs are seen as providing general guidelines which are harmonized with
international standards.
Yet, at the same time, uniform charts of accounts and detailed rules and
instructions are still maintained[4]. As new types of transactions (which had
not existed under central planning) began to emerge, new accounts were
simply added to the chart to address them e.g. provision for declines in the
value of inventories, provision for bad debts, shares in joint ventures, and
value-added tax.
ARA
21,1
82
The survey covers five groups of stakeholders, namely, enterprise managers, bank
officers, independent auditors, state (including taxation) officers, and university
lecturers. A total of 141 responses were obtained from two of the countrys major cities,
including Ho Chi Minh City, the financial and commercial heart of the country. In
essence, the respondents were asked to compare the new, mixed system (in operation
since 1995) with the previous, fund-based socialist system, in terms of the information
they provided to assist decision making by enterprise management, investors,
and state officials. On a five-point Likert scale, with 1 indicating total disagreement
and 5 indicating total agreement with a statement to the effect that the new system
has produced more useful information, the mean scores obtained for a range of
statements, dealing with various aspects of the comparison, were all around 4. These
results suggest that the major break, undertaken in 1995, with the old system has been
moderately well received.
Nguyen Cong Phuongs survey was conducted before the 2006 EAS was issued.
Further, the surveys questions focussed exclusively on the benefits and advantages of
adopting the new system, with no explicit mention of the associated costs and
disadvantages. To update and supplement the above findings, therefore, the current
authors conducted, in 2010, a series of interviews with heads and vice heads of
accounting departments of 20 medium-to-large enterprises in Ho Chi Minh and
Da Nang cities, two of the most important economic centers in the country.
Of these enterprises, six were SOEs, 11 were joint-stock enterprises (with some
domestic private equity), two were joint ventures (with some foreign equity), and one
was 100 percent foreign owned[5]. In total, 15 of the 20 interviewees had practiced
accounting since before 1995 and felt able to offer opinions regarding comparisons
between the new and the pre-1995 financial accounting systems.
During the course of the interviews, each interviewee was asked to respond to a set
of fixed questions (in the form of a short questionnaire) and also to comment
and expand on these quantitative responses. Table II presents a summary of their
numerical ratings with regard to the advantages, disadvantages, and net benefit of the
current system relative to the old.
How strongly would you agree or disagree with the following statements?
(1 strongly disagree, 2 disagree, 3 neither, 4 agree, 5 strongly agree)
Table II.
Responses of
15 interviewees
regarding advantages
and disadvantages of
the current vs the
pre-1995 financial
accounting system
Mean
SD
1. Accounting information reflects the enterprises true situation better than before 3.86
2. Accounting information is easier to understand than before
3.93
3. Accounting system better meets the needs of management
4.00
4. Accounting system better meets the needs of investors
4.14
5. Accounting system better meets the requirements of international relations
4.29
How strongly would you agree or disagree with the following statements?
(1 strongly disagree, 2 disagree, 3 neither, 4 agree, 5 strongly agree)
Mean
1. Accounting information is less consistent across different enterprises and years
than before
2.79
2. The work of accountants is more complex and less clear-cut than before
2.07
3. Accountants have difficulties with the taxation office more frequently than before 2.79
Mean
How would you rate the net benefit (benefitscosts) of the shift from the pre-1995 to
the current financial accounting system? (1 strongly negative 2 negative,
3 neither, 4 positive, 5 strongly positive)
4.20
0.64
0.59
0.53
0.52
0.45
SD
0.67
0.70
0.86
SD
0.41
The table consists of three sections. In the upper section, we report interviewees
reactions to five statements about possible advantages of the new system. Not
surprisingly, most interviewees agree or strongly agree with the statement the new
system better meets the needs of international relations: the fifth data row shows
that the average rating was 4.29 on a scale from 1 to 5, where 1 indicates strongly
disagree and 5 strongly agree. As shown in data rows 1-4, the interviewees also had
a generally favorable view regarding other aspects of the new system: it tended to be
seen as producing information that is easier to understand, better reflects an
enterprises situation, and better meets the requirements of investors as well as the
enterprises own management.
The second section of the table summarizes the interviewees reactions to three
statements regarding possible disadvantages of the current system. Interestingly, most
did not see the new system as making accountants tasks more complex or ambiguous
indeed, the average rating on statement no. 2 in this section was 2.07, indicating
rather the reverse. Similarly, most interviewees did not view the new system as causing
more difficulties with the taxation department, or reducing consistency across
enterprises or over time.
The tables third section consists of a single question, asking interviewees to rate
the net benefit of shifting from the old to the current system. In line with the responses
in the first two sections, most interviewees saw the shift as generating net benefits,
with the average rating being 4.20. This finding tends to confirm that the new financial
accounting system has generally met with approval among Vietnamese accounting
professionals. Other findings from these interviews are reported in Section 5.
Before ending this brief description of the current system, it should be noted that,
since 2006, accounting regulations and tax regulations have provided for different
treatments of the concept of profit. Accounting profit is now to be calculated in
accordance with VAS 17, which is harmonized with IAS 12, while taxable profit/income
is to be calculated according to current tax rules and regulations. It is no longer
the case that the accounting profit reported by an enterprise must also serve as a basis
for calculating its taxes.
5. Harmonization with international standards
As part of the process to integrate the country more closely into the regional and global
economies, and following suggestions made by a number of donor countries and
multilateral organizations, the Vietnamese government undertook to take steps toward
harmonizing the national accounting system with international systems. Thus
Vietnam has been one of the 100-plus countries which have made efforts to implement
IASs (Deegan, 2009). During the implementation process, however, some countries may
prefer to make adjustments to the standards in order to suit their own national
conditions (Adams and Do, 2003). In Vietnams case, instead of adopting all of the
original IASs, as recommended by some foreign advisors, the MOF has opted for a
more selective and gradual approach. There has been considerable support for this
approach among domestic commentators (see, e.g., Phan, 2009; Nguyen, 2011).
In 1999 the MOF established the Vietnamese Accounting Standards Committee
(VASC) to oversee the task of researching and drafting national accounting
standards. This committee consisted of 13 members, of whom only one formally
represented accounting professional organizations, and only two were scholars from
the university/research sector the remaining ten members were all senior officials
in key government agencies such as MOF, General Department of Taxation,
Developing
transitional
economy
83
ARA
21,1
84
State Treasury, and State Securities Commission. As senior members of the accounting
profession, most committee members had been trained in the old, Soviet style.
From 2001 and 2005, MOF issued five ministerial decisions to promulgate
26 VASs (at the third level of the regulatory hierarchy, as shown in Figure 1). Table III
is a list of these standards, together with eight draft standards which are still under
consideration but are expected to be issued in the near future[6]. Of all these, VAS 1 is
the most general it establishes the overall theoretical framework and specifies
how specific situations that are not covered by any of the subsequent standards
are to be addressed.
Framework
Inventories
Tangible fixed assets
2002
2001
2001
IAS 2
IAS 16
VAS 04
VAS 05
VAS 06
VAS 07
2001
2003
2002
2003
IAS
IAS
IAS
IAS
38
40
17
28
Inventories
Property, plant and
equipment
Intangible fixed assets
Investment property
Leases
Investments in associates
2003
IAS 31
2002
IAS 21
Insurance contracts
Presentation of financial
statements
Disclosures in the financial
statements of banks and
similar financial institutions
2005
2003
2003
VAS 08
VAS 10
VAS 11
VAS 14
VAS 15
VAS 16
VAS 17
VAS 18
VAS 19
VAS 21
VAS 22
VAS 23
VAS 24
VAS 25
Table III.
VASs and equivalent
IASs/IFRSs
IAS/IFRSa
VAS 26
VAS 27
VAS 28
2005
2001
2002
2002
2003
2005
2005
2002
2003
2003
2003
2003
(continued)
IAS/IFRSa
VAS 29
IAS 8
VAS 30
IAS 33
IFRS 2
IFRS 5
IFRS 6
IFRS 7
IAS 39
IAS 20
IAS 19
IAS 36
IAS 41
b
b
Notes: aCorrespondence between VASs and IASs/IFRSs is generally not exact (see main text for
details); bunder consideration
Developing
transitional
economy
85
Table III.
ARA
21,1
86
Developing
transitional
economy
87
ARA
21,1
88
6. MA
Under the central planning system, MA as it is generally understood in the west did
not exist in Vietnam. Nevertheless, staff in the statistics, accounting and planning
areas of each enterprise generally carried out a number of activities which were rather
similar in nature to some western MA practices. In particular, they would typically be
involved in all three main phases of the planning cycle. During the planning phase,
their inputs would be required in terms of feedback to higher planning authorities
regarding tentative targets being set and related parameters. During the
implementation phase, they would provide statistics and information which are
essential to the monitoring and control process, and during the post-implementation
phase, they would routinely participate in the analysis of factors influencing
performance outcomes during the just-completed cycle. In essence, the tasks and
procedures involved had much in common with western MA techniques in the
functional areas of budgeting, costing, and planning.
Vietnam began to experiment with limited departures from strict central
planning during the late-1970s and early-1980s (Fforde and De Vylder, 1996). In
particular, a decree was issued in 1981, allowing the so-called three-plan system to
operate. Under this system, the annual plan of each enterprise would have three
elements. The first element was Plan A, which involved mandatory output targets, to
be produced with inputs provided by the state; any profits would be transferred
to the state budget. Thus Plan A represented a continuation of the previous
central planning practices. By contrast, Plan B and Plan C allowed the management
of each enterprise greater degrees of flexibility in making decisions, in terms
of output levels, product types, input sources, sale outlets, and prices. To support
such decision making, access to relevant statistics and information became
critical for management, thus heightening the role of what later came to be known
as MA.
After the launch of Doi Moi in 1986, the economic reform process accelerated and
broadened. The authorities began to allow new forms of enterprise ownership. In
privately owned and foreign-owned enterprises, decision making would of course be
undertaken by the enterprises management (as opposed to external planners). But
even in the case of SOEs, decision making and management functions were also
decentralized and transferred to the local management (Pham, 2002). All these
developments increased the need for some form of MA at the enterprise level.
Management at wholly foreign-owned and joint-venture (foreign-domestic) enterprises
began to introduce and apply western MA techniques and practices (MAPs). These
quickly spread to other (domestic) enterprises, some of which had spontaneously
responded to similar internal needs by adopting western MAPs.
By the mid-1990s, MA courses (in a form recognizable by western academics) had
begun to be offered at some universities. The Accounting Law, promulgated in 2003,
formally recognizes MA as a part of the profession and discipline of accounting. An
MOF circular issued in 2006 contains detailed, specific provisions to guide the
application of MA in enterprises. Since 2007, MA has been one of the subjects included
in annual examinations which are taken by candidates wishing to qualify for the
Auditor Certificate (
) or the Accounting Practitioner Certificate
).
(
What western MAPs have been adopted in Vietnam? How popular (i.e. frequently
adopted) have they been? Have enterprises that adopted western MAPs found them
to be useful? To obtain answers to these and related questions, Doan et al. (2011)
Developing
transitional
economy
89
ARA
21,1
90
auditing and public accounting firms. Of these, over 1,600 have obtained certification
by the MOF as auditor or accounting practitioner, and approximately 300 are overseascertified auditors (VACPA, 2011).
VAA and VACPA have gained greater prominence and more responsibilities in
recent years, as the supervision of accounting and auditing activities has shifted
gradually from the MOF to these professional organizations. In particular, they now
manage the process of annual registration of public accountants and public accounting
firms, and auditors and auditing firms. This gives them the authority and the means to
monitor and maintain quality standards. In addition, the professional organizations
have been increasingly involved in the provision of short training courses to update the
knowledge and enhance the skills of professionals who are already certified, and to
help certification candidates prepare for their examinations.
As yet, however, these examinations are still administered by the MOF. Similarly,
to date VAA and VACPA have tended not to provide any significant inputs to the
design of accounting degree programs and individual courses at the various
universities and colleges. Their formal role in the deliberations and preparations of
the national accounting standards has also been rather limited. Interestingly, members
of the VAAs Executive Committee have tended to be senior bureaucrats with
responsibilities in the finance and taxation areas rather than practitioners in the
private sector or academics. According to Narayan and Godden (2000), the MOF
provided funding for VAA, at least in its early years. In order for VAA and VACPA to
function well and to represent their members effectively in any dialogue with the
regulators in the future, greater autonomy would appear to be a desirable goal.
8. Summary and future research directions
A recurrent theme in the literature on accounting in transitional and developing
economies is that changes in accounting regulations, methods and practices frequently
arose as a response to changes in the underlying economic and political environment.
As we have seen in this paper, that proposition appears to have been borne out in the
case of Vietnam. Over the past three decades, as the country first experimented with,
and then embraced, economic liberalization and closer links with western economies,
its accounting system has also changed accordingly.
During the 1980s and early-1990s, while economic reforms were still tentative and
enterprises were still working out how best to operate under the new system, changes
in Vietnamese accounting were incremental: although new accounts and financial
statements were introduced to accommodate new transactions and classes of
enterprises, the system remained largely unchanged from its previous, Soviet style.
It was only after the mid-1990s, when the economic reform process had been firmly
in place for a decade, that fundamental changes to the system began to occur, including
the adoption of western accounting principles and standards.
At present, the countrys accounting system contains elements taken from both the
IAS/IFRS approach and the pre-1995 Vietnamese system, which was itself the result of
combining the Soviet style and the traditional French system. Despite the considerable
efforts already made toward harmonization, there remain significant differences
between VASs and international ones, as embodied in the IFRSs. For example, the
country has not chosen to adopt the practice of reporting fair value, and this is unlikely
to change in the near term. In addition, it has continued to rely on charts of accounts
and detailed rules, treating them as instruments and means to help accountants apply
the national accounting standards appropriately. Further convergence toward
Developing
transitional
economy
91
ARA
21,1
92
international practice in these regards may be slow, especially in the SME sector, and
may result in a segmented financial accounting system, where enterprises in different
tiers of the system may be allowed, for example, different degrees of flexibility.
These observations are, in the main, consistent with the findings and reflections
of Bailey (1995), Nobes (1998), Huang and Ma (2001), Richard (2003), Xiao et al. (2004),
Sucher et al. (2005), Ezzamel et al. (2007), Mashayekhi and Mashayekh (2008), and
Lawson et al. (2009) for other countries around the world. It is hoped that the present
paper will make a contribution to this literature by providing complementary
information regarding an infrequently reported country, and by considering both the
pros and cons of harmonizing with IASs/IFRSs in a developing-country context.
In the future, it will be of interest to monitor the rate at which VASs converge to
IASs/IFRSs, and to assess the extent to which true convergence occurs i.e. in
substance and spirit, as well as in form. Standard theories (such as the theory of
diffusion of innovations) and international experiences suggest a number of factors
which may be key determinants of this convergence process, and it may be instructive
to test these prior expectations against the actual outcomes. In particular, FDI and
overseas development assistance are likely to continue playing a significant role as
drivers of capital accumulation, structural change, and economic growth. As such,
their influence on the type of financial information demanded and produced, and on
accounting practice and systems, may be profound.
For a variety of reasons, Vietnam is undergoing substantial changes in corporate
governance (see, e.g., Le and Walker, 2008). In turn, these will affect both the quantity
and quality of accounting information required by management and by investors.
Similarly, the country has been in the process of reforming its public administration
system and practices, and this process will probably require a major transformation in
public sector accounting. These, and other, ongoing significant changes invite careful
observation and analysis by researchers.
Notes
1. An example of these aid projects was the European Union Technical Assistance Program
Vietnam (EUROTAP-VIET) Accounting and Auditing Project, which provided support in
this area during the period 1995-1998, to the value of 8.2 million ECU.
2. The original wordings in Vietnamese were
which may be
translated literally as enterprise accounting regime. The translation in the text, which
replaces regime with system, is in keeping with common usage of the terms in similar
contexts by other authors in the literatures on Vietnamese and Chinese accounting.
3. An example of these is a 2004 decree which (among other things) requires all state-owned
auditing firms to transform themselves into privately owned companies by 2007; see
Section 7.
4. Typically the chart of accounts comprises nine classes. Of these, accounts from classes 1 to 4
provide information to be used in drawing up the balance sheet. Accounts from classes 5 to 9
provide information presented in the income statement.
5. Within each of these four ownership categories, the subject enterprises were selected at
random from a total list of 199 potential subject enterprises (this list had been constructed
via the snowball approach where potential subjects were asked to recommend other
potential participants, and so on).
6. It appears that since 2006, further work on VAS development has been delayed, due partly to
resource constraints and uncertainty over the precise roles of MOF and of professional
7. It is interesting to note that, in a comparison of financial reports produced under IASs and
under Chinese accounting standards which applied during the 1990s, Eccher and Healy
(2000) found that information produced using the IAS system was no more useful than that
prepared using Chinese standards, in terms of either the explanatory power of reported
accruals for cash flows, or the association between reported earnings and subsequent
stock returns.
References
Adams, H.A. and Do, L.T. (2003), Vietnamese Accounting Standards Intent and Purpose
Contrasted to International Accounting Standards, ACW, Hanoi.
Aleonard, L. (1997), Systems of accounting in Vietnam, in Baydoun, N., Nishimura, A. and
Willett, R. (Eds), Accounting in the Asia-Pacific Region, Wiley and Sons, Singapore, pp. 378-399.
Bailey, D. (1995), Accounting in transition in the transitional economy, European Accounting
Review, Vol. 4 No. 4, pp. 595-623.
Briston, R.J. (1978), The evolution of accounting in developing countries, International Journal
of Accounting Education and Research, Vol. 14 No. 1, pp. 105-120.
CIA (2011), The World Factbook, CIA, available at: www.cia.gov/library/publications/the-worldfactbook/geos/vm.html (accessed January 29, 2011).
Deegan, C. (2009), Financial Accounting Theory, 3rd ed., McGraw-Hill Australia Pty Ltd, Sydney,
NSW.
Deloitte Touche Tohmatsu (2003), Vietnamese Accounting Standards vs Current Accounting
Regulations, Deloitte Touche Tohmatsu.
Doan, N.P.A., Nguyen, D.T. and Mia, L. (2011), Western management accounting practices
in Vietnamese enterprises: adoption and perceived benefits, Pacific Accounting Review,
Vol. 23 No. 2, pp. 162-164.
Eccher, E.A. and Healy, P.M. (2000), The role of international accounting standards in
transitional economies: a study of the Peoples Republic of China, Electronic Paper
Collection, Social Science Research Network.
eStandardsForum (2010), Vietnam: international financial reporting standards, available
at: www.estandardsforum.org/vietnam/standards/international-financial-reportingstandards (accessed June 8, 2011).
Ezzamel, M., Xiao, J. and Pan, A. (2007), Political ideology and accounting regulation in China,
Accounting, Organizations and Society, Vol. 32 Nos 7-8, pp. 669-700.
Fforde, A. and De Vylder, S. (1996), From Plan to Market: The Economic Transition in Vietnam,
Westview Press, Boulder, CO.
Ha, T.N.H. (2008), Vietnamese accounting and auditing system has gradually harmonized
with international norms and has been accepted by other countries (
),
Vietnamese Auditing Journal, Vol. 11, pp. 47-49.
Hove, M.R. (1986), Accounting practices in developing countries: colonialisms legacy of
inappropriate technologies, International Journal of Accounting, Vol. 22 No. 1,
pp. 81-100.
Huang, A. and Ma, R. (2001), Accounting in China in Transition: 1949-2000, World Scientific,
Singapore.
IMF (2007), Vietnam: selected issues, IMF Country Report No. 07/385, IMF, Washington, DC.
Developing
transitional
economy
93
ARA
21,1
94
Lawson, R., Yang, J. and Yuan, H. (2009), Accounting in China: a long journey to the rebirth of a
profession, Cost Management, Vol. 23 No. 2, pp. 5-15.
Le, M.T. and Walker, G. (2008), Corporate governance of listed companies in Vietnam, Bond
Law Review, Vol. 20 No. 2, pp. 1-80.
Leung, S.E. (2010), Vietnam: an economic survey, Asian-Pacific Economic Literature, Vol. 24
No. 2, pp. 83-103.
Mai, T.H.M. (2008), Vietnamese accounting standard system: from theory to practice
(
), Vietnamese
Accounting Journal, Vol. 4, pp. 12-14.
Mashayekhi, B. and Mashayekh, S. (2008), Development of accounting in Iran, International
Journal of Accounting, Vol. 43 No. 1, pp. 66-86.
Narayan, F.B. and Godden, T. (2000), Financial Management and Governance Issues in Vietnam,
Asian Development Bank, Manila.
Nguyen, C.P. (2005), A study on Vietnamese accounting system (
), research paper, Danang University, Danang.
Nguyen, H.C. (2011), The possibilities of adopting IAS/IFRS in Vietnam: an analysis, Corporate
Ownership & Control, Vol. 9 No. 1, pp. 161-170.
Nguyen, D.T. and Huyen, P. (1997), Vietnam, in Ma, R. (Ed.), Financial Reporting in the Pacific
Asia Region, World Scientific Publishing Co. Inc, Singapore, pp. 413-433.
Nguyen, P.M. (2008), Adoption of accounting standards in Vietnam from the viewpoint
of international professional association
, Vietnamese Auditing Journal, Vol. 4, pp. 44-46.
Nobes, C.W. (1998), Accounting in Developing Economies: Questions about Users, Uses and
Appropriate Reporting Practices, ACCA, London.
Pham, H.H. (2010), De jure convergence between Vietnamese and International Accounting
Standards (
), Vietnamese Journal of Science and Technology, Vol. 40 No. 40,
pp. 155-164.
Pham, Q. (2002), Toward the construction of a system of management accounting reports and
its application in Vietnamese enterprises (
), unpublished
PhD dissertation, The National Economics University, Hanoi.
Phan, T.P.L. (2009), Vietnam has not fully adopted IASs/IFRSs, why? (
), available at: www.vacpa.org.vn/
index.php?omodules&nforum&fforum_detail&idforum275&page5 (accessed
January 29, 2011).
Phung, T.D. (2006), Possible harmonization between Vietnamese accounting standards and
ASEAN and international accounting standards (
), Vietnamese
Accounting Journal, Vol. 1, pp. 24-25.
PriceWaterhouseCoopers (2008), Similarities and differences: a comparison of IFRS and Thai GAAP,
Vietnamese GAAP, Cambodian GAAP and Laos GAAP, PriceWaterhouseCoopers, October.
Richard, J. (1995), The evolution of the Romanian and Russian accounting charts after the collapse
of the communist system, European Accounting Review, Vol. 4 No. 2, pp. 305-322.
Richard, J. (2003), Accounting in Eastern Europe: from communism to capitalism, in Walton, P.,
Haller, A. and Raffournier, B. (Eds), International Accounting, 2nd ed., Thomson, London,
pp. 332-347.
Rogers, E.M. (2003), Diffusion of Innovations, 5th ed., London Free Press, New York, NY.
Sarikas, R.H.S., Hien, V.D. and Djatej, A.M. (2009), International influence on accountancy in
Vietnam, in McGee, R.W. (Ed.), Corporate Governance in Developing Economies: Country
Studies of Africa, Asia and Latin America, Springer, New York, NY, pp. 181-192.
Schroll, R. (1995), The new accounting system in the Czech Republic, European Accounting
Review, Vol. 4 No. 4, pp. 827-832.
Solodchenko, I. and Sucher, P. (2005), Accounting in Ukraine since independence: real politik,
problems and prospects, European Accounting Review, Vol. 14 No. 3, pp. 603-633.
Sucher, P., Kosmala, K., Bychkova, S. and Jindrichovska, I. (2005), Introduction: transitional
economies and changing notions of accounting and accountability, European Accounting
Review, Vol. 14 No. 3, pp. 571-577.
Tran, D.K.N. and Ramachandran, N. (2006), Capital structure in small and medium-sized
enterprises: the case of Vietnam, ASEAN Economic Bulletin, Vol. 23 No. 2, pp. 192-211.
Tyrrall, D., Woodward, D. and Rakhimbekova, A. (2007), The relevance of International
Financial Reporting Standards to a developing country: evidence from Kazakhstan,
International Journal of Accounting, Vol. 42 No. 1, pp. 82-110.
UNCTAD (2003), Accounting needs of developing countries, in Walton, P., Haller, A. and
Raffournier, B. (Eds), International Accounting, 2nd ed., Thomson Learning EMEA,
London, pp. 336-384.
VACPA (2011), List of auditors (in Vietnamese: Danh sach Kiem Toan Vien), available
at: www.vacpa.org.vn/index.php?omodules&ninspector&finspector&idtype131
(accessed April 15, 2011).
Vellam, I. (2004), Implementation of International Accounting Standards in Poland: can true
convergence be achieved in practice?, Accounting in Europe, Vol. 1 No. 1, pp. 143-167.
Xiao, J.Z., Weetman, P. and Sun, M. (2004), Political influence and coexistence of a uniform
accounting system and accounting standards: recent developments in China, Abacus,
Vol. 40 No. 2, pp. 193-218.
Yang, D.C. and Nguyen, A.T. (2003), The enterprise accounting system of Vietnam and United
States generally accepted accounting principles: a comparison, Advances in International
Accounting, Vol. 16, pp. 175-192.
Further reading
Deloitte Touche Tohmatsu (2006), IAS plus-country and regional updates Vietnam, available
at: http://iasplus.com/country/vietnam.htm (accessed May 19, 2010).
About the authors
Doan Ngoc Phi Anh is a Lecturer in the Department of Accounting, Danang University of
Economics, Danang, Vietnam. He has completed a PhD in the Department of Accounting,
Finance and Economics at Griffith University, Brisbane, Australia. His main research interests
include management accounting in developing and transitional countries, financial analysis and
internal control systems. Doan Ngoc Phi Anh is the corresponding author and can be contacted
at: phianhdn@yahoo.com, Ngoc. Doan@griffith.edu.au
Duc-Tho Nguyen is a Professor in the Department of Accounting, Finance and Economics,
Griffith Business School, Griffith University. He gained his PhD from the Australian National
University in 1981, and since 1989 has been with Griffith University, where he has held senior
positions, including Dean of Commerce and Head of School. He has consulted for the World
Bank, UNDP, ILO, AusAID and other organizations.
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints
Developing
transitional
economy
95
1. N. K. Rozhkova. 2015. Synthetic and Analytical Accounting of Inventory as a Tool to Improve Inventory
Accounting System in Vietnam. Journal of Economics, Business and Management 3:5, 489-492. [CrossRef]