The multinational organization in Vietnam whose shares are listed

 

The International
Accounting Standards Board has played an important role in developing a global
single set of high-quality accounting standards. Since Vietnam has already
adopted the IAS/IFRS as a basis for their own accounting system, it is possible
that there could be full convergence in the future. Although Vietnam’s efforts
into developing more standards that comply the IFRS has been slow, adopting
IAS/IFRS promises to ensure better analysis of financial statements and improving
the accounting system’s quality according
to Mueller, Gernon and Meek (1997).

Accounting harmonisation
is essential in achieving transparency and comparability in the way financial
statements are prepared. This is important for small businesses and most
importantly, the global convergence of multinational organization in Vietnam whose
shares are listed on numerous stock exchanges. This helps assist the reduction
of costs when consolidating financial statements, as well as “facilitating
the investment decision-making for investors” (Cuong, 2011).

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In my
opinion, Vietnam is able to achieve convergence with the IFRS, however national
cultural, economical, legal and political factors could play a crucial role in failing
to achieve this. Phan, Mascitelli & Barut (2013) suggest that IFRS are only required in
Vietnam for state-owned banks and permitted for commercial banks. In
addition, Vietnam itself has a developing economy it may be difficult for them
to apply these standards as well as developed countries such as the U.S. Due to
the replacement of “Accounting and Statistics” to “Accounting Law”, Nguyen and
Gong (2012) suggests that the Accounting Law has marked a critical point
in accounting change because it has recognised the importance of accounting in
the Vietnamese transition economy by improving its legal status.

Vietnam
could view compliance with international accounting standards as a barrier in
achieving full convergence for the reason that, convergence could be viewed as
submission to another country’s laws or will.  

Differences
in cultural values such as; Language, education, economy and religion in
society could make it difficult to implement a single set of standards. For
instance, language in Vietnam could be construed through translation, therefore
making it increasingly difficult for the standard to preserve its original
meaning. “If financial accounting is going to be
useful, a company’s reports need to be credible, easy to understand, and
comparable to those of other companies” (Kuchta and Sukpen, 2011).

Additionally,
a dilemma Vietnam and other growing economies may encounter when updating
accounting standards, is whether it would be beneficial for them to adopt IFRS
Standards, or whether they should modify IFRS Standards to meet local
standards.

Although the
possibility of convergence could be hindered from the reasons stated above,
Vietnam with its developing economy and growing population accounting convergence
could be achieved. Benito, Brusca and Montesinos, (2007)
suggest that the harmonization of public accounting could
contribute to guarantee the proper functioning of the common market.