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Vietnam Update for August 2006 Update for April 2003 Update for April 2001 Update for January 2001 Update for October 2000 Hanoi: Ho Chi Minh City: Financial Reporting Framework in Vietnam - August 2006 Update All domestic companies, listed and unlisted, are required to use Vietnamese Accounting Standards (VASs), which have been developed by the Ministry of Finance. Generally, the VASs were based on IASs that were issued up through 2003, though some modifications were made to reflect local accounting regulations and environment. None of the IASB's amendments to IASs nor new IFRSs have been adopted. The Ministry of Finance has temporarily suspended the development of Vietnamese Accounting Standards (VAS) due to resource constraints. The Ministry of Finance is considering whether to grant rights to the Vietnam Association of Certified Public Accountants (VACPA) to formulate and update Vietnamese Accounting Standards. If this is formalised under the law, VACPA would then serve as the accounting standard setting body in Vietnam, rather than the MOF. The table below lists VASs in force at August 2006. Vietnamese Accounting Standards - August 2006 VAS 01 Framework VAS 02 Inventories VAS 03 Tangible fixed assets VAS 04 Intangible fixed assets VAS 05 Investment property VAS 06 Leases VAS 07 Accounting for investments in associates VAS 08 Financial reporting of interest in joint ventures VAS 10 The effects of changes in foreign exchange rates VAS 11 Business Combinations VAS 14 Revenues and other incomes VAS 15 Construction contracts VAS 16 Borrowing costs VAS 17 Income taxes VAS 18 Provisions, Contingent Liabilities and Contingent Assets VAS 19 Insurance Contracts VAS 21 Presentation of financial statements VAS 22 Disclosures in the financial statements of banks and similar financial institutions VAS 23 Events after the balance sheet date VAS 24 Cash flow statements VAS 25 Consolidated financial statements and accounting for investments in subsidiaries VAS 26 Related party disclosures VAS 27 Interim financial reporting VAS 28 Segment reporting VAS 29 Changes in accounting policies, accounting estimates and errors VAS 30 Earnings per Share April 2003 Update New Vietnam accounting standards based on IAS Vietnam has begun to adopt of a body of Vietnamese Accounting Standards (VAS) that are based on, though not identical to, the related International Accounting Standards IAS). The following standards, which have been approved by the Minister of Finance and are required to be applied to enterprises of all economic sectors throughout Vietnam, replace the respective accounting regulations. Specific accounting regulations will be amended and supplemented in accordance with these standards. Standards Nos. 02, 03, 04, and 14 are effective for 2002 reporting; the remaining standards are effective for 2003 reporting: VAS 01 Framework VAS 02 Inventories VAS 03 Tangible Fixed Assets VAS 04 Intangible Fixed Assets VAS 06 Leases VAS 10 The Effects of Changes in Foreign Exchange Rates VAS 14 Revenue and Other Incomes VAS 15 Construction Contracts VAS 16 Borrowing Costs VAS 24 Cash Flow Statement Click here to download a Comprehensive Summary of the New VAS (PDF 187k) prepared by VACO-Deloitte Touche Tohmatsu. The Ministry of Finance is working to develop additional VAS. April 2001 Update In an effort to further develop the auditing activities in Vietnam, the Ministry of Finance (MOF) has adopted the following new auditing standards, with effect from 15th January 2001: Standard 250 Consideration of laws and regulations in an audit of financial statements Standard 310 Knowledge of the business Standard 500 Audit evidence Standard 510 Initial engagement - opening balances Standard 520 Analytical procedures Standard 580 Management representations Vietnam now has ten standards on auditing. On the accounting side, MOF is developing a new accounting law which, if enacted, is planned to go into effect as planned early next year. MOF has considered the country's commitment to liberalising financial services such as insurance, auditing, and accounting in drafting the new law. The new law would replace the 1998 ordinance on accounting and statistics, which many in the business sector believe is not suitable to economic activities of a market economy. January 2001 Update The Ministry of Finance (MOF) has adopted program for creating a system of accounting and auditing standards for Vietnam. The accounting standards will be based on International Accounting Standards (IASs) approved by the International Accounting Standards Committee, and the auditing standards will be based International Standards on Auditing (ISAs) approved by the International Auditing Practices Committee of the International Federation of Accountants (IFAC). The standards will be applicable to all enterprises and auditing firms operating in Vietnam. The Vietnamese Standards on Accounting and Auditing Committee of the MOF has completed reviewing the first four drafted accounting standards, covering inventory, tangible assets, intangible assets, and revenue. Comments obtained from the members of the Committee are currently being considered. It is envisaged that these accounting standards will be finalised in the second quarter of 2001. October 2000 Update Decrees issued by the Ministry of Finance (MOF) provide some guidance on accounting standards that companies doing business in Vietnam must follow. Domestic companies must follow the Vietnamese Accounting System (VAS). Foreign companies, with very few exceptions, are also required to follow this accounting system. In line with the MOF's intention to implement a uniform accounting system, MOF issued a letter confirming its position to require that all foreign companies that have not applied VAS to start applying VAS from 1 January 2001. Recently, a dialogue between MOF officials and foreign companies' representative is scheduled to take place in early October to discuss the possibility of extending the implementation beyond 1 January 2001. MOF plans to have national accounting standards that are in line with IAS. The Accounting and Auditing Department of the MOF is currently drafting its first four accounting standards, which it expects to issue before the end of the year. Those four standards will cover accounting for inventory, tangible assets, intangible assets, and revenue. MOF plans to complete and issue all accounting standards that are in line with IAS by the year 2003.