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IASB Chairman encourages Vietnam to adopt IFRSs

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08 Mar 2016

At a workshop on 'Experiences of IFRS Implementation in Developing Countries' in Hanoi, IASB Chairman Hans Hoogervorst discussed a possible IFRS adoption in Vietnam.

Mr Hoogervorst began his speech by stressing that IFRSs bring transparency, improve accountability, and help companies and markets to operate more efficiently. He also noted academic research that shows that most emerging economies adopting IFRSs see a reduction in their cost of capital. He therefore invited Vietnam to adopt IFRSs as a means to unlock the wealth of opportunity Vietnam has to offer and to make it an attractive place for international investors to invest.

Mr Hoogervorst then turned to the question of whether Vietnam should adopt IFRSs as they are or try to modify IFRSs to meet local requirements. He strongly recommended adopting.

The big reason is economics. If a country adopts IFRS Standards to attract foreign capital, then developing a country-specific version of the Standards makes no sense. International investors just don’t have the time to study local variations to IFRS Standards. Even small changes make them nervous about the quality of the standards. Investors have plenty of investment opportunities around the world. The benefits of adjusting IFRS Standards are tiny when compared to the international recognition that comes with full adoption.

Mr Hoogervorst also noted that adopting IFRSs as they are was much easier and quicker than trying to make one's own modifications. He also pointed out that Vietnam had a very young accountancy profession and developing the profession would be a lot easier when tapping in to a wealth of IFRS materials, resources, training courses and people from around the world.

Mr Hoogervorst concluded his speech by briefly touching on two other topics. He commented on the use of IFRSs around the world and particularly pointed out developments in Japan, India and China. And he also explained how the IASB is trying to help overcome the transition challenges for emerging economies. In this context, he pointed at the IASB's Emerging Economies Group (EEG) and the IFRS for SMEs.

Please click to access the full text of the speech on the IASB's website. A supporting slideshow is also available.

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