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Vietnam: Major Amendments to Accounting Law 2015

(PresseBox) (München, ) Having applied in Vietnam for nearly 10 years, Accounting Law 2005 has revealed a number of limitations when it comes to comparison with the development of the economy. According to many experts, it is essential to make amendments to the law in order to make it appropriate to the far-reaching global economic integration of Vietnam.

A bill of amendments to the accounting law was submitted by ministry of finance to the government, in which there are breakthrough changes aiming at approaching transparency – one of international accounting standards (IAS), accepting and acknowledging IAS as well as the practice of accounting and auditing in regional and international countries. After collecting 75 comments from 15 ministries, 36 provincial committees, entities, corporations and organisations, several articles of accounting law have been amended and added.

On November 20th, 2015, the bill on accounting law (revised) was adopted by the National Assembly of the Socialist Republic of Vietnam with a majority of the votes.

Major amendments

Accounting principles: Regarding to the accounting law, the deputy minister of finance said that one of the most important accounting principles supplemented is the ‘fair value’ principle. Accounting Law 2005 only referred to the (historical) cost principle; assets and liabilities were therefore not reflected properly in accordance with international accounting practices.

The new accounting law specifies that the value of assets and liabilities shall be recorded at cost. After initial recognition, assets and liabilities the value of which frequently fluctuates in accordance with the market price and could be re-assessed reliably, shall be recorded at fair value at the end of the accounting period. This work is technical, which results in regulations being issued by the ministry of finance detailing the kinds of assets and liabilities to be recorded and measured at fair value, and the accounting methods to be applied to record and re-assess them at fair value.

Accounting areas: Only management accounting and financial accounting are accepted according to the new accounting law.

Electronic accounting records storage:
Entities are allowed to store electronic accounting records in accordance with regulations on e-vouchers. In addition, entities shall ensure convenience when checking vouchers and information security, which will save both manpower and materials in voucher storage.

The new accounting law also regulates the preservation and storage of and solutions for missing accounting vouchers.

Accounting service practice: The accounting law specifies the conditions applying to the business of accounting practice; in addition, accounting consultancies are also considered as providing accounting services. Therefore, registration is a must to comply with regulations.

The new accounting law specifies types of companies allowed to providing accounting services: limited companies with 2 members and above; partnerships and private companies. However, limited companies have to meet several conditions to avoid risks, for examples, need to have at least 2 CPAs, member as an organization is allowed to contribute entity according to specific rate regulated by the government.). A sole proprietorship shall have limited liability to avoid risks and improve the owner’s responsibility for the services he or she provides.

According to international practice, no type of accounting firm exists as a joint stock company.

Several additions have made to the new accounting law, including the prohibition of the following acts in the accounting field: preparing two systems of accounting records; renting and borrowing accountant certificates or certificates of registration and accounting practice. A decree specifying sanctions applicable to the accounting field is to be issued by the state.

Accounting Law 2015 will take effect on January 1st, 2017. For financial statements of the state, the government will be preparing the necessary conditions for state financial statements 24 months after January 1st, 2017 at the latest.

Hang Phuong Nguyen
ACCA, CPA, MSc, Director of ECOVIS VSBC, Hanoi, Vietnam

About ECOVIS AG Steuerberatungsgesellschaft

Ecovis is a leading global consulting firm with its origins in Continental Europe. It has over 4,500 people operating in over 60 countries. Its consulting focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice. The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments – from preparation in the client‘s home country to support in the target country. In its consulting work Ecovis concentrates mainly on mid-sized firms.
Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues.
The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.

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