To: ………………………………………………………..

To implement Resolution No. 30/NQ-CP promulgating the Action Plan of the Government of Vietnam on implementing the Conclusion of the 4th Conference of the XIII CPV Central Committee on accelerating the construction and correction of the CPV and the political system; resolutely prevent and strictly handle officials and CPV members that are degraded in terms of political ideology, morality, and lifestyle, signs of self-development and self-transformation, and perform the Auditing and Accounting Strategy by 2030 promulgated with Decision No. 633/QD-TTg dated May 23, 2022 of the Prime Minister of Vietnam, The Ministry of Finance of Vietnam is developing plans for presenting the Prime Minister of Vietnam with reports of the National Assembly of Vietnam on putting the project on the Law on amendments to the Law on Accounting to the law and ordinance development program 2024 of the National Assembly.

To have bases for the implementation, the Ministry of Finance of Vietnam has developed drafts of the Report on the summary of the implementation of the Law on Accounting, which has the final assessment of the implementation of the Law on Accounting and identifies shortcomings, limitations, and inadequacies in the implementation of the Law on Accounting, thereby proposing contents that need to be amended and supplemented in accordance with reality.

Units shall provide suggestions on the draft of the Report on the summary of the implementation of the Law on Accounting mentioned above with specified difficulties of units and specified proposals for amendment and supplement.

Suggestions shall be sent to the Ministry of Finance of Vietnam before September 6, 2022 for summary.

For more details, contact the Ministry of Finance of Vietnam (Department of Accounting and Auditing Regulations) Mr. Phan Anh Quan - phone number 024.22202828 (8637); Ms. Tran Huyen Thanh - phone number 024.22202828 (8636).

Thank you for your cooperation./.

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PP. MINISTER
DEPUTY MINISTER




Ta Anh Tuan

LIST OF UNITS THAT REQUEST SUGGESTIONS ON THE FINAL ASSESSMENT OF THE IMPLEMENTATION OF THE LAW ON ACCOUNTING

I. MINISTRIES AND CENTRAL AUTHORITIES

1. Ministry of National Defense of Vietnam

2. Ministry of Public Security of Vietnam

3. Ministry of Foreign Affairs of Vietnam

4. Ministry of Home Affairs of Vietnam

5. The Ministry of Justice of Vietnam

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7. Ministry of Industry and Trade of Vietnam

8. Ministry of Agriculture of Vietnam

9. Ministry of Transport of Vietnam

10. Ministry of Construction of Vietnam

11. Ministry of Natural Resources and Environment of Vietnam  

12. Ministry of Information and Communications of Vietnam

13. Ministry of Labor - War Invalids and Social Affairs of Vietnam

14. Ministry of Culture, Sports and Tourism of Vietnam

15. Ministry of Science and Technology of Vietnam

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17. Ministry of Health of Vietnam

18. State Bank of Vietnam

19. Government Inspectorate of Vietnam

20. Government Office of Vietnam

21. State Audit Office of Vietnam

22. Commission for the Management of State Capital

II. PROVINCES

63 provinces and centrally affiliated cities.

III. UNIVERSITIES AND ACADEMIES

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2. National Economics University

3. Foreign Trade University

4. Thuongmai University

REPORT

SUMMARY ON THE IMPLEMENTATION OF THE LAW ON ACCOUNTING 2015

(From 2017 to present)

The Law on Accounting 2015[1] came into force in 2017 and provided a clearer approach to general principles and practices of accounting, suitable for the conditions and situations of Vietnam and serves as the basis for completing the full legal framework of accounting in the direction of a closer approach to international practices, organized the preparation of state financial reports nationwide and at the provincial level and the implementation of internal audit at enterprises, state agencies, and public service providers; provided support and guidelines for small and micro enterprises on the appropriate and efficient implementation of accounting.

To implement the Action Plan of the Government of Vietnam in Resolution No. 30/NQ-CP dated March 1, 2022 and the Auditing and Accounting Strategy by 2030 promulgated by Decision No. 633/QD-TTg dated May 23, 2022, the Ministry of Finance of Vietnam is reporting on the summary of the implementation of the Law on Accounting from 2017 to present and proposing amendments and supplements to implement the plan for the development of the Draft of the Law on Amendments to the Law on Accounting 2015 as follows:

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LEADERSHIP, DIRECTIVE, AND ORGANIZATION OF THE IMPLEMENTATION OF THE LAW ON ACCOUNTING

1. Universalization, dissemination, monitoring, urging, legal support, and guidelines for resolving difficulties during the implementation of the Law on Accounting

The Law on Accounting No. 88/2015/QH13 was approved by the XIII National Assembly of Vietnam at the 10th meeting session on November 20, 2015 and came into force on January 1, 2017. The Ministry of Finance of Vietnam has taken charge and cooperated with relevant agencies and organizations in implementing activities of universalization and dissemination of accounting laws to relevant enterprises, organizations, and individuals via forms such as organization of conferences and seminars for universalizing legislative documents and articles posted on means of mass communication. 

The Ministry of Finance of Vietnam shall also proactively monitor the implementation process of the Law on Accounting, promptly detect and receive feedback from accounting units to provide guidelines on remedies and solutions to difficulties in the actual enforcement of Laws. Additionally, the Ministry of Finance of Vietnam has actively and proactively cooperated with relevant organizations and units in providing training and legal aid for accounting units regarding compliance with laws on accounting, finance, budget, tax, and relevant laws. The operations mentioned above have assisted the Law on Accounting to quickly take effect, integrate into life, and contribute to the promotion of the development of accounting in Vietnam in particular and the economy of Vietnam in general.

According to the Law on Accounting, accounting units all have the organization of the accounting apparatus and shall arrange accountants, chief accountants, or accounting officers to provide advisory services and suggestions for heads of enterprises, agencies, and units regarding the implementation and enforcement of laws. These contents are not only related to accounting but also include other relevant contents such as regulations of budget, finance, and tax; development of internal regulations and procedures; conclusion and implementation of contracts; declaration and payment of tax and insurance; payment with partners, buyers, sellers, etc., thereby, assisting accounting units in fully implementing tasks and obligations with the state, workers, and relevant parties in compliance with the law.

2. Directive and organization of the promulgation of documents elaborating on implementation guidelines

After the promulgation of the Law on Accounting 2015, the Prime Minister of Vietnam promulgated Decision No. 196/QD-TTg dated February 1, 2016 on promulgation of the List and assignment of agencies presiding over the compilation of drafts of documents of the Government of Vietnam and Prime Minister of Vietnam elaborating on the implementation of approved Laws at the 10th meeting session of the XIII National Assembly of Vietnam, in which contain the Law on Accounting. The organization of the implementation of the Law on Accounting is strictly directed by the Government of Vietnam and the Ministry of Finance of Vietnam by promulgating Decrees and Circulars guiding the implementation. Since the promulgation of the Law on Accounting up to now, there have been many documents guiding its implementation promulgated by the Government of Vietnam and the Ministry of Finance of Vietnam, including 5 Decrees on the Government of Vietnam and 39 Circulars of the Ministry of Finance of Vietnam (attached Appendix).

The mentioned legislative documents are relatively comprehensive regarding legal issues in accounting, consistent with reality, and have created a solid legal corridor, contributing to the promotion of the development of accounting activities.

Generally, documents elaborating on the implementation of the Law on Accounting were promptly promulgated, ensuring the proposed progress and creating a legal system of legislative documents on accounting that was synchronous and consistent with other relevant legislative documents.  These documents, in addition to accounting objectives, also satisfy objectives about the simplification of administrative procedures, application of information technology, and reduction of costs for accounting units and relevant parties, consistent with the development of the socio-economy of Vietnam and international standards and practices. Thereby, contributing to the integration of the Law on Accounting into life, ensuring uniformity and efficiency in the practical application of laws.

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ASSESSMENT OF MAJOR RESULTS IN THE IMPLEMENTATION OF THE LAW ON ACCOUNTING

1. General assessment

The promulgation of the Law on Accounting and its guiding document over the past 6 years has created a legal basis for accounting to perform its role as an important economic management tool and functions of creating an information system on the economy – finance - budget serving the economic operation and decisions of the State as well as of each unit, organization, and enterprise. Thereby, contributing to the successful implementation of major solutions to the directive and operation of the implementation of socio-economic development plans according to the Socio-Economic Development Strategy and Resolutions of the Government of Vietnam on major tasks and solutions to the operation of the implementation of socio-economic development plans.

The Law on Accounting 2015 is a detailed Law based on the Law on Accounting 2003, which has amended and added several new contents consistent with the actual conditions of the economy and society. Contents that have been elaborated are general provisions; accounting work including accounting records, accounting accounts, accounting notebooks, and financial reports; accounting inspection; asset inventory, preservation, and storage of accounting documents; accounting work in cases where accounting units face division, separation, consolidation, merger, conversion of type or form of ownership, dissolution, termination of operation, or bankruptcy; organization of the accounting apparatus and accountants; accounting service business operation; state management of accounting.

According to the Law on Accounting 2015, several contents have had relatively basic innovations compared to the Law on Accounting 2003. For example, the content of the accounting principle mentioned the "fair value" to create a basis for the application of international financial reporting standards in enterprises and promulgate relevant accounting standards, including standards of financial tools, insurance policies, fixed assets, and investment properties. Additionally, the Law on Accounting 2015 also has regulations on state financial reports and internal audits. These are new issues that have been guided and organized by the Government of Vietnam at relevant units in the past time.

To implement the Law on Accounting, the Government of Vietnam promulgated Decree No. 174/2016/ND-CP on December 30, 2016 elaborating on the Law on Accounting on accounting work, organization of the accounting apparatus, accountants, accounting service business operations, provision of transboundary accounting services, and professional associations of accounting. These are the necessary contents assigned to the Government of Vietnam by the Law on Accounting to provide guidelines and ensure adequate bases for implementation.

Additionally, the Government of Vietnam also promulgated Decree No. 41/2018/ND-CP on March 12, 2018 on administrative penalties for violations against regulations on accounting - independent audit providing for administrative violations, the prescriptive period for imposition of penalties, penalties, fines, remedial measures, and competence to record and impose penalties for administrative violations against regulations on accounting - independent audit.

2. Assessment of the implementation of several specific regulations in the Law on Accounting

2.1. Regarding contents of the accounting work

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Regarding corporate accounting, the Ministry of Finance of Vietnam has promulgated Circulars guiding general accounting regulations for units of different types and scales. These regulations are consistent with the system of 26 accounting standards of Vietnam promulgated by the Ministry of Finance of Vietnam. Currently, the Ministry of Finance of Vietnam is implementing the preparation of the draft of corporate accounting regulations, with appropriate amendments and supplements consistent with reality and management requirements.

Regarding state accounting, state accounting units shall comply with accounting regulations appropriate for each field, such as administrative accounting regulations on public services, accounting regulations applicable to management boards of public investment projects, accounting regulations on the State Budget and professional activities of the State Treasury, accounting regulations on inland tax, accounting regulations on tax collection and other collection regarding imported and exported goods, accounting regulations on public debts, accounting regulations on social insurance, health insurance, etc.  These accounting regulations all guide units of state accounting to prepare their financial reports following the Law on Accounting. 

2.2. Regarding accounting inspection work

The Law on Accounting has specified agencies that are competent to inspect the accounting work, covering units from central to local levels. Additionally, the Law on Accounting has also stipulated contents of accounting inspection, accounting inspection time, rights and responsibilities of accounting inspection teams, and rights and responsibilities of accounting units that receive accounting inspection. These regulations are bases for Ministries, central authorities, and local authorities to organize the accounting inspection work consistent with the organization of operations, apparatus, and management requirements of their units.

Regarding corporate accounting, the inspection and supervision of the implementation of accounting standards and regulations at enterprises are to innovate and improve the efficiency of operations of enterprises, serving the management, financial supervision, and state capital investment at enterprises.  The supervision is also efficiently maintained via activities of the audit of financial reports, analysis, assessment, classification of enterprises, inspection, examination, supervision of the implementation of financial regulations and policies on enterprises, disclosure of information on the business result and financial situation of enterprises, etc. Requirements for inspection and supervision of the enforcement of laws, accounting regulations, and accounting inspections shall comply with the Law on Accounting, Decree No. 174/2016/ND-CP guiding the Law on Accounting, and guiding Circulars of the Ministry of Finance of Vietnam. Agencies competent to conduct accounting inspections, such as the inspectorate, state audit office, etc., shall directly inspect and supervise the enforcement of regulations of accounting laws.

Regarding state accounting, requirements for inspection and supervision of the enforcement of laws, accounting regulations, and accounting inspections shall comply with the Law on Accounting, Decree No. 174/2016/ND-CP, and accounting regulations that units are regulated entities.  Currently, the supervision of the enforcement of accounting laws at state accounting units is performed by agencies competent to conduct accounting inspections, such as the inspectorate, state audit office, etc. Additionally, units that use the State Budget also implement the self-inspection following guidelines of Decision No. 67/2004/QD-BTC dated August 13, 2004 of the Minister of Finance of Vietnam on the promulgation of regulations on self-inspection of finance and accounting at agencies and units that use the state budget.

2.3. Regarding asset inventory and preservation and storage of accounting documents

The Law on Accounting has stipulated cases of the necessity of asset inventory and the main contents of the preservation and storage of accounting documents, including the document storage period and responsibilities of accounting units if accounting units are lost or damaged.

Specific contents of the preservation and storage of accounting documents, prescribed in Decree No. 174/2016/ND-CP dated December 30, 2016 of the Government of Vietnam elaborating on the Law on Accounting, are bases for units to organize the implementation regarding paper documents and electronic documents.

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The Law on Accounting has specified the contents of work in specific cases as the bases for units to organize the implementation when operations arise. When cases arise in reality, units shall, based on the regulation of the Law on Accounting that has organized the implementation of accounting work, conduct financial schemes and complete relevant documents to terminate the operations of old units and organize operations at new units according to the law.

2.5. Regarding the organization of the accounting apparatus and accountants

The Law on Accounting has specified that accounting units have to organize the accounting apparatus and allocate accountants or rent accounting services; the organization of the apparatus and allocation of accountants, chief accountants, accounting officers, or rental of accounting services or chief accountant services shall comply with regulations of the Government of Vietnam. Regarding legal representatives, the Law also specifies the responsibilities to organize the accounting apparatus, allocate accountants, or decide to hire accounting service enterprises or households consistent with the regulations of the Law on Accounting. Based on these regulations, all accounting units must organize the accounting apparatus and allocate the head of such apparatus following standards and conditions prescribed in the Law on Accounting.

Additionally, the Law also specifies accounting units that may sign contracts with accounting service enterprises or households to rent accounting services or chief accountant services according to regulations of the law.

2.6. Regarding accounting service business operations

The Law on Accounting 2015 has shown the contents of accounting services in terms of integration. With the objectives of economic integration in general and accounting in particular, regulations of the Law are basically and relatively adequate and clear and have enabled the establishment and development of accounting service providers. With the implementation of the Law on Accounting, the accounting service market of Vietnam has achieved remarkable results, gradually meeting the practical requirements of the socio-economy.

However, it is possible to assess that the number of accounting service enterprises that register for business operations is limited and on a small scale due to the newly started implementation. Even though the number of newly established enterprises increases every year[2], the number of new customers only reached 10.970 in 2020, which increased by 48% compared to 2019.

2.7. Regarding state management operations

The Law on Accounting stipulates that the Government shall ensure uniformity regarding the state management of accounting. The Ministry of Finance of Vietnam shall take responsibility before the Government of Vietnam for implementing state management of accounting and submitting construction tasks and entitlements to the Government of Vietnam for decisions on strategies and policies on the development of accounting; developing and suggesting the Government of Vietnam for promulgation or promulgating legislative documents on accounting under its jurisdiction; issuing, reissuing, and revoking Certificates of Registration for Accounting Service Practice and Certificates of Eligibility for engaging in the accounting service business; suspending the accounting service practice and business; stipulating the exams, issuance, revocation, and management of accountant certificates; inspecting accounting operations; stipulating the update of knowledge for accountants; organizing and managing the scientific research on accounting and application of information technology to accounting operations; inspecting and settling complaints and denunciations and handling violations against accounting laws;

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People’s Committees of provinces shall, within their scope of tasks and entitlements, perform the state management of accounting in their areas.

With the regulations mentioned above, the cooperation between the Ministry of Finance of Vietnam and relevant units is not efficient, regular, and continuous.  Therefore, it is necessary to study measures to improve the cooperation between Ministries and ministerial agencies with the Ministry of Finance of Vietnam consistent with the tasks and entitlements of each unit as prescribed by law.

2.8. Regarding the system of accounting standards

a) Regarding corporate accounting standards, from 2000 to 2005, the Ministry of Finance of Vietnam promulgated 26 corporate accounting standards.  The system of 26 corporate accounting standards and accounting regulations applicable to all enterprises in all economic fields and sectors operating in Vietnam has greatly contributed to the administration and operation of enterprises, reflecting many transactions of the market economy and suitable for requirements for management of the State in the period of reform and world economic integration.

However, during 2011 - 2020, such standards have not been fully updated and promulgated compared to international standards. Therefore, before requirements of the market economy, economic integration, and development of information technology, on March 16, 2020, with the consent of the Prime Minister of Vietnam, the Minister of Finance of Vietnam promulgated Decision No. 345/QD-BTC on approval of Schemes for the application of standards of financial reports in Vietnam, including the following 2 objectives:  

- Preparation of schemes, road maps, and disclosure and provision of support for the application of International Financial Reporting Standards (IFRS) in Vietnam for each specifically identified group of subjects, suitable for international practices to improve the transparency and truthfulness of financial reports and enhance the accountability of enterprises to users of financial reports.

- New promulgation and organization of the implementation of the system of Vietnam Financial Reporting Standards (VFRS) according to the principles of maximum absorption of international practices, suitable for the characteristics of the economy of Vietnam and requirements of enterprises, ensuring the feasibility during the implementation.

b) Regarding public sector accounting standards, on July 31, 2019, the Minister of Finance of Vietnam promulgated Decision No. 1299/QD-BTC approving the Scheme for the development and disclosure of the public sector accounting standards of Vietnam, including the following objectives: 

- To study, develop, promulgate and announce Vietnam’s public sector accounting standards (VPSAS) on the basis of international public sector accounting standards. Vietnam's public sector accounting standards applied by public sector entities must meet the national requirements for economic integration, be consistent with reforms and innovations in policies on economic management and public sector financial management of Vietnam, and be used as the basis for providing financial information in a timely and honest manner so as to improve competence, efficiency, and transparency in the management of resources of the Government of Vietnam.

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- Vietnam’s public sector standards shall be used as the basis for promulgating specific guidelines on accounting for each type of public sector entity in conformity with their organization and operation, as well as regulations on public finance and the state budget.

According to the roadmap of the Scheme for disclosure of Vietnam’s public sector accounting standards, from 2020 to 2024, 21 Vietnam’s public sector accounting standards will be promulgated and disclosed. To implement plans of the Scheme, by July 2022, the Minister of Finance of Vietnam has promulgated 11 Vietnam’s public sector accounting standards.

2.9. Regarding state financial reports

To implement the Law on Accounting, the Ministry of Finance of Vietnam has developed Decrees of the Government of Vietnam and documents on guidelines for the preparation of state financial reports based on the summary of financial reports of state agencies, public service providers, economic organizations, and relevant units of the state sector from the 2018 fiscal year. This report is used to summarize and explain the state financial situation, results of state financial operations, and transfer currencies from state financial operations nationwide and in each province.

Basically, state financial reports have provided information on the state budget collection and expenditures, state financial funds, public debts, state funding at enterprises, properties, capital resources, and the use of capital resources of the State. However, it is necessary to complete information provided by state financial reports in a more adequate and accurate manner.

2.10. Regarding internal audit

Article 39 of the Law on Accounting stipulates internal control and audit, including the assignment of the Government of Vietnam to elaborate on internal audits in enterprises, state agencies, and public service providers. To perform this request, the Government of Vietnam has promulgated Decree No. 05/2019/ND-CP on January 22, 2019 on internal audits at Ministries, ministerial agencies affiliated to the Government of Vietnam, People's Committees of provinces and centrally affiliated cities, eligible large-scale public service providers, and enterprises following the principles of professional independence, efficiency, and consistency with organizational operations of each unit.  The Ministry of Finance of Vietnam has promulgated Circulars guiding standards of internal audits and regulations on internal audits for units.  

Regulated units shall organize internal audit departments to test the suitability, effectiveness, and efficiency of the internal audit system; inspect and confirm the quality and reliability of economic and financial information of financial reports and reports on accounting administration before submitting them for approval; inspect compliance with principles of operations and management, compliance with the law, regulations on finance and accounting, policies, resolutions, and decisions of heads of accounting units; detect loopholes, weaknesses, and frauds in the management and protection of assets of units; propose measures to improve and perfect the system of management and operation of accounting units.

2.11. Regarding operations of professional organizations

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Professional organizations are important bridges between state agencies, enterprises, and society, implementing functions of social criticism and participating in the development of legal documents showing inadequacies and difficulties in law enforcement. Via operations of professional organizations, the functions and tasks of state management and professional management operations have been established and distinguished more clearly. This is the objective reality, starting from international practices and the necessity of the renovation, opening, and international integration regarding the accounting field in Vietnam.

In recent years, the Ministry of Finance of Vietnam has increased state management of accounting on the basis of renovating operational mechanisms as well as improving the professional management quality consistent with international practices. It is necessary to maintain close cooperation between state management agencies and professional organizations to increase the quality supervision of accounting practice, ensuring that the practice strictly complies with the law and improving the quality of people practicing accounting services on par with developed countries in the region and the world.

2.12. Regarding accounting human resources

It is necessary to train, construct, and develop accounting staff of state accounting and corporate accounting and auditing staff and accountants with good professional qualifications, ethics, and responsibilities. Regarding accounting human resources of the state sector, aside from satisfying the general accounting criteria, it is necessary to thoroughly understand typical financial regulations on public sector accounting, regulations on the management of the state budget in Vietnam, capital sources for loans, aid, public investment, etc.

It is necessary to regularly innovate accounting training methods and programs at training institutions and regulations and methods of organizing accountant exams. Provide advanced knowledge training for accounting officials and officers; update knowledge for accountants. The additional annual resource from training institutions, universities, and colleges of accounting must have a large quantity and good quality, trained with programs increasingly associated with actual requirements.

The number of people who have accountant certificates by December 2021 is 1.091 people, including 419 people working in accounting service enterprises (accounting for 38% of the number of people with accountant certificates).

All accountants must have at least bachelor's degrees in finance, audit - accounting, banking, etc., 3 practical years of experience, and have passed the national exam for issuance of certificates of accountants or auditors. With work experience and passing the exam for issuance of certificates, practicing accountants must all have the summary knowledge of laws on the economy, corporate finance, tax policies, and accounting - audits. During the registration for accounting practice, to ensure service quality, accountants must update their knowledge according to the annually prescribed time.

2.13. Regarding international cooperation in accounting

After more than 20 years of integration into accounting, Vietnam has made fundamental changes in regulations prescribed in the legal framework, aiming for the development of the professions and services of accounting and audits.  In reality, Vietnam has made many relationships and cooperation with international accounting organizations and countries via signing agreements in WTO Agreements, Agreements with ASEAN; participating in the ASEAN Chartered Professional Accountant Coordinating Committee; participating as a member of the ASEAN Federation of Accountants (AFA), Confederation of Asian and Pacific Accountants (CAPA), and International Federation of Accountants (IFAC).

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The maintenance of promotional operations for cooperation with international organizations operating in Vietnam such as: ACCA, CPA Australia; World Bank (WB), Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), etc., is for supporting and promoting the development of accounting operations. Participation in the Emerging Economies Group (EEG).

2.14. Regarding the application of information technology and other operations

At units, organizations, and enterprises, the application of information technology has been implemented in the management and implementation of accounting work, consistent with the development of the Fourth Industrial Revolution.  

At state management agencies and state budget collection and expenditure units, the administrative reform has been implemented in a substantive manner with specific and practical solutions; online public services have been implemented and applied to administrative procedures for accounting at the highest level, consistent with the permitted conditions; databases have been developed and summarized for the disclosure of information on accounting practice serving the requirements of organizations and individuals.

Units, organizations, training institutions, and professional organizations shall apply technology to research and training; promote digitalization in the direction of digital transformation in the accounting sector suitably and effectively.

Part III

LIMITATIONS AND INADEQUACIES IN THE IMPLEMANTATION OF THE LAW ON ACCOUNTING

1. Regulations of the Law on Accounting lag behind reality

- The operational environment related to accounting in Vietnam is always changing. The opening of the market and international integration require that policies on finance and accounting have to be promptly adjusted, consistent with economic compositions, including enterprises with 100% foreign funding, foreign enterprises branches in Vietnam, and international integration commitments to gradually be deeper and operations of enterprises to be expanded abroad. Therefore, it is necessary to require regulations on accounting to be more consistent with international practices and standards.

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- The sense of responsibility and law compliance of units, heads of accounting units, and accountants in units are not strict enough, leading to failure to comply with the regulations on the management of finance and accounting and violations that require handling. Errors may arise from subjective and objective reasons, such as the expression of responsibility for accounting work leading to the failure to meet the quality requirement for financial reports, and there are even errors due to subjective reasons of accounting units and heads of accounting units. Several accounting units want to have a “beautiful” financial report to perform different purposes. Therefore, many units have intentionally violated accounting standards and regulations when preparing and presenting financial reports, leading to such reports not showing the correct financial situations of units with false or concealed information.

- The legal framework related to accounting in different fields has certain differences with contents that are not synchronous due to the requirement and nature of management operations. Differences in policies related to tax policies and other regulations lead to the fact that units seem to only pay attention to and focus on following tax policies and completing procedures to perform tax obligations and do not care about compliance with regulations on accounting to provide information on the finance of units according to the Law on Accounting and accounting standards.

- The industrial revolution and requirements for the process of digitalization, especially digital transformation, all lead to regulations on accounting in the Law on Accounting failing to be consistent with reality. Units shall report on difficulties in the implementation of signing documents, rotating the processing of documents, storing accounting documents, etc. Although economic transactions by electronic means are currently performed under the Law on Electronic transaction and other specialized laws, within the scope of the Law on Accounting, there must be regulations for clarification and synchronicity with the Law on Electronic Transactions and other relevant laws, suitable for the process of digital transformation.

- Currently, accounting software is developed relatively diverse with different qualities due to the experience and capability of accounting software providers and the ability of accounting units to grasp and provide technical requirements for software providers based on the understanding and use of applications of accountant staff and employees of accounting units. This reality requires appropriate regulations to ensure the quality of accounting software and system applications that accounting units use during their accounting work and management.

2. Several regulations of the Law on Accounting have shown limitations and inadequacies

Even with the achieved important results mentioned above, the Law on Accounting 2015, or the accounting work in Vietnam in general, still has certain difficulties and limitations, specifically:

- The Law on Accounting stipulates that property and liability are initially recorded according to the original price. After the initial recording, regarding certain types of properties and liabilities whose values frequently fluctuate according to market prices, their values can be reliably determined at the end of the period of financial report preparation. This is the regulation to be consistent with international practices and fully show the values of properties and liabilities. However, in practice, there are many difficulties in organizing the implementation, accordingly, it is necessary to identify relevant conditions for the recording by reasonable prices. 

- Regarding accounting regulations, according to the Law on Accounting, the Ministry of Finance of Vietnam is the agency that takes responsibility before the Government of Vietnam for performing the state management of accounting and is entitled to promulgate Circulars and guiding documents as a state management agency specialized in guidance. However, in reality, the credit institution system still applies separate accounting regulations, with contents that have not been promptly updated.  In terms of the nature of operations of credit institutions that are also enterprises with purposes of conducting business in the field of currency and credit, they may be classified in the corporate accounting area, however, they also have their peculiarities due to the operation characteristics of this kind of organization.   The uniformity of accounting regulations is essential, including contents such as accounting records, accounting account systems, accounting notebooks, and financial reports. Therefore, this content needs to be studied and considered for having uniform and appropriate regulations.

- Certain regulations on the contents of the accounting work, from the documents, accounts, accounting notebooks, financial reports, and administration reports, need to be reviewed and assessed for appropriateness. For example, regarding regulations on financial reports, regulations on the contents, form, and deadline for disclosing financial reports also lead to different interpretations in the implementation process, leading to cases of failure to implement; entities that require information also have different interpretations in terms of access to public information on financial reports.

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- Regulations on accounting units, organization of the accounting apparatus, standards and criteria for accountants, and standards and criteria for chief accountants have generated difficulties in reality. For example, regarding state accounting units, the arrangement of separate or affiliated accounting units of departments and the organization of affiliated accounting units, bookkeeping units, etc., always have difficulties in functions, tasks, non-recurrent role principles, and authorizations to perform accounting work.

- The Law on Accounting 2015 has stipulated the conditions for engaging in accounting service business and methods of organization to develop and improve the service quality.  However, in reality, there are still shortcomings in the business operations of service enterprises, business registration, and accounting service practice. Therefore, even though the service market has developed, it has yet to meet the expectations and requirements of reality.   Additionally, regulations on the responsibilities of service providers and service receivers also need to be clarified, especially developed customer units in terms of scale and quantity. Moreover, regulations related to this content in other legal regulations also lead to inconsistency in the implementation.

- Regarding professional accounting organizations, they have been specified in the Law on Accounting. According to the Law, professional accounting organizations are established and operated following laws on associations and shall comply with accounting laws. Professional accounting organizations may provide advanced training and knowledge update for accounting officers and accountants, and perform tasks related to accounting as prescribed by the Government of Vietnam. However, professional organizations have not developed into self-governing organizations with public accounting operations like in other countries around the world, showing essential roles, cooperating with state management agencies in developing accounting standards, and participating in the supervision of accounting service quality of accountants.

- The quality of accounting work is also notable content. Recently, especially before the promulgation of the Law on Accounting and guidelines on accounting regulations and standards, the quality of accounting work has been appreciated, legal representatives of accounting units have paid attention to the organization of accounting, professional accounting, statistical accounting, and financial accounting; however, the accounting quality has yet to satisfy the management requirements, and demands of the society, signs of dishonest and fraud accounting recording have happened and have been handled by legal agencies; financial reports have not been prompt with inadequate reliability. Reasons for the shortcomings mentioned above are from compliance with the law, they must be adequately guided, and there must be strict sanctions when there are violations.

3. Regulations of relevant laws that have been amended

- The Law on Tax Administration No. 38/2019/QH14 was approved by the National Assembly of Vietnam on June 13, 2019 and came into force as of July 1, 2020, on the application of electronic invoices and documents. The law fundamentally stipulates that enterprises shall use electronic invoices in selling goods and providing services to remedy frauds in the use of paper invoices reduce the cost for taxpayers, improve the competitiveness of the whole economy, develop a database on invoices, and serve the development of electronic tax management. The law also has regulations on principles of preparation, management, and use of invoices; application of invoices when selling goods and providing services; database on electronic invoices and documents, etc.  

The regulations mentioned above came into force as of July 1, 2022; such regulations encourage agencies, organizations, and individuals to apply regulations on electronic invoices and documents of this Law before July 1, 2022. Pursuant to regulations of the Law on Tax Administration No. 38/2019/QH14 and legislative documents of relevant laws (the Law on Value-Added Tax, Law on Accounting, Law on Electronic Transactions, and Law on Information Technology), the Government of Vietnam promulgated Decree No. 123/2020/ND-CP on October 19, 2020 on invoices and documents; the Ministry of Finance of Vietnam promulgated Circular No. 78/2021/TT-BTC on September 17, 2021 guiding a number of Articles of the Law on Tax Administration dated June 13, 2019, and Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government of Vietnam on invoices and documents. Accordingly, they have created an adequate legal basis for the implementation of electronic invoices and documents nationwide, ensuring that by July 1, 2022, the application of electronic invoices will be implemented nationwide.

- The Law on Tax Administration has contents that are not consistent with the Law on Accounting regarding the signature on financial reports. According to the Law on Accounting, chief accountants and legal representatives must sign their signatures on enterprises' financial reports. However, the declaration system only requires legal representatives to provide digital signatures; the signatures of accountants or chief accountants are optional when submitting enterprises' financial reports.

- The Law on Tad Administration stipulates the conditions for providing accounting services for micro-enterprises, and according to the Law, Article 150 has added Article 70a of the Law on Accounting on regulations on tax agents may provide tax services for micro-enterprises if at least one of their employees has an accountant certificate. Meanwhile, the Law on Accounting requires accounting service enterprises must have at least 2 practicing accountants with the capital contribution percentage must account for at least 50% of the charter capital and the organization’s capital must account for a maximum of 35% and must be granted a certificate of eligibility for engaging in the accounting service business before providing accounting services, during the process of providing accounting services, they must be subject to the inspection of accounting service operations of the Ministry of Finance of Vietnam regarding practice registration, service supply documents, obligation to notify and report, etc.  Additionally, the 2 practicing accountants are persons granted certificates of account practice registration with strict procedures and conditions. However, tax agents only need 1 person with granted accountant certificates, are exempted from applying for certificates of accounting service practice like practicing accountants in accounting service enterprises, and are exempted from certificate issuance fees and compliance with regulations on the notifying and reporting obligations. Local tax agencies will inspect tax agents like when inspecting taxpayers, etc.

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Part IV

AMENDMENT SUGGESTIONS

1. Viewpoints and objectives

1.1 Viewpoints

- Identifying accounting as the essential management tool in the stage of the new socio-economic development of the country. From there, it is necessary to adequately create and improve the quality of accounting information so that accounting is truly the essential economic management tool in the creation of the information system serving the operation and economic decisions of the State as well as of each enterprise, unit, and organization.

- It is necessary to identify short-term and long-term objectives, systematically establish synchronous solutions to further improve the legal framework of accounting, apply the system of professional standards and solutions consistent with international practices with appropriate roadmaps; improve the inspection and supervision of accounting to ensure compliance with accounting laws; improve the quality of training and advanced training in human resources; develop and improve the status of professional organizations; apply information technology to the management and organization of the implementation of accounting laws.

- It is necessary to pay attention to the increase and improvement of the role and capacity of state management agencies and professional organizations regarding the legal framework planning, organization of the implementation, inspection, and supervision of compliance with accounting laws.

- The development of international integration activities and the implementation of international practices to improve the quality of accounting information contribute to improving competitiveness and satisfying requirements for international integration.

- It is necessary to realize that the development and improvement of accounting processes and techniques have to be suitable with the application of information technology, consistent with the process of digital transformation, and professional qualifications and skills of human resources at units and organizations. Accordingly, it is necessary to have appropriate solutions, adapting to the digital transformation process in association with activities of digitalization to reform processes and administrative procedures related to the objectives of digital finance.

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- To complete the system of accounting laws adequately, comprehensively, and synchronously, consistent with international practices and conditions of Vietnam to increase the role and responsibility of enterprises, organizing units, and individuals in improving the quality of operations, providing information on accounting for management, operation, and issuance of decisions, and determining obligations of agencies, enterprises, and organizations.

- Develop the legal framework to apply to the International Financial Reporting Standards (IFRS) and update the system of Vietnam Financial Reporting Standards (VFRS) based on international practices consistent with the market economy of Vietnam; ensure the comparability of economic and financial information of enterprises and organizations in the economy; serve the capital attraction of domestic and foreign investors. Disclose the system of public sector accounting standards of Vietnam based on the international public sector accounting standards and apply it consistent with the law of Vietnam.

- Develop mechanisms suitable for the characteristics of the operating field to:

+ Increase the operating capacity of accounting management and supervision agencies. Improve the efficiency of the management and supervision of accounting at enterprises, accounting units, and accounting service providers.

+ Increase inspection and supervision and adopt appropriate sanctions to ensure compliance with the law of accounting units and accounting service providers to improve the quality of financial reports and accounting services.

- Develop the market, improve quality, and diversify accounting service products; restructure the demand and supply of accounting services following regulations of the law and the needs of the socio-economy. Improve the quality and quantity of professionals and accountants to provide high-quality services; implement and expand the provision of accounting services regarding foreign markets.

- Develop the human resources of accounting regarding the quantity and quality to satisfy the practical requirements; innovate contents, programs, and measures to provide training and advanced training for the human resources and combine theory and practice associated with the digitalization and digital transformation process in terms of accounting. Innovate processes and methods of issuing professional certificates and practicing certificates consistent with international practices and conditions of Vietnam. Adopt supporting measures to improve the professional qualifications and operations of the accountant staff working in the medium, small, and micro-enterprises.

- Promote the role, unify, and increase the operational capacity of professional accounting organizations in the development of legal documents; provide training and advanced training in the professional specialty; cooperate in inspecting and supervising compliance with professional standards.

- Deeply develop international integration activities, expand cooperation with international accounting organizations; study the experience to develop the accounting system of Vietnam; improve the status and operational efficiency of Vietnam's accounting in the world and the region.  

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2. Suggestions on specific contents that need adjustment in the Law on Accounting

2.1. Review regulations to be consistent with the digitalization and digital transformation process in accounting

Current regulations on accounting records, notebooks, financial reports, and other accounting documents are mainly oriented to be paperwork-related while stipulating additional regulations for cases of electronic transactions.  Therefore, regulations on electronic accounting records, preparation and storage of accounting records, and signing of accounting records must be mainly stipulated based on the electronic aspect. Cases of implementation on paper must be stipulated as additional cases due to little generation and should tend to continue to decrease due to digital transformation. Objectives to be achieved are to help units have the basis for the implementation, handling, and storage of information on applications, limiting the printing and conversion of accounting documents to paper documents, causing waste. 

Regulations on accounting records and notebooks are developed based on regulations on accounting paperwork. For example, according to regulations, when writing documents, it must be done by using ink pens, numbers and letters must be continuous, without interruption, blank spaces must be crossed, documents must have sufficient copies according to regulations; signatures must be made by indelible ink, signatures on documents of 1 person must be consistent, accounting notebooks must be fan-stamped; accounting notebooks must be written by ink pens; do not write additional information in the margin outside of the printing space; do not overlap the writing; do not write with line spacing; in case the page is not fully written, the unwritten part must be crossed out; when the page is finished, add up the page totals and move them to the next page, etc. Regulations on accounting on computers and electronic data are only additionally stipulated, therefore, are not sufficient and comprehensive.

Regarding storage time, the Law on Accounting (Article 41) stipulates the preservation and storage of accounting documents[3]. In reality, there are accounting documents that have a storage time of 5 or 10 years according to regulations, however, these documents are the bases for preparing as well as relating to permanently stored accounting documents.  Therefore, the regulations mentioned above will cause difficulties in determining the destruction of accounting documents with different storage times in the same dossier. This issue is also more difficult in implementing the storage on computers when data has a relationship with each other, forming a database. The destruction of accounting documents will affect all data of the unit.

In order to satisfy the requirements for digitalization and digital transformation, certain regulations in the Law on Accounting must be studied and amended as follows:

- Review regulations on accounting records and notebooks and repair errors in notebooks that are inconsistent with the current practical implementation of information technology in an appropriate manner.

- Review regulations on signatures on accounting records (sign every copy with blue ink pens), accounting documents, and other relevant contents for amendments consistent with the establishment, transfer, processing, and storage via electronic means, iCloud, etc.

- Review regulations related to economic transactions in the electronic environment, practical application of information technology and digital technology in economic transactions, and practical implementation of regulations on electronic transactions. These contents must be consistent and synchronous with the implementation of electronic invoices nationwide.

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The Law on Accounting 2015 (Article 7) assigns the Ministry of Finance of Vietnam to stipulate accounting standards and codes of ethics for accountants based on international accounting standards and Vietnam's conditions.  In reality, the Ministry of Finance of Vietnam has promulgated 26 corporate accounting standards as well as accounting regulations applicable to all enterprises in all economic fields and sectors operating in Vietnam.  However, during 2011 - 2020, such standards have not been fully updated and promulgated. Therefore, before requirements of the market economy, economic integration, and development of information technology, after reporting to the Prime Minister of Vietnam, on March 16, 2020, the Minister of Finance of Vietnam promulgated Decision No. 345/QD-BTC on approval of Schemes for the application of standards of financial reports in Vietnam. 

The scheme for the implementation of accounting standards is long-term, therefore, the Law on Accounting may need to have clearer regulations on allowing enterprises in Vietnam to apply International Financial Reporting Standards according to the guidelines of the Ministry of Finance of Vietnam. Additionally, it may be considered to establish an accounting standard committee affiliated to the Ministry of Finance of Vietnam, determine the competency of such committee in the direction of members assigned by the Ministry of Finance of Vietnam are competent to issue independent professional, operational decisions and decisions on a collective basis, etc.

2.3. Regarding the currency in accounting

The Law on Accounting (Article 10) stipulates that “The accounting currency is Vietnam dong; its Vietnamese symbol is “đ” and international symbol is "VND”. Where an economic/financial transaction in a foreign currency occurs, the accounting unit must record the foreign currency and VND at the actual exchange rate, unless otherwise prescribed by law; if there is no exchange rate between the foreign currency and VND, it shall be exchanged into another foreign currency that has an exchange rate with VND. An accounting unit whose most revenues and expenditures are in a foreign currency may use such foreign currency as the accounting currency and has to take legal responsibility for such action and notify its supervisory tax authority. When making a financial statement which is used in Vietnam, the accounting unit must convert the foreign currency into VND at the actual exchange rate, unless otherwise prescribed by law”.

In reality, there are many difficulties while implementing the regulations mentioned above. Because in reality, in case of enterprises have currencies with different functions from the VND, and units must use such currencies following accounting standards. Regulations on units that may select the VND accounting currency as prescribed in the current Law on Accounting are inconsistent with accounting standards and have caused many difficulties for units and enterprises. Therefore, it is necessary to further study and specify regulations on functional currencies and reporting currencies.

2.4. Regarding numbers used in accounting

The Law on Accounting (Article 11) stipulates that the thousands separator is a dot (.); and the decimal mark is a comma (,). This regulation is inconsistent with the current practical application of information technology, generated in the production environment of application systems, causing difficulties in accounting, especially for units that apply accounting software provided by foreign countries. In this case, units have to re-configure the system, which increases the cost but reduces the performance of the system due to conversion as prescribed by Vietnam's regulations.

Therefore, this content must be studied with appropriate regulations, satisfying the requirement for digitalization and digital transformation in accounting. Accordingly, it is necessary to have regulations that are flexible and consistent with international practices. However, it is also necessary to pay attention to the contents of transitional regulations on implementation.

2.5. Regarding the translation of accounting documents and records

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This issue needs further study and clearer regulations, specifically in the direction of stipulating only transactions of copies serving the recording of accounting notebooks or directly related to payment, such as “Invoices” or other relevant documents.

2.6. Regarding the extended accounting period

The Law on Accounting (Article 12) stipulates that if the first or last annual accounting period is shorter than 90 days, it may be aggregated with the next or previous annual accounting period, respectively; the first or last annual accounting period must be shorter than 15 months. In this case, the inconsistent use of day and month units leads to problems in practice, because 3 consecutive months maybe 90 or more than 90 days. If units are to apply for 3 full months, the total days may exceed 90 days.

Therefore, this content must be reviewed to stipulate uniform time units, avoiding the generation of problems in practice. 

2.7. Prohibited acts in accounting practice

The Law on Accounting (Article 13) has regulations prohibiting the act of hiring units ineligible for engaging in the accounting service business to provide accounting services, which is inconsistent with the actual accounting services and is difficult to control and handle violations. Currently, this regulation is similar to regulations on auditing services.

Regarding this content, it is necessary to review to have clearer regulations on conditions for conducting accounting services to develop the market and reduce costs and human resources for units. Additionally, it is necessary to continue to review Decrees on fines in accounting to have regulations that are consistent with the Law on Accounting.

2.8. Regarding the sealing, custody, and confiscation of accounting documents and records

Regarding paper accounting documents, regulations on the sealing, custody, and confiscation of accounting documents, especially accounting records that are commonly implemented with no problems, not affecting the data in accounting notebooks.  However, regarding electronic records and electronic accounting documents, the sealing, custody, and confiscation of such documents are not clearly stipulated, there is no basis for the delivery of accounting documents, or if there is a delivery of documents, it may affect the data in accounting notebooks or databases of units.

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2.9. Regulations on accounting notebooks

- Clause 2 Article 25 stipulates that “Each accounting unit shall use only one accounting notebook system for an annual accounting period.” The regulation mentioned above is not clear, adequate, and consistent with regulations prescribed in Clause 10 Article 10, which stipulates that the act of “establishing two or more accounting notebook systems” is prohibited. In reality, units may have to open accounting notebooks for accounting administration, the mentioned regulation is not clear in terms of the financial accounting system, therefore, is not suitable for opening notebook systems for accounting administration.

- Certain regulations on accounting notebooks, such as regulations on recording and correcting accounting notebooks are still mainly based on manual recording, while currently, the recording of accounting notebooks at units is mainly conducted via electronic means, the recording via electronic means is only partially stipulated in Clause 7 Article 26 “Accounting units may make electronic accounting notebooks, etc.” The mentioned regulation does not cover every unit, therefore, is inconsistent with the situation of technology application in the current accounting operations and future trends.  

2.10. Regarding financial reports 

The Law on Accounting (Article 29) stipulates that financial reports of an accounting unit are used for aggregating and describing its financial conditions and performance. Financial reports of an accounting unit include: Financial condition report; Business performance report; Cash flow report; Note to financial reports; Other reports as prescribed by law.

The specific listing of financial reports of accounting units, like the current Law, may lead to difficulties in determining the list of reports for accounting units to be consistent with international accounting practices. Especially, small and micro-enterprises will face the mentioned difficulties as well as difficulties in organizing the accounting apparatus.

In the case of hiring accounting services, it is necessary to consider regulations on requirements for the financial report makers, chief accountants, and legal representatives to all provide their signatures on financial reports on enterprises and accounting units. According to practices, many countries only stipulate that legal representatives shall take legal liability for enterprises' financial reports. When legal representatives hire organizations or individuals to provide them with accounting work or services, they still have to take legal liability. Therefore, they have to look for quality and reputable accounting service providers.

2.11. Regarding the increase of publicity and transparency

The Law on Accounting (Article 31) has stipulated the content of the disclosure of financial reports for units using and not using the state budget, accounting units using the people’s contributions, and accounting units engaging in the business. However the form and deadline for disclosure (Article 32) are not clearly defined regarding accounting units, and forms of disclosure are not similar, leading to the perfunctory implementation of units[4]. The access to disclosed information of interested users of reporting information is limited in practice, or in other cases, such information is bound to confidentiality by the law.

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- Re-stipulate contents of the disclosure of financial reports and forms of disclosure in a more specific and clarified manner.  

- Add regulations that clarify the scope of the disclosure of financial reports and subjects that receive disclosed information on financial reports; specifically stipulate or consider annulling contents that require the disclosure of several targets of financial reports, instead of such contents, it is necessary to stipulate the disclosure of the whole financial reports and not parts of them.

- Regarding disclosure forms, there should be compulsory forms such as posting on pages or electronic information portals of enterprises and accounting units. Additionally, it may be possible to select additional disclosure under other forms.

2.12. Regarding internal audit

The Law on Accounting (Article 39) stipulates that internal audit departments shall test the suitability, effectiveness, and efficiency of the internal audit system; inspect and confirm the quality and reliability of economic and financial information of financial reports and reports on accounting administration before submitting them for approval; inspect compliance with principles of operations and management, compliance with the law, regulations on finance and accounting, policies, resolutions, and decisions of heads of accounting units; detect loopholes, weaknesses, and frauds in the management and protection of assets of units; propose measures to improve and perfect the system of management and operation of accounting units.

The Government of Vietnam promulgated Decree No. 05/2019/ND-CP on January 22, 2019, elaborating on internal audits in enterprises, state agencies, and public service providers. The Ministry of Finance of Vietnam also promulgated Circulars guiding internal audit standards and model regulations on internal audits for units. However, until now, there are still difficulties in organizing the internal audit apparatus, ensuring independence, and preventing the increase of the apparatus at units at central and local levels.

2.13. Regarding the accounting units 

The Law on Accounting (Article 49) stipulates the organize the accounting apparatus of accounting units, the responsibilities of legal representatives of accounting units in the organization of the accounting apparatus, and the allocation of accountants or decisions on hiring accounting services. However, the identification of accounting units is not specified in the Law. The Law only stipulates that regulated entities of the Law that prepare financial reports are considered accounting units. Meanwhile, regulations on units that prepare financial reports are mentioned in Circulars guiding accounting regulations, promulgated by the Ministry of Finance of Vietnam. 

In reality, micro-units, especially in the public sector, also have to organize the accounting apparatus, while the organizational apparatus of such units does not have sufficient personnel to allocate the accounting apparatus[6]. In some cases, the accounting apparatus is integrated into departments or divisions and cannot be organized into separate departments, leading to difficulties in organizing and operating the work. In practice, some affiliated recording units have to organize the accounting apparatus because they are identified as accounting units because they prepare financial reports.

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From the difficulties mentioned above, there must be more appropriate regulations on accounting units or clearer regulations on reporting units. From there, identify which units have to prepare financial reports and which units have to organize the accounting apparatus, reducing social costs and resolving difficulties for units and enterprises.

2.14. Regarding regulations on accountants

- The Law on Accounting (Article 54) stipulates the standards, rights, and responsibilities of accountants. Specifically, the Law stipulates that accountants must have professional accounting qualifications (chief accountants must be at least at intermediate levels). Additionally, Clause 5 Article 18 of Decree No. 174/2017/ND-CP stipulates that “a trained accountant means a person who has an associate degree, diploma, bachelor’s degree or post-graduate degree in finance, accounting or audit granted by higher education institutions in Vietnam and overseas, etc.”. This regulation is inconsistent with the reality of the training majors and specialties of the current education system. In reality, there are many cases of people with bachelor's degrees in majors different from finance, accounting, and audit (for example, business administration), but their transcripts clearly state: accounting or unit major or financial management and accounting major. These cases are considered as having professional accounting qualifications.

- The Law on Accounting (Article 54) stipulates that one of the standards and conditions of chief accountants is to “have chief accountant advanced training certificates”. Currently, chief accountant advanced training certificates include corporate and public service chief accountant advanced training certificates. However, in the Law on Accounting and guiding Decrees, there are no regulations on whether persons with corporate chief accountant advanced training certificates can be appointed as chief accountants of units in the state sector or not and vice versa. Decree No. 174/2017/ND-CP stipulates that the standards and conditions of accountants and accounting officer are the same, causing difficulties with the implementation. Because if one person is eligible for being an accounting officer, the unit may appoint that person as the chief accountant. Additionally, several persons may have domestic or foreign accountant certificates or auditor certificates, but do not have the conditions to study for the grant of chief accountant certificates. Therefore, such persons are eligible for the appointment as chief accountants because the certificates they have cannot replace the chief accountant advanced training certificates.

- The Law on Accounting (Article 53) stipulates that chief accountants of state agencies, organizations, and public service providers using state budget, and enterprises whose over 50% charter capital is held by the State, apart from the tasks specified in Clause 1 of this Article, are also responsible for assisting the accounting units’ legal representatives in financial supervision of the accounting units. Therefore, regulations prescribed in the Law (Clause 2 Article 53) have yet to mention the tasks of chief accountants at accounting units that are agencies with tasks of state budget collection and expenditure at various levels; public service providers not using the state budget assisting legal representatives of accounting units in the financial management of such units.

From the reality mentioned above, it is necessary to review and amend regulations on accountants, accounting officers, and chief accountants consistent with the current and future reality.

2.15. Regarding the organization of the accounting apparatus and chief accountants

Currently, the Law on Accounting (Article 54) stipulates the conditions for appointing chief accountants are to have chief accountant certificates without stipulating accountant certificates or auditor certificates. In reality, persons with professional qualifications and accountant certificates or auditor certificates do not have time to study for the grant of chief accountant certificates. Therefore, regarding the standards and conditions of chief accountants, it is necessary to have additional conditions for having chief accountant certificates or accountant certificates, or auditor certificates.

Regulations on standards of chief accountants and accounting officers are similar Therefore, small and micro-enterprises may allocate accounting officers without having to allocate chief accountants, which is practically meaningless.

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Via the practical implementation of the Law on Accounting, several opinions from reality suggest that the arrangement of chief accountants at accounting units in the state or public sector is not necessary. Regarding small-scale units, the arrangement of accounting units will cause difficulties. However, if the accounting apparatus is not maintained, there must be appropriate regulations on reports and compliance with the budget of units. Therefore, this content must be carefully studied to be consistent with the requirement for budget management and public finance at central and local levels. 

2.16. Regarding accounting service business operations

- The Law on Accounting (Article 59) stipulates that foreign accounting service enterprises may conduct capital contributions with individuals to establish accounting service enterprises.   However, Clause 4 Article 59 stipulates that foreign accounting service enterprises engaging in the business of accounting services in Vietnam shall conduct capital contributions with established accounting service enterprises operating in Vietnam. In reality, documents proving that foreign enterprises engage in the business of accounting services face many difficulties and the management does not have practical results. Therefore, this regulation is requested to be reconsidered.

- The Law on Accounting stipulates the conditions for granting Certificates of Eligibility for engaging in the accounting service business.  During the implementation, there have been many difficulties generated in reality. Regarding this content, it is necessary to clearly stipulate if one or all of the legal representatives are practicing accountants according to the 2 following cases:

+ Regarding the type of Limited Liability Company or partnership, there should only be 1 legal representative, director, or general director who is a practicing accountant. It is not recommended to request all legal representatives to be practicing accountants because enterprises may operate in many sectors, and with many legal representatives, each one will be in charge of a different sector.

+ Have clearer regulations on having many legal representatives. If an accounting service enterprise has many legal representatives, all of them must be practicing accountants.

- Additionally, it is necessary to:

+ Conduct reviews to have regulations consistent with WTO Agreements on not restricting foreign investors from establishing accounting service enterprises in Vietnam.

+ Review and amend business conditions for private enterprises in the direction of regulations on having only 1 practicing accountant or at least 1 practicing accountant instead of requiring 2 practicing accountants. 

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+ Request the removal of the regulation on labor contracts for practicing accountants prescribed in Clause 4 Article 61. The reason is that in the application for the certificate of eligibility for engaging in the accounting service business, it is stated that the application for accounting practice of an individual already has copies of the full-time labor contract at the accounting service unit.

+ Request the amendments to cases of re-issuance of certificates of eligibility for engaging in the accounting service business when there are changes to information on certificates of eligibility for engaging in the accounting service business on legal representatives, directors, and general directors (instead of just changes to the first and last name like now), including consideration for removing cases of changing the address of headquarters of accounting service branches.

+ Reconsider regulations on revoking certificates of eligibility for engaging in the accounting service business if there is a failure to remedy violations of the maintenance of business conditions within 60 days from the date of suspension. Request additional regulations on enterprises will have their certificates of eligibility for engaging in the accounting service business revoked within 6 months from the date of notifications of ineligibility for engaging in the accounting service business. Because in reality, there have been many cases of ineligibility for engaging in the accounting service business, but the Ministry of Finance of Vietnam is not notified, so enterprises are not warned or suspended from engaging in the business of accounting services. When such acts are discovered, the suspension period has expired, but enterprises are not suspended, so certificates of eligibility for engaging in the accounting service business of such enterprises cannot be revoked.

+ In reality, when an enterprise is ineligible for registering the practice, it will be prohibited from conducting accounting practice. Therefore, study the annulment of Point b clause 6 Article 69 on practicing accountants ineligible for registering the practice will be suspended from practicing accounting services.

2.17. Regarding accounting service provision

The Law on Accounting stipulates that to establish an enterprise that provides accounting services, there must be at least 2 persons with accountant certificates, and the director of the enterprise must have a practicing certificate of accounting for at least 2 years. Enterprises may be established under the form of a Limited Liability Company with two or more members (similar to independent audit enterprises) and have the charter capital following regulations of the Government of Vietnam. Persons with practicing certificates of accounting working in enterprises shall contribute capital of at least 50% of the charter capital of units.

However, current regulations may limit the development of enterprises providing accounting services. On the other hand, these regulations are not similar to regulations in the Law on Tax Administration on the provision of accounting services for micro-enterprises.

Therefore, it is necessary to re-review practicing conditions and conditions for registering the business of accounting services to be consistent with reality and synchronous with other regulations of laws on accounting practice.

2.1.8. Regarding professional accounting organizations

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Currently, the Vietnam Federation of Accountants and Auditors (VAA) is a professional accounting organization that has been converted to the model of an Association. The establishment of the organization and operations of the Association shall comply with regulations on associations, with the obligation to comply with accounting laws. However, there are no specific regulations on laws on associations.

To implement the Accounting and Auditing Strategy by 2030, according to regulations on laws on associations, it is necessary to have appropriate regulations in the Law on Accounting for professional associations may efficiently participate in the development of laws on accounting - audit, the development and promulgation of legal regulations related to operational responsibilities of professional organizations of accounting - audit, and the development of organizational models of public operations in a uniform, self-governing, and professional manner, complying with international practices and attracting a large number of participants.   Improve the efficiency of the participation in the development and criticism of policies; improve the capacity for the management and supervision of compliance with professional standards, standards and regulations on professional ethics of accountants and auditors; inspect the quality of services and provide advanced training in professional knowledge and professional ethics for accountants - auditors; organize exams and issue professional certificates under regulations of laws.

Specifically, it is necessary to conduct a study to assign professional operations consistent with the law and capacity of professional associations following an appropriate roadmap, ensuring principles of stabilization and taking legal liability.

2.19. Regarding state management of accounting

Aside from studying regulations for units to cooperate efficiently, the comprehensive program on state administrative reform 2021 - 2030 shall be implemented, and it is necessary to study regulations in the Law on Accounting on the decentralization in the management, inspection, and supervision in a more ’clarified manner to ensure feasibility and efficiency in practice.

Study to have clearer regulations in the Law on Accounting on responsibilities of agencies and units in providing guidelines on accounting for banks and credit institutions.

2.20. Regarding accounting software

Currently, accounting software is developed relatively diverse with different qualities due to the experience and capability of accounting software providers and the ability of accounting units to grasp and provide technical requirements for software providers based on the understanding and use of applications of accountant staff and employees of accounting units.

This reality requires new and principled regulations in the Law on Accounting, which are professional requirements, to ensure the quality of accounting software and system applications that accounting units use during their accounting work and management.

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3.1. Promulgation and disclosure of accounting standard systems

- Determine the appropriate reporting framework suitable for each type of enterprise to improve the efficiency of information on finance and accounting[7]. Implement the application of international financial reporting standards in Vietnam following the roadmap determined by the Ministry of Finance of Vietnam for enterprises requesting the application or eligible for such application. Develop and implement Vietnam's financial reporting standards consistent with international practices and conditions of Vietnam to replace Vietnam's system of corporate accounting standards. Promulgate documents on accounting guidelines for medium, small, and micro-enterprises.

Regarding the system of financial reporting standards, there must be clearer orientation and assurance of conditions for using fair value in recording and presenting financial reports. This content is relatively complicated, and up until now, there are still difficulties in preparing conditions for the implementation and application.

- Disclose Vietnam's public sector accounting standards based on international public sector accounting standards, consistent with the reform trend of the management of public finance and the state budget of Vietnam. Vietnam's public sector accounting standards shall ensure requirements for establishing a uniform basis for accounting recording, which is the standard and format for preparing and presenting financial information of accounting units in the State sector, state financial reports, and local financial reports.   

3.2. Intensification of the capacity of accounting management and supervision agencies and efficiency of the inspection and supervision of compliance with accounting laws  

- Increase the capacity of agencies directly implementing accounting management and supervision; adopt appropriate measures to attract high-quality human resources to perform tasks of accounting management and supervision in a good and effective manner. Study international experience and implement appropriate schemes for organizing operations following accounting consultation models to issue decisions consistent with international practices, laws of Vietnam, and units’ practices.

- Innovate and effectively implement contents, methods, and conditions for implementing the management and supervision of accounting operations. Increase cooperation with agencies and units with tasks of inspecting and supervising financial reports and compliance with accounting laws. Cooperate with professional organizations, training institutions, and professional staff with practical experience in accounting practice to increase professional training in accounting, foreign languages, and skills in inspecting and supervising financial reports and compliance with accounting laws.

- Rely on functions and tasks to ensure the human resources for implementing the supervision of compliance with accounting laws of enterprises and organizations in the state sector and corporate sector. Focus on policies on the supervision of compliance with accounting standards of listed companies and other companies with public interest. Ensure conditions for improving the efficiency of management and supervision of the accounting service market; strictly handle violations against accounting standards and standards of professional ethics as prescribed by law.

- Concretize responsibilities and obligations of enterprises, accounting units, and individuals in increasing the publicity and transparency of financial situations, ensuring equality rights in the access to information of investors and relevant parties regarding financial reports and other financial information.

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- Increase the inspection and guidelines on the effective implementation of internal audits at enterprises, People’s Committees of provinces and centrally affiliated cities, Ministries, ministerial agencies, governmental agencies, and large-scale public service providers according to regulations of the Government of Vietnam and guidelines of the Ministry of Finance of Vietnam[8].

3.3. Development of the accounting service market  

- Determine the criteria for units with public interest in the direction of supplementing necessary subjects together with requirements for publicity and transparency of financial reports more strictly and efficiently to ensure public interests and the sustainable development of the economy. Study and determine subjects of annual financial report audit, which are large-scale public service providers, especially public service providers that cover their recurrent expenditures and expenditures on investment and public service providers that cover their recurrent expenditures.

- Develop criteria and orientations of the scale, quantity, and quality of services of accounting service enterprises consistent with practical requirements via the completion of practice policies and conditions; increase the quantity and quality of accountant staff; effectively implement solutions regarding the service supply resources to improve accounting service quality.

 - Complete and implement legal regulations, creating bases and conditions for negotiation and participation in international agreements and mutual recognition agreements regarding accounting services with other countries in the region and the world.

3.4. Development of professional associations

- Rely on regulations of laws on associations and accounting laws to develop and issue legal regulations related to operational responsibilities of professional accounting organizations; develop organizational models of professional operations in a uniform, self-governing, and professional manner, complying with international practices and attracting a large number of participants.

- Improve the efficiency of the participation in the development and criticism of policies; improve the capacity for the management and supervision of compliance with professional standards, standards, and regulations on professional ethics of accountants and auditors; inspect the quality of services and provide advanced training in professional knowledge and professional ethics for accountants.

- Study to transfer professional operations consistent with the law and capacity of professional associations following an appropriate roadmap, ensuring principles of stabilization and taking legal liability.

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3.5. Development of accounting human resources

- Innovate contents, programs, and measures to provide training and advanced training for human resources and combine theory and practice associated with the digitalization and digital transformation process in terms of accounting. Pay attention to the high-quality accounting human resources serving requirements of enterprises, accounting units, and other organizations in the whole economy in the context of deeper integration. 

- Innovate methods of studying, organizing exams, and issuing accountant certificates, ensuring that knowledge and skills satisfy requirements, international practices, and conditions for mutual recognition in the region and the world.

- Improve accountants' sense of discipline, professional qualifications, and professional ethics by innovating regulations on contents and forms of training and knowledge updates; care for and encourage training programs on international professional certificates to access practicing knowledge and skills according to international practices.

- Innovate the contents, forms, and programs on chief accountant training and advanced training; develop contents and programs on annual professional knowledge updates for chief accountants of units with public interest.

- Adopt supporting measures to improve the professional qualifications and operations of accountant staff working in medium, small, and micro-enterprises.

3.6. Intensification and expansion of international cooperation

- Increase relationships and take advantage of the support of international professional accounting organizations and non-governmental organizations in studying and exchanging accounting experience; provide technical support for the innovation of the management model of the accounting profession as well as other professional accounting techniques.

- Study models of developed countries to apply to Vietnam in the organization and management of the inspection and supervision of financial reports and activities of developing and applying financial reporting standards; development of professional accounting techniques; development of accounting services; completion of models of training, exams, and issuance of accountant certificates.

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- Increase ASEAN cooperation in the mutual recognition of accounting services, expand the exchange of professional accountants of ASEAN standards, and increase the number of Vietnamese accountants achieving ASEAN professional accounting certificates and participating in the provision of accounting services in ASEAN countries.

- Participate in the process of developing international financial reporting standards and public sector accounting standards of international accounting standard committees. Continue to provide support for professional organizations to adequately implement the membership role of organizations of the International Federation of Accountants (IFAC), ASEAN Federation of Accountants (AFA), and members of the Confederation of Asian and Pacific Accountants (CAPA).

3.7. Application of information technology and other operations

- Regarding technology application: Continue to review, reduce, and simplify administrative procedures to create favorable conditions and save time and costs for enterprises, accounting units, accounting service enterprises, and accountants. Effectively apply development achievements of information technology, satisfying requirements for the process of digitalization and digital transformation in accounting at state agencies, enterprises, and accounting units.

- Regarding other operations:  

+ Effectively and qualitatively implement the preparation of state financial reports to adequately show information on property, resources, and obligations of the Government of Vietnam and local authorities as the basis for the planning for policies on management and operation of finance and budget.

+ Develop a system of data serving the management and supervision of the accounting service market; connect information between agencies managing and supervising accounting and the stock market; ensure transparent and timely disclosure of information for the market regarding the staff of accounting enterprises, as well as practicing accountants.

+ Relevant units shall cooperate in organizing the system of information and data on the financial information of enterprises and accounting units for the utilization of data according to public services of organizations and individuals, ensuring official information is used in economic relationships and transactions.

+ Organize the accounting and financial apparatus at state accounting units in a lean and effective direction. Implement measures to improve the quality of the preparation and presentation of state financial reports, improving the accountability of units in the effective management and use of state property and resources from central to local levels. /.

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APPENDIX

DOCUMENTS GUIDING THE LAW ON ACCOUNTING

(1) Decree No. 174/2016/ND-CP dated December 30, 2016 of the Government of Vietnam elaborating on the Law on Accounting;

(2) Decree No. 25/2017/ND-CP dated March 14, 2017 of the Government of Vietnam on state financial reports;

(3) Decree No. 41/2018/ND-CP dated March 12, 2018 of the Government of Vietnam penalties for administrative violations in the fields of accounting and independent audit;  

(4) Decree No. 05/2019/ND-CP dated January 22, 2019 of the Government of Vietnam on internal audit;

(5) Decree No. 102/2021/ND-CP dated November 16, 2021 of the Government of Vietnam on amendments to some Articles of Decrees on penalties for administrative violations against regulations on tax and invoice; customs; insurance business and lottery business; management and use of public property; thrift practice and wastefulness prevention; national reserve; state treasury; accounting and independent audit;

(6) Circular No. 53/2016/TT-BTC dated March 21, 2016 on amendments to Circular No. 200/2014/TT-BTC dated December 22, 2014 guiding the corporate accounting system;

(7) Circular No. 133/2016/TT-BTC dated August 16, 2016 on accounting for small and medium enterprises;

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(9) Circular No. 292/2016/TT-BTC dated November 15, 2016 on guidelines on the annual knowledge update for practicing accountants and persons registering for accounting practice;

(10) Circular No. 296/2016/TT-BTC dated November 15, 2016 on guidelines on the issuance, revocation, and management of accounting service practice registration certificates;

(11) Circular No. 297/2016/TT-BTC dated November 15, 2016 on issuance, management, and use of certificates of eligibility for engaging in the accounting service business;

(12) Circular No. 317/2016/TT-BTC dated December 7, 2016 on guidelines for accountants to apply regarding the Environment Protection Fund of Vietnam promulgated by the Minister of Finance of Vietnam;

(13) Circular No. 24/2017/TT-BTC dated March 28, 2017 on guidelines on accounting for cooperatives and unions of cooperatives; 

(14) Circular No. 77/2017/TT-BTC dated July 28, 2017 guiding regulations on State Budget Accounting and State Treasury Professional Operations promulgated by the Minister of Finance of Vietnam;

(15) Circular No. 91/2017/TT-BTC dated August 31, 2017 of the Ministry of Finance on exams, issuance, and management of auditor certificates and account certificates;

(16) Circular No. 107/2017/TT-BTC dated October 10, 2017 guiding administrative and public accounting regulations;

(17) Circular No. 16/2018/TT-BTC dated February 7, 2018 on guidelines for financial regulations applied to credit organizations and foreign bank branches;

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(19) Circular No. 74/2018/TT-BTC dated August 16, 2018 on guidelines on accounting regulations for loans and repayments of the Government of Vietnam and local authorities; statistics and monitoring of debts from re-lending and guarantees of the Government of Vietnam;

(20) Circular No. 99/2018/TT-BTC dated November 1, 2018 on guidelines on the preparation of summarized financial reports of state accounting agencies that are superior accounting units promulgated by the Minister of Finance of Vietnam;

(21) Circular No. 102/2018/TT-BTC dated November 14, 2018 guiding social insurance accounting;

(22) Circular No. 103/2018/TT-BTC dated November 14, 2018 on accounting applied to the “For the Poor” Fund promulgated by the Minister of Finance of Vietnam; 

(23) Circular No. 108/2018/TT-BTC dated November 15, 2018 guiding national reserve accounting promulgated by the Minister of Finance of Vietnam;

(24) Circular No. 109/2018/TT-BTC dated November 15, 2018 on accounting applied to the Accumulated Fund for Debt Repayment promulgated by the Minister of Finance of Vietnam;

(25) Circular No. 112/2018/TT-BTC dated November 15, 2018 of the Ministry of Finance of Vietnam on amendments to Circular No. 174/2015/TT-BTC dated November 10, 2015 of the Ministry of Finance of Vietnam on guidelines on professional tax accounting and other collections regarding imported and exported goods promulgated by the Minister of Finance of Vietnam;

(26) Circular No. 132/2018/TT-BTC dated December 28, 2018 on accounting for micro-enterprises;

(27) Circular No. 133/2018/TT-BTC dated December 28, 2018 on guidelines on the preparation of state financial reports;

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(29) Circular No. 44/2019/TT-BTC dated July 19, 2019 on amendments to Circular No. 292/2016/TT-BTC dated November 15, 2016 of the Minister of Finance of Vietnam on guidelines on the annual knowledge update for practicing accountants and persons registering for accounting practice and Circular No. 296/2016/TT-BTC dated November 15, 2016 of the Minister of Finance of Vietnam on guidelines on the issuance, revocation, and management of accounting service practice registration certificates;

(30) Circular No, 70/2019/TT-BTC dated October 3, 2018 guiding regulations on budget accounting and commune finance promulgated by the Minister of Finance of Vietnam;

(31) Circular No. 76/2019/TT-BTC dated November 5, 2019 guiding regulations on traffic and irrigation infrastructure property accounting promulgated by the Minister of Finance of Vietnam;

(32) Circular No. 79/2019/TT-BTC dated November 14, 2019 guiding accounting regulations applied to project management boards using public capital investment promulgated by the Minister of Finance of Vietnam;

(33) Circular No. 89/2019/TT-BTC dated December 26, 2019 guiding accounting regulations applied to the Vietnam Securities Depository;

(34) Circular No. 19/2020/TT-BTC dated March 31, 2020 on amendments to Circular No. 77/2017/TT-BTC dated July 28, 2017 guiding regulations on State Budget Accounting and State Treasury Professional Operations promulgated by the Ministry of Finance of Vietnam;

(35) Circular No. 39/2020/TT-BTC dated May 15, 2020 on amendments to reporting regulations prescribed in Circulars on accounting and independent audit;

(36) Circular No. 40/2020/TT-BTC dated May 15, 2020 guiding reporting regulations on accounting and independent audit prescribed in Decree No. 174/2016/ND-CP dated December 30, 2016 guiding the Law on Accounting and Decree No. 17/2012/ND-CP dated March 13, 2012 guiding the Law on Independent Audit;

(37) Circular No. 66/2020/TT-BTC dated July 10, 2020 promulgating modal regulations on internal audit applied to enterprises;

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(39) Circular No. 08/2021/TT-BTC dated January 25, 2021 promulgating standards of internal audits and principles of professional ethics;

(40) Circular No. 09/2021/TT-BTC dated January 25, 2021 guiding the inspection of accounting service operations;

(41) Circular No. 26/2021/TT-BTC dated April 7, 2021 guiding accounting work during the conversion of public service providers into joint-stock companies;

(42) Circular No. 39/2021/TT-BTC dated June 1, 2021 on amendments to Circular No. 133/2018/TT-BTC dated December 29, 2018 of the Minister of Finance guiding the preparation of state financial reports;

(43) Circular No. 88/2021/TT-BTC dated October 11, 2021 on accounting for households businesses and individual businesses promulgated by the Minister of Finance of Vietnam;

(44) Circular No. 90/2021/TT-BTC dated October 13, 2021 guiding accounting regulations applied to the Non-Budget State Financial Fund promulgated by the Minister of Finance of Vietnam. 

[1] The Law on Accounting No. 88/2015/QH13 dated November 20, 2015.  

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[3] Clauses 1, 2, and 3 stipulate that accounting documents must be stored for a period of 5 years, 10 years, and permanently stored.

[4] For example, when units perform one of the methods of disclosing, such as issuing publications; notifying in writing; listing; posting on their pages or other forms as prescribed by law.

[5] For example, the Law on Credit Institutions, Law on Securities, Law on Investment, Law on Insurance Business, etc., have their typical regulations.

[6] Several provincial social organizations, such as the Association for the Blind and Association for Study Promotion are identified as accounting units. However, their organizational apparatus is ineligible for establishing the accounting apparatus.

[7] The reporting framework for enterprises includes: enterprises that apply international financial reporting standards; enterprises that apply Vietnam's financial reporting standards; enterprises that apply regulations on corporate accounting for small and medium enterprises and enterprises that apply regulations on corporate accounting for micro-enterprises.

[8] According to Decree No. 05/2019/ND-CP dated January 22, 2019 of the Government of Vietnam on internal audit.