Estimation of Benefits and Difficulties When Applying IFRS in Vietnam: From Business Perspective

While many countries around the world have adopted IFRS at different levels, Vietnam is in the process of IFRS adoption by 2022. The study was conducted through the survey of 119 directors and accountants to estimate the benefits and difficulties of applying IFRS in Vietnam. The forecast content include (i) Business benefits; (ii) Benefits for investors; (iii) Benefits to policy makers; (iv) Benefits for state management agencies; (v) Challenges of applying IFRS. By regression analysis, the forecast results showed that all factors have a significantly affect on the IFRS adoption in Vietnam and they explain 54.5% of the reasons for the application. The group of benefits has a positive impact on IFRS application in Vietnam, of which, the strongest impact is the business benefits, while the challenge factor has a negative impact on IFRS adoption in Viet Nam. This result suggests policy implications for the application of IFRS in Vietnam.


Introduction
The International Accounting Standards Board (IASB) issued a new accounting principle named International Financial Reporting Standards (IFRS) in 2001, with the purpose of increasing transparency and comparability of information on the financial statements. Research proved that the IFRS application reduces the cost of preparing financial statements for companies attract domestic and foreign investment (Odia and Ogiedu, 2013). Many countries have chosen IFRS adoption instead of establishing their own accounting standards such as Australia, Hong Kong, European countries (Merve et al., 2014). Up to now, IFRS system has been accepted and adopted by many countries. By 2016, there were 117 countries adopting IFRS. Currently, Vietnam has issued 26 accounting standards based on International Accounting Standards (IAS) that known as Vietnamese Accounting Standards (VAS). However, this system has revealed many limitations that have been not suitable with the market economy system. Particularly, it has not adopted fair value accounting and has not issued financial instruments. The difference between VAS and IFRS has reduced the trust of foreign investors (Tu Oanh et al., 2019;Downes et al., 2018). The Vietnamese Ministry of Finance and relevant agencies have been taking the necessary steps for the IFRS application roadmap up to 2022. Therefore, many studies in Vietnam were conducted to assess the difference between VAS and IFRS, feasibility, benefits, challenges when applying IFRS, thereby, implementing the use of IFRS in financial statements.
This study investigated factors affecting the adoption of IFRS in Vietnam through collecting opinions of managers and accountants on the benefits and difficulties when applying IFRS in Vietnam, thereby proposing potential solutions for the effective adoption of IFRS in Vietnam.

Improving efficiency of cost control
The applications of IFRS provide a more reliable and truthful picture about the current financial situation, performance operations, and fair value of enterprises. Studies conducted in Bangladesh, Turkey and India from Joanne et al., (2016), Merve et al., (2014), Kapoor and Ruhela (2013) proved that the implementation of IFRS facilitates better control systems since the sources of reported information were more reliable. Ocansey and Enahoro (2014), Boateng et al., (2014), Okpala (2012) conducted studies in Ghana and Nigeria and found that the applications of IRFS help companies to improve the efficiency of the internal audit and facilitate better risks control, thus, the cost of auditing reduces more than 7.6%. Furthermore, Alkhtani (2012) conducted a study in Saudi Arabia, Dimitropoulos et al., (2013), Ballas et al., (2010) carried out studies in Greece, Chand et al., (2010) conducted a study in in Fiji, Joshi et al., (2016), Madawaki (2014), Lasmin (2012), Choi et al., (2011) conducted studies in Southeast Asian countries such as Singapore, Malaysia and Indonesia. The results proved that IFRS helps to reduce capital costs and improve stock prices. Ocansey and Enahoro (2014), Boateng et al., (2014), and Okpala (2012) investigated companies in Ghana and Nigeria and found that IFRS help to improve companies' competitiveness. Girbina et al., (2012) and Mihai et al., (2012) conducted studies in Romania and provided that the applications of IFRS enables a healthy investing environment which attracts investment from foreign companies and reduces political pressure on multinational companies. Joanne et al., (2016), Bunea et al., (2012), Bohušová and Blašková (2011) conducted studies on small and medium-sized enterprises and found that IFRS is very useful in guiding the applications in local environment for multinational companies. IFRS also allows professional accountants to work efficiently in different countries, especially countries in the region. Some studies in developing countries demonstrated that IFRS benefits were easier for accountants to prepare reports basing on common standards, and provide more transparent and understandable information (Joshi et al., 2016;Madawaki, 2014). ISSN 1923-4023 E-ISSN 1923-4031 Chen et al., 2010John, 2018;Siriyama et al., 2017;Alkhtani, 2012;Dimitropoulos et al., 2013).

Benefits for policy makers
For policymakers, the IFRS adoption helps industry authorities to improve regulatory supervision and enforcement, provide higher standards for financial disclosure, provide better information for market participants, attracting and monitoring the list of foreign companies better (John, 2018;Siriyama et al., 2017;Joshi et al., 2016;Kapoor and Ruhela, 2013;Lasmin, 2012;Choi et al., 2011). Katta (2014) investigated countries which have applied IFRS and found that listed companies benefit from economic integration such as accessing domestic and foreign capitals, maintaining competitiveness and sustainable development. A study investigated the impact of IFRS in Europe, Asia and Africa and proved that capital cost of European companies is estimated to improve by 1%. Although this figure is relatively small, the absolute number is very large because it is calculated by the amount of money/total market value of all shares of these companies. In Asia, Joshi et al., (2016), Lasmin (2012), Choi et al., (2011) conducted studies in developing countries such as Singapore, Malaysia and Indonesia and investigated the relationship between financial statements and stock prices. The studies found that stock prices increased significantly after these companies applied IFRS.

Attracting and developing foreign investment
The adoption of IFRS in each country demonstrates the strong commitment of the government in protecting investors and creating a healthy business environment for the purpose of sustainable development. IFRS helps companies to attract resources from abroad and raise capital at low costs on the international market. John (2018), Siriyama et al., (2017), Alkhtani (2012), Dimitropoulos et al., (2013), Ballas et al., (2010) in Nigeria, Saudi Arabia and Greece conducted studies and proved that foreign investment increases 15.3% indicating that investors have increased confidence, creating positive signals for economic development.

Creating opportunities for enterprises to access international capital at a reasonable cost
IFRS is the global language which is widely accepted by international investors. Foreign investors are more cautious with financial statements that prepared according to each country's accounting standards because of the lack of uniformity and transparency. Therefore, attracting investment capital will be more difficult in this case. This conclusion was proved by the research of Boateng et al., (2014), Okpala (2012) on the ability to attract loans from businesses in Ghana and Nigeria; Girbina et al., (2012), Mihai et al., (2012) presents opportunities for low-cost loans to Romanian companies from international markets.

Strengthening the support from IASB
The adoption of IFRS helps to reduce the costs of setting national accounting standards and enables countries to receive support from IASB in exchanging information, updating on-going projects and impact of such projects on companies. Furthermore, countries can contribute to the revision of the IFRS (Joanne et al., 2016).

Benefits for authorities
One of the most obvious benefits of IFRS for the government is providing useful information for management decisions, administration, risks control, and decisions related to inspection, examination and supervision of the authorities. IFRS requires companies to increase accountability, improve transparency of financial statements and comparability among companies. In addition, it requires financial transactions to objectively and truthfully reflect the actual situation and performance of companies according to financial disclosure requirements. Therefore, information on performance of companies is relatively reliable and useful for the market participants (Downes et al., 2018, DeFond et al., 2011, Bhattacharjee, 2010. Furthermore, IFRS helps to improve the monitoring and enforcement of regulations (John, 2018;Siriyama et al., 2017) and attract foreign investment (Kapoor, 2013;Chand et al., 2010). ISSN 1923-4023 E-ISSN 1923 changing software system, testing, and implementation. Downes et al., 2018, Xinyun et al., (2017, Young & Zeng (2015), Katta (2014), Jones & Finley (2011), Ballas et al., (2010) investigated difficulties in applying IFRS including costs, time, complexity required for the changes.

Human resources issues:
The training of accounting resources plays an important role in providing information, therefore, the training of accountants to present financial statements according to IFRS has received much attention from researchers. John (2018) showed that accountants in Nigerian businesses could not present their financial statements under IFRS because they were not equipped with knowledge of IFRS. On the other hand, it is necessary to raise the awareness of managers on IFRS to support accountants. The results of Samaha and Khlif (2016), ATU et al., (2016) studied in developing countries, Abd (2014) investigated Middle Eastern countries, Mohamed (2014) conducted a study in Libya that pointed out the main barriers to IFRS implementation was the ability to understand and apply IFRS of the current accounting team.

Legal issues:
The accounting systems of many countries are affected by tax regulations and financial laws. The implementation of IFRS can create vast differences between accounting and tax regulations (Samaha andKhlif, 2016, ATU et al., 2016). Studies suggested that it is necessary to modify the current legal system to create a facilitating environment for IFRS (Mohamed, 2014). Xinyun et al., (2017), Young and Zeng (2015) investigated difficulties when IFRS are regularly changed and updated annually. Raoudha (2016), Jones andFinley, 2011, Ballas et al., 2010 proved that since IFRS requires the measurement of the assets and liabilities of enterprises at market value at the reporting time, the market needs to be relatively developed be able to provide reliable information. Samaha and Khlif (2016) and ATU et al., (2016) conducted studies in undeveloped and developing countries and found that the capital markets, financial markets were developing, and certain financial instruments such as convertible bonds, derivatives, preferred stocks have not been widely traded in the market. Therefore, most companies had not had experience in recording transactions in such contexts. Furthermore, the determination of fair value of markets varies widely, and the applications of IFRS among countries are also different (some countries fully or partially applied), making it difficult to compare different financial statements.

Adoption of IFRS
There are two methods for applying IFRS: (i) Approving the entire IFRS as a national standard and (ii) Approving separately each IFRS standard. Accounting standards are applied natively and without modifications in both methods. On the scope of application, all updates and changes in the IFRS will be effective simultaneously for the country applying the IFRS in the first method and all changes to the IFRS will be considered for partial application in the second one. According to compliance, the first allows for the highest level of compliance with IFRS and minimizes risks of inconsistencies while the second has more flexibility, allowing the country to choose at the appropriate level. However, the first method may reduce the comparability of financial statements or fail to catch up with the rapid changes of market economic transactions. The second method is also considered a transitional solution after which the country will move to apply the first one.
Assessing the orientation of adoption IFRS in Vietnam, this study inherited the results of the authors: (1) The study of Adejoh & Hasnah (2014)  Period of IFRS application: From the experience of applying IFRS in countries, the time needed for transition from national standards to IFRS is considered at the following points: (i) under 3 years, ( ii) 3-5 years; (iii) 5-10 years Business of IFRS application: A common trend of countries around the world is to apply IFRS in advance to public companies, followed by encouraging businesses to apply, and finally force enterprises to apply. ISSN 1923-4023 E-ISSN 1923

Methodology
This study uses the scales of previous studies John (2018)   The total questionnaires distributed was 200, included the North and the South of Vietnam with diverse types of businesses. The number of answers received was 156 (78%). The data is cleaned with valid answers was 119 and put into analysis on SPSS software. The sample size appropriates for the study according to Tabachnick and Fidell (1996), for the multiregression analysis, the minimum needed sample size is calculated by the formula: n = 50 + 8 * m (In which, m: number of independent variables). In this study, there are 5 independent variables, so the minimum sample size is: n = 50 + 8 * 5 = 90. H4. The benefits for authorities have positive impacts on the adoption of IFRS in Vietnam.

Regression equation
Based on the research hypotheses, the regression equation which reflects the correlation between influential factors and the adoption of IFRS as follows: Adoption of IFRS = α + β 1 BEN i + β 2 BIN i + β 3 BPO i + β 4 BAU i + β 5 CHA i + ε i In which: α: constant β i : regression coefficient ε i : residual Independent variables: The benefits for enterprises (BEN); The benefits for investors (BIN); The benefits for policy makers (BPO); The benefits for authorities (BAU); Challenges of implementing IFRS (CHA).

Dependent variables: Adoption of IFRS
Adoption of IFRS is considered in the following aspects: Scope of application: In section 2.3, we have mentioned 2 adoption of IFRS methods: (i) Approving the entire IFRS and (ii) Approving separately IFRS standard. Vietnam has chosen the second method by developing 26 VAS. In fact, Vietnam has faced challenges in the drafting process and led to inconsistencies compared to the general principles set out in the framework of preparing and presenting the financial statements of IFRS. Therefore, the general trend in Vietnam will be to use the method of recognizing IFRS as a national standard.
The object of application: IFRS is designed for profit-driven and oriented towards capital markets. Therefore, the standards is required to be applied by entities of public interest, including listed and financial institutions.
The application period: As the experience of applying IFRS in countries, the necessary time for transition from national standards to IFRS is considered at the following points: (i) under 3 years, (ii) 3-5 years; (iii) 5-10 years. ISSN 1923-4023 E-ISSN 1923-4031  .000 Source: Compiled by the authors based on research results. Table 3 shows that Kaiser-Meyer-Olkin (KMO) = 0.770 > 0.5 which means the sample is adequate and factor analysis can be proceeded. Secondly, the Barlett's test shows that the value of significance was 0.000 which is lower than 0.001. This means factor analysis is valid and there may be statistically significant interrelationship between variables.  .693 Source: Compiled by the authors based on research results. Table 5 shows that, all loading factors were greater than 0.5, thus 20 observation variables are strong and valid. Particularly, BEN1 (benefits for enterprises regarding improving the quality of information) had the strongest impact on the dependent variable (the adoption of IFRS); BPO4 had the smallest impact on the dependent variable.

Correlation Analysis
Correlation analysis was conducted with 5 independent factors (BEN, BIN, BPO, BAU, and CHA) and the dependent factor which is adoption of IFRS. The purpose of correlation analysis is to quantify the relationship between the dependent variable and the independent variables as well as the relationship between independent variables before conducting regression analysis. In particular, the dependent variable is measured by two scales, which is the full adoption of IFRS and partial adoption of IFRS. The results of correlation analysis are shown as follows: *. Correlation is significant at the 0.05 level (2-tailed).
The above table shows that all variables BEN, BIN, BPO, BAU, and CHA had significance valuces smaller than 0.05. Therefore, all independent variables are correlated with the dependent variables (the adoption of IFRS). However, the pearson correlation coefficients between variables were relatively small (<0.65) which reflects the poor correlation between the independent variables and dependent variables. Some independent variables are correlated but at low levels, so there is no multicollinearity phenomenon between independent variables. Thus, the research data is appropriate for conducting regression analysis to quantify the influence of each factor on the dependent variable.

Regression Analysis
The results of regression analysis are explained as follows:  Table 7 shows that the Adjusted R Square of 0.545 means that the independent variables can explain 54.5% of the variance of dependent variable. Thus, apart from factors BEN, BIN, BPO, BAU, and CHA the adoption of IFRS depends on other factors.
Testing for autocorrelation: Table 7 shows that Durbin -Waston = 1.646 which means there is no autocorrelation.
Testing for multicollinearity: Table 9 shows that VIF of independent variables ranging from 1.352 to 1.993 < 2.0; therefore, there is no multicollinearity.
The regression analysis was conducted using Enter method. The results are as follows:  Table 9 shows that hypotheses H1, H2, H3, H4, and H5 are accepted. In other words, BEN, BIN, BPO, and BAU have positive impacts on the adoption of IFRS. Particularly, BEN have the strongest impacts on the adoption of IFRS (β 1 = 0.341), which is followed by BIN (β 2 = 0.272), BAU (β 4 = 0.257), and BPO (β 3 = 0.181). Challenges of adopting IFRS (CHA) have negative impacts on the adoption of IFRS (β 5 = -0.254). Furthermore, all variables had significance values smaller than 0.05; therefore, these factors are statistically significant. Additionally VIF = 1.352, this means there is no multicollinearity.

Conclusion and Recommendations
This study investigated factors affecting the adoption of IFRS in Vietnamese accounting. The results showed that the application of IFRS bring many benefits to enterprises, investors, policy makers and authorities. In particular, the benefits for enterprises were rated the highest, which was followed by benefits for authorities, and benefits for policy makers.
Firstly, regarding the benefits for enterprises, IFRS requires the strengthening of corporate accountability, thus increasing the transparency of financial statements and comparability among companies. IFRS requires transactions to truthfully reflect their nature rather than their name or legal form, which enables business performance to be reflected objectively and reliably. Therefore, benefits for enterprises were investigated according to 4 aspects: (i) improving the quality of financial statements and improving the management efficiency. This item had the strongest impact on the adoption of IFRS (0.911); (ii) Attracting domestic and foreign investment of individuals and organizations. This item had the second strongest impact on the adoption of IFRS (0.903); (iii) Improving the effectiveness of control and reduce audit costs (0.881); and (iv) Improving competitiveness and facilitating easier accounting work ( Secondly, regarding the benefits for investors, when adopting IFRS, the board of directors must disclose detailed bases for the recognition and presentation of the financial statements, explain the specific causes in cases where it is not possible to comply with the standard, clearly identify the risks that enterprises may face during the course of operations. Therefore, the financial statements provide useful and reliable information to investors for decision making. In this study, benefits of IFRS for investors are (i) providing reliable bases for decision making; (ii) increasing the confidence of investors; (iii) reducing risks for investors; and (iv) providing bases for comparison and evaluation to select better investment opportunities. The research results showed that the benefits had impacts in the reverse order from which they were written above. This research results are consistent with the studies from John and Gaston et al., (2010). However Siriyama et al., (2017) and Alkhtani (2012) argued that the greatest benefit of IFRS is to reduce risks for investors.
Thirdly, regarding the benefits for policy makers: this factor is measured by four items (i) promoting the development of the stock markets which had the strongest impact on the adoption of IFRS. This study examined the creating opportunities for companies to access international capital at a reasonable cost, and (iv) strengthening the support from IASB. The research results showed that the benefits had impacts in the reverse order from which they were written above. The results are consistent with studies from Siriyama et al., (2017), Joshi et al., (2016, Choi et al., (2011), Lasmin (2012, Boateng et al., (2014), Okpala (2012). However, the exact magnitude of the impacts varied among the studies.
Fourthly, regarding the benefits for authorities, The application of IFRS provide useful information for the government in making decisions on management, administration, risk control and decisions related to the inspection, examination and supervision. The findings are consistent with studies from result John (2018); Siriyama et al., (2017), Kapoor (2013), DeFond et al., (2011, Bhattacharjee (2010) which showed that IFRS requires companies to increase accountability, improve transparency of financial statements and comparability among enterprises, and helps the authorities to provide requirements for the presentation of financial statements according to financial disclosure standards.
Fifthly, regarding the challenges, a large proportion of respondents stated that the biggest difficulty of implementing IFRS was market problems. The reason is that IFRS requires recognition at fair value, while developing capital markets and financial markets cannot provide reliable information about fair value of assets or liabilities. Furthermore, certain transactions are not available in the markets because other markets are not synchronized. For example, certain financial instruments such as convertible bonds, derivatives, preferred stocks have not been widely traded in the market. Therefore, most companies had not had experience in recording transactions in such contexts. Samaha and Khlif (2016), ATU et al., (2016), Downes et al., 2018, Xinyun et al., (2017, Young and Zeng (2015), Katta (2014), Jones and Finley (2011) investigated difficulties of implementing IFRS regarding the markets issues in developing countries. KPMG Vietnam (2018) provided that the initial adoption of IFRS is costly. Tu Chuc Anh et al., (2019) provided that the implementation of IFRS is costly due to training costs, hiring experts to provide guidelines for staff. Tu Oanh Le Thi et al., (2019) pointed out one of the most challenging issues when applying IFRS in Vietnam is converting cost. In addition, human resource issues are also big problems of implementing IFRS (Samaha and Khlif, 2016;ATU et al., 2016).
For Vietnamese SMEs, the purpose of the IFRS is to give regulations on accounting information in quality, understandable and comparable. IFRS for SMEs focuses on other types of transactions and events to meet the needs of over 95% SMEs worldwide. Accounting information that is not suitable for SMEs will be eliminated in IFRSs for SMEs such as earnings per share, semi-annual reports and partial reports. IFRS for SMEs complies simple accounting policies. Many accounting principles in measuring and recording Assets, Liabilities, Income and Expenses in IFRSs for SMEs are simplified, for example, depreciation of goodwill, borrowing costs and capitalization, accounting for investments in joint ventures, financial instruments… There are fundamental differences between IFRS and IFRS for SMEs, so besides the issuance of IRFS for enterprises in general, it is essential for Vietnam to issue IFRS for SMEs.
In summary, the adoption of IFRS is a challenge for Vietnam because the capital markets and the stock market are developing, the qualifications and proficiency of auditors, accountants and investors are low. Therefore, preparing and presenting financial statements in accordance with IFRS requires significant efforts from management agencies in charge of accounting, enterprises, professional organizations and people working in accounting and finance. In other words, the implementation of IFRS in Vietnam requires cooperation of the government, enterprise, and individuals. Potential actions can be done to promote the adoption of IFRS and its benefits in Vietnam: (i) refine the requirements and policies for the adoption of IFRS in Vietnam. It is necessary to establish regulations and guidelines to implement special techniques of IFRS such as recognition of loss on assets, derivative instruments, and how to determine the fair value of certain assets, financial assets, properties. The legal regulations on finance and accounting should be amended to avoid conflicts and duplication; (ii) establish a roadmap including clear visions and missions for the adoption of IFRS in Vietnam. This is the responsibility of the authorities in regard to accounting; and (iii) raise awareness about the role financial statements prepared according to IFRS. It is necessary to advertise the benefits and necessity of IFRS so that managers, investors, and accountants understand the need of presenting financial statements according to IFRS. (iv) strengthen training regarding IFRS for experts, lecturers, auditors and accountants. Especially, universities should incorporate IFRS in training programs. Furthermore, professional organizations and associations should enhance the promotion and introduction of IFRS as well as provide guidance to companies regarding the implementation of IFRS.