Test for the fourth hypothesis - Hypotheses testing

CHAPTER 4 RESULTS AND DISCUSSION

4.2 Hypotheses testing

4.2.4 Test for the fourth hypothesis

Means and frequency distributions of challenges items

Responses to the expected challenges of applying IFRSs illustrates in Table 4.18.

The answers of the respondents’ scores were measured on a five-point Likert scale from 1 “strongly disagree” to 5 “strongly agree”. The higher the score, the more the respondents agreed with the statement; the lower the score, the more the respondents disagreed with the statement. The following depicted the mean values, t-value and frequencies of responses. The mean scores of expected challenges item: “IFRSs are more complex than the current situation” ranked the highest (mean correlatively equal 4.35), and the mean score of item “to change the mindset of finance personnel” ranked the lowest (mean = 2.96).

Disagree Disagree Undecided Agree Strongly Agree T

(Sig.) 1. IFRSs are more complex than the current

situation 4.35 21.242 2. I think language (English) will be the barrier to

adopting IFRSs 3.68 7.862 3. Knowledge of IFRSs is still limited 4.01 15.685

.000^*** 3 4. Training of accounting and management staff 4.34 26.608

.000^*** 5. To change the mindset of finance personnel 2.96 -.469

.640

As indicated in Table 4.18, in terms of challenges of using IFRSs on average the respondents agreed mostly with: (1) IFRSs are more complex than the current situation (mean = 4.35 and most frequent answer was strongly agree with 46.7%), (2) training of accounting and management staff (mean = 4.34 and most frequent answer was agree with 60.7%), (3) knowledge of IFRSs is still limited (mean = 4.01 and most frequent answer was agree with 57.4%), and (4) the language (English) will be the barrier to adopting IFRSs (mean = 3.68 and most frequent answer was agree with 40.2%). The only one statement that the respondents disagreed with (or were undecided about) was

“to change the mindset of finance personnel” (mean = 2.96, most frequent answer was undecided with 36.9%).

Looking more specifically at the fifth statement “to change the mindset of finance personnel”, there are thirty six respondents (29.5%) were strong agreed or agreed, forty one respondents (33.6%) were disagreed or strong disagreed, and forty five others were undecided. Interestingly, a one way ANOVA (Table 4.19) with Scheffe test suggested a significant difference (p < 0.01) among lecturers and accountants in evaluating this statement. Lecturers reported a higher agreed with mean = 3.26 and 43.8% agreed or strongly agreed. To the contrary, accountants showed a disagreement with this statement (mean = 2.49, 43 accountants (91.4%) strongly disagreed, disagree or undecided). The reason may because this statement relates to financial people including accountants. In some respects, people do not usually self-evaluate highly weaknesses of themselves and they try explaining their weakness in the positive way.

Therefore, the accountant in this study have a lower agreement with this challenge is understandable.

Table 4.19

To Change the Mindset of Finance Personnel vs. Job – An One Way ANOVA

Job F

Generally, the first challenge for applying IFRSs is to train the accounting and financial staff. Improving their capacity is very important because IFRSs are made for big companies in the developed countries (Jermakowicza and Gomik-Tomaszewskib, 2006) so they are much more complex than VASs. Furthermore, IFRSs have many complex and polysemantic terminologies which are presented in English, while the common language used in Vietnam is Vietnamese. Therefore, to apply IFRSs, professional accountants of Vietnam’s MOF firstly need to vietnamize all terminologies in IFRSs then make sure everyone can fully understand and apply them in the right way.

It is impossible to finish all of them right away or in a short of time. Thus, Vietnam’s MOF should make a clear step-by-step plan to apply IFRSs that includes increasing accountant's awareness of IFRSs, issuing the standards lacking compared to IFRSs, and quickly bringing IFRSs into education.

Test for the fourth hypothesis

In this part we test the third hypothesis – namely, the challenges of applying IFRSs in Vietnam are clear. The third column of Table 4.19 provides the results of one sample t-test analysis of how respondents agree about expected challenges of applying IFRSs. In which the four (80%) of total 5 challenge items have statistically significantly different from the test value of 3 (p < 0.05) with the positive T-value. It means that the sample has a significance higher mean on the evaluation of these challenges than 3

“undecided”.

While, the findings of this test was showed that only a challenge is “to change the mindset of finance personnel” has no statistically significantly different from the test value of 3 (mean = 2.96). It means that this challenge may not real happen in Vietnam.

Moreover, when we calculate the average mean of all expected challenge items, the result is 3.87. This number means that, in general, the respondents tend to agree with the expected challenges of applying IFRSs. This suggests that the main hypothesis – namely, “the challenges of applying IFRSs in Vietnam are clear” is accepted.

Summary

The purpose of this study is to examine the possible solutions regarding the most suitable timing and the best way to apply IFRSs in Vietnam. The key findings and discussion are explicated in the following:

Firstly, the respondents participating in this study were 148 people including 80 lecturers, 62 accountants and 6 auditors and financial officers. Notably, more than a half of respondents have invested in the stock market. So the sample seems to be represented not only the accounting lecturers and the accountants but also the investors in Vietnam.

Furthermore, it has negligible difference between genders, therefore this sample can somewhat ensure an objectivity when making assessments to the general population.

The findings also suggest that the teaching of IFRSs at the universities in Vietnam is a negligible. It is possible that this leads to the lack of adequate knowledge of accountants and auditors about IFRSs at this time.

Secondly, the first hypothesis that “the information of IFRSs in Vietnam is adequate and diversified” is rejected. According to responses, lecturers show a greater satisfaction with IFRSs resource than accountants. The reason is that the lecturers have high levels of scientific research and usually study in theoretical accounting, as well as helping to apply this knowledge practically. They also have many more opportunities to attend conferences, to read books, newspapers and magazines.

Generally, almost all of the young respondents (less than 45 years old) reported that they know IFRSs from the internet. People who have master's or doctor's degree and have invested in the stock market, have higher opportunities to know IFRSs from conferences, newspapers and magazines. Moreover, the findings show that even now twenty six respondents have no knowledge of IFRSs. Then, to increase the accuracy of analytical results, people who have never known about IFRSs will be excluded from continued analyses.

Regarding the frequency of contacting IFRSs resources, the most common frequency response is several times a month with the average time if 2.94 hour. The primary reason for contacting the IFRSs information was the necessary for the respondent’s job. Improving accounting ability and respondent’s interest were cited in turn as the second and the third most important reason. Furthermore, some of the respondents reported one of their reasons for contacting the IFRSs information was their attendance at a conference, congress, or other forms of education. Finally, there are some respondents who have business reasons for contacting the IFRSs information.

The above results suggest that a large part of accountants in Vietnam has not yet had urgent needs for using IFRSs so they pay little attention to these standards. These results may be interpreted as showing that some of respondents have no real motivation or lack the conditions necessary for learning about IFRSs. As a consequence, if the demand for IFRSs is not large enough then the supply of IFRSs’ resources may not be abundant or diverse is understandable.

Thirdly, regarding the question whether the the respondents agreed that it’s suitable to apply IFRSs in Vietnam in the future, a large percent of respondents agree that IFRSs is suitable to use in Vietnam. The findings further suggest that lecturers agree more strongly on using IFRSs in Vietnam in future than accountants. This may originate from differences in the role of the accountant and the lecturer in applying IFRSs. Because the role of the lecturer is a facilitator for the accountant’ learning and acquiring knowledge while accountants are those who will be directly implement the application of IFRSs.

The main purpose of this study is to identify the possible solutions regarding the most suitable timing and the best way to apply IFRSs in Vietnam. It’s interesting to note that a majority of respondents included in this study thought that convergence IFRSs is consistent with the conditions of Vietnam. Convergence means Vietnam should update, amend, supplement, and refine VASs to fit with IFRSs. Therefore, the second hypothesis “the update and refine VASs to fit with IFRSs is indispensable” is accepted.

Moreover, the findings suggest that lecturers have a tendency to convergence IFRSs higher than accountants and they believe that the best time to apply (by the way of convergence) IFRSs in Vietnam is period 2015 to 2016.

Explaining the reason for choosing convergence IFRSs, Prof. Dang Van Thanh, the chairman of VAA and accounting faculty of Hanoi University of Business and Technology says that: “Vietnam’s economy is in conversion so the characteristics and development level are different with other countries”. Therefore, we need to select the appropriate steps to Vietnam during the application of IFRSs. Furthermore, others who choose convergence IFRSs also gave some reasons that include: IFRSs is relatively complex because it covers all transactions in the developed economies. While Vietnam is a developing country where there may not be many complex transactions. Besides, the ability for accountants to take a shortcut to apply IFRSs in Vietnam may not be

enough. Hence, Vietnam should be careful in choosing the way to apply IFRSs, and also should amend the standards (if necessary) to suit the conditions.

As a consequence, there are five standards which should be soon updated and issued in Vietnam including: (1) IAS 36 Impairment of Assets, (2) IFRS 2 Share-based Payment, (3) IFRS 1 First-time Adoption of IFRSs, (4) IAS 39 Financial Instruments:

Recognition and Measurement, and (5) IAS 29 Financial Reporting in Hyperinflationary Economic. However, to ensure that the Vietnam accounting system is always consistent with international accounting practices, Vietnam not only needs to quickly promulgate the five standards above, but also needs to constantly research, amend the missing standards or aspects not consistent with IFRSs. Vietnam should have achieved this, and then VASs will be compatible with IFRSs by 2020 showing the commitment to integration.

Fourthly, the findings from this study confirm that a large percent of respondents believe that the change in accounting and reporting under IFRSs as the benefits for enterprises, including (1) easier access to capital (2) greater reporting transparency, and (3) improved quality and timeliness of management information. The expected benefits of the change, such as (1) better comparability with other businesses, (2) lower cost of capital and (3) reduce reporting transform cost are questioned by most respondents. Likewise, the change as increase cross-border listings and investment opportunities for investors is also questioned by many.

Fortunately, there is general consensus that the other expected benefits for investors, nation, accountants and auditors in Vietnam are clear. Then taken together, these findings suggest that the third hypothesis – namely, “the benefits of applying IFRSs in Vietnam are clear” is accepted.

On the other hand, the results of logistic regression analysis show that respondents who agreed more strongly with the changes under IFRSs including: (1) lower cost of capital, (2) increase cross-border listings and investment opportunities for investors, (3) create the confidence for investors, contributing to the development of stock market, (4) create the global network of accountants and auditors, who more tend to convergence IFRSs. While of those who agreed more that using IFRSs will make (1) greater reporting transparency, (2) reduce reporting transform cost, (3) easier compare

the financial results of companies operating in the different jurisdictions, (4) reduce the cost of accounting standards development and maintenance, (5) easier sell accounting and auditing services in different countries, who more tend to adoption IFRSs.

Fifthly, there is general consensus that IFRSs are so complex thereby to apply IFRSs, the training of accounting and management staff is the most important challenge.

Besides, the consensus view of almost respondents that the limited knowledge of IFRSs and the barrier of language (written in English) are also the challenge. The findings then suggest that the fourth hypothesis – namely, “the challenges of applying IFRSs in Vietnam are clear” is accepted. Finally, the findings here suggest that to be successful in applying IFRSs, Vietnam’s MOF should make a clear step-by-step plan that includes increasing accountant’s awareness of IFRSs, issuing the standards lacking compared to IFRSs, and quickly bringing IFRSs into education.

CHAPTER 5 CONCLUSION AND SUGGESTIONS

This chapter includes the research summary as a conclusion. The theoretical and practical implications for Vietnam’s MOF, professional accounting associations, enterprises, education, accountants and auditors will be provided. Also, the limitation and recommendation for future research will be carried out.

5.1 Research Summary

This study firstly provides a short background of current situation of the world accounting environment and particularly the situation in Vietnam. Then, it discusses the previous researches related to information about IFRSs, the reasons for the convergence to IFRSs worldwide, and the advantages of IFRSs. Based on the review of the existing literature, this study has developed four hypotheses as likely Vietnam IFRSs resource, the update and refines VASs and outcomes if Vietnam applies IFRSs. Last but not least, an analysis of international accounting convergence being conducted in some countries, typically China and Malaysia to draw the lessons for Vietnam.

As expected in the first hypothesis, the results indicate that the information of IFRSs in Vietnam is not really adequate and diversified. Besides, the second hypothesis expected that the update and refine VASs to fit with IFRSs is indispensable. Our findings show that a large majority of respondents believe that convergence IFRSs is consistent with the conditions of Vietnam and the best time to convergence to IFRSs is period 2015 to 2016. Then the second hypothesis is accepted.

Recognition and Measurement, and (5) IAS 29 Financial Reporting in Hyperinflationary Economic.

The third hypothesis expected the benefits of applying IFRSs in Vietnam are clear. Our observation from the study finds that this hypothesis is accepted by the way

a large percent of respondents believe that the change in accounting and reporting under IFRSs, including (1) easier access to capital (2) greater reporting transparency, and (3) improved quality and timeliness of management information. Additionally, there is general consensus with the expected benefits for nation, investors, accountants and auditors in Vietnam. However, only one small doubt is that there are four expected benefits of the change, including (1) better comparability with other businesses, (2) lower cost of capital, (3) reduce reporting transform cost, and (4) increase cross-border listings and investment opportunities are questioned by many.

The fourth hypothesis expected the challenges of applying IFRSs in Vietnam are clear. The overall investigation suggests that the complex nature IFRSs and the training of accounting and management staff are the most important challenges. Besides, the consensus view of almost all of respondents that the limited knowledge of IFRSs, and the barrier of language (English) are also important challenges in applying IFRSs. The findings then indicate that the fourth hypothesis – namely, “the challenges of applying IFRSs in Vietnam are clear” is accepted.

5.2 Theoretical and Practical Implications

The results have important implications, especially for the best way and the timing to apply IFRSs in Vietnam. Specifically, this study indicates that the convergence IFRSs is consistent with the conditions of Vietnam and the best time to convergence to IFRSs is period 2015 to 2016. Furthermore, by combining these findings with the lessons drawn from the experience of applying IFRSs of China and Malaysia, there is a further suggestion that to create a common voice for career, Vietnam’s MOF must build an integration roadmap with each step in detail. This roadmap requires effort on the MOF, enterprises, professional associations, education and the accountants and auditors itself.

For Vietnam’s MOF

Vietnam’s MOF may refer to the model of Malaysia in the process of issuing accounting standards. Particularly, before and during the process of issuing the standards, MOF should be discussed with the public and welcome feedback from the related parties. On the other hand, there are two lessons from China including (1) Vietnam should be maintained and widened international cooperation on accounting

field. This not only brings good experience in the process of issuing standards, but also is creating the opportunities for professional accountants to learn from others, (2) the development of national accounting and the convergence to international standards should be consistent with the economic development of each nation. Therefore, convergence does not mean that Vietnam apply immediately all of the existing standards of the IFRSs.

For enterprises

The goodwill from enterprise managers is essential for the success of convergence to IFRS. Because the application of IFRSs may require a change of the information technology structure, retraining of accounting staff and management, and it also can impact on profit and loss account of companies. Moreover, enterprises should be creating good conditions for accounting staffs to update the change (or the supplement) in accounting standards. As well as encouraging staff to participate in professional associations; training and fostering the accounting skills which on the one hand improve the capacity of staff and on other hand to improve the ability to control the transparency, accuracy and timeliness of financial information.

For professional accounting associations

Besides completing the legal framework, strengthening the activities of professional associations have also played an important role in the success of applying IFRSs. VAA is the highest professional association of Vietnam accountants which has the role of organizing, managing and training the accounting skills for its members.

VAA is responsible for organizing exchange activities, forums to disseminate knowledge and share experience for members.

In the future, Vietnam’s MOF will continue to promulgate new standards and modify or add some points in VAAs so VAA will carry a heavy responsibility in disseminating this new knowledge. To accomplish its mission, VAA should continue to improve its role in the transmission and dissemination of knowledge from theory to practice.

86 For education

The schools need quickly to renew the program, content, and training methods of accounting and auditing at all levels. Training program requires not only conform to the existing standards, but also need to gradually prepared preconditions for convergence with international accounting.

First, the schools need to redesign the curriculum, teaching materials accounting to ensure regular updates of changes in accounting standards. Besides they should promote scientific research groups in the field of accounting and auditing, then the results should be published and disseminated to the foundation for further research.

Furthermore, the schools should become a bridge between enterprises and the application of new standards with the role as a guide. Schools might coordinate with businesses to review and adjust the curriculum in line with actual needs of the business.

Specially, schools can recommend the accountant who has high professional level collaborate in training directly or participate in other scientific research activities.

For accountants and auditors

Overall accounting in the world has changed. Thus, it is essential for

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