Test for the second hypothesis

Yes No Total Frequency Percent Frequency Percent

My interest 60 49.2 62 50.8 122

Necessary for my job 68 55.7 54 44.3 122

Improving my accounting ability 67 54.9 55 45.1 122

Business reasons 4 3.3 118 96.7 122

Attending a conference, congress,

and other forms of educations 23 18.9 99 81.1 122

The above analyses suggested that a large number of accountants in Vietnam have not yet had urgent needs for using IFRSs so they pay little time to learn these standards. These results may be understood in a different way: some respondents have no real motivation or lack the conditions necessary for learning 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. However, with the process of globalization as an indispensable trend, Vietnam's goal is integration and equality with other countries in the field of accounting and auditing services by 2020. Therefore, the first hypothesis – namely, that “the information of IFRSs in Vietnam is adequate and diversified” was rejected which poses an important question for the Vietnamese policymaker: what should Vietnam’s Government do to achieve its goal?

4.2.2 Test for the second hypothesis

Before testing the second hypothesis, we start with analyzing for responses of question: Do you agree that it’s suitable to apply IFRSs in Vietnam in the future. Table 4.7 represents the distribution of three sets of results including the cross tabulation analysis, Chi Square test and one way ANOVA. The first four columns of table showed that 88 (72.1 %) respondents (24 accountants and 62 lecturers) agree that IFRSs is suitable to use in Vietnam in the future. 28 (22.95%) respondents report that they have no idea about using IFRSs. This is because of some challenges in using IFRSs and on the other hand in Vietnam the standards which will be used are dependent on government policy. Six others reported that they do not agree that IFRSs is suitable to use in Vietnam. Remarkably, five of them were accountants

.

57 Table 4.7

Job vs. IFRSs is Suitable to Use in Vietnam in Future Cross Tabulation

IFRSs is suitable to use in

Vietnam in future X2 F Mean

difference

No ideas No Yes (p) (p) (p)

Accountant 18 5 24 17.865 8.043 -.585

Lecturer 10 1 62 .001^*** .001^*** .001^***

Auditor 0 0 2

Total 28 6 88

Note: *** indicates significance at the 0.01 level.

The fifth column of the table is the results of Chi Square test which suggested significant differences between job groups (X² = 17.865, p = 0.001). One way ANOVA was also given the same result (F = 8.043, p = 0.001). As a consequence, Scheffe test was significant (p < .005) that lecturers showed the higher agreement on using IFRSs in Vietnam in future than accountants. This result 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 therefore they can be somewhat easily agreed with the application of IFRSs. While the role of accountants is who will be directly implementing the application of IFRSs.

Consequently, the change in the applicable standards may result in difficulties in implementing their work. As a consequence, there could be some accountants who will not want any change.

The way in applying IFRSs is consistent with Vietnam

Now focusing the analysis on which way in applying IFRSs is consistent with the condition of Vietnam. There are two ways in applying IFRSs including convergence and adoption. Convergence means Vietnam should update, amend, supplement, and refine VASs to fit with IFRSs. Adoption means Vietnam should update and apply the full set of IFRSs. Therefore, if respondents tend to convergence, the second hypothesis – “the update and refine VASs to fit with IFRSs is indispensable” will be accepted. If respondents tend to adoption then this hypothesis will be rejected.

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To test this hypothesis, we used a descriptive statistics and one sample t-test in which the value “1” was assigned to “convergence” and the value “0” was assigned to

“adoption”. The following analyses were used to represent a summary test results with test value of 0.

Table 4.8 The Way in Applying IFRSs is Consistent with the Conditions of Vietnam

N Mean SD

Test Value = 0 t df Sig.

The way in applying IFRSs is consistent

with the conditions of Vietnam 116 .72 .453 17.007 115 .000^***

Note: ^***indicates significance at the 0.01 level.

Table 4.8 showed the average position for the way for applying IFRSs is 0.72 and a standard deviation of 0.453. One sample t test suggested that are highly statistically significant from the test value of 0 (t-value = 17.007, sig. <.001). In these findings it appeared that this sample has a significantly higher mean than 0 or in other words, respondents tend to convergence IFRSs. Therefore, the second hypothesis that

"the update and refine VASs to fit with IFRSs is indispensable" is accepted.

When running the cross tabulation with Chi Square test and one way ANOVA with the dependent variable (the way to apply IFRSs) and independent variable (job), the results are represented in Table 4.9.

Table 4.9 Job vs. The Way in Applying IFRSs

The way in applying IFRSs X2 F Mean

Difference

Others Adoption Convergence (p) (p) (p)

Accountant 0 26 21 32.901 8.043 -.585

Lecturer 6 7 60 .000^*** .001^*** .001^***

Auditor 0 0 2

Total 6 33 83

Note: ^*** indicates significance at the 0.01 level.

In this table, there are 83 (68%) respondents (21 accountants, 60 lecturers, and 2 auditors) reported that convergence IFRSs is consistent with the conditions of Vietnam,

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33 (27%) respondents (26 accountants and 7 lecturers) reported that “adoption”, and six others reported that "others". Chi Square suggested significant differences between Jobs about choosing the way in applying IFRSs (X2 = 32.901, p = 0.000). Similarly, one way ANOVA also proposed the same result (F = 8.043, p = 0.001). Being more specific, Scheffe showed a significant difference between accountants and lecturers with significant level is 0.001. We might conclude from this that lecturers have a tendency to convergence IFRSs higher than accountants. While accountants somewhere tends to adoption.

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 levels are different with other countries”. Therefore, we need to select the appropriate steps to Vietnam during the application of IFRSs. He also offers his views on Vietnam accounting development in future which may include two periods. Period 1, by 2015 Vietnam basically completes legal system on accounting in accordance with market economy mechanism. Then Vietnam will fully promulgate and apply national accounting standard system toward meeting requirements of the market economy and integrating to international standards. Period 2 by 2020, Vietnam will be comprehensively developed in accounting service market; fully integrated into the regional and international service market; applied in common standards on training, practicing certificates, standards on financial statements, etc. To be successful, Vietnam should strongly develop professional associations in the field of accounting, improve roles, functions of professional associations, and take over tasks transferred from state administration authorities on accounting for professional associations. Alternatively, Vietnam must maintain and widen international cooperation on accounting field.

In addition, the people who choose convergence IFRSs also gave some other 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. Moreover, the ability to understand and implement the provisions of IFRSs to apply in the practice of accountants in Vietnam may not be enough. Hence, Vietnam should be careful in choosing whether to apply IFRSs, and also should amend the standards (if necessary) to suit the conditions in Vietnam.

60 The best time to apply IFRSs in Vietnam

Regarding to the best time to apply IFRSs in Vietnam, the results of a descriptive statistics showed that 24 (19.7%) respondents thought that the period 2012 to 2014 is the best time for applying IFRSs in Vietnam, 37 (33.6%) respondents chose the period 2015 to 2016, 30 (26.2 %) respondents chose the period 2017 to 2018, 19 (15.6%) respondents chose the period 2019 to 2020, and only 6 (4.9%) respondents chose the period after 2020.

Table 4.10 The Way in Applying IFRSs vs. The Best Time to Apply IFRSs

The best time to apply IFRSs in Vietnam

Mean

Alternatively, Table 4.10 shows an independent sample t-test which suggested a significant difference (p = 0.000) among respondents who tend to convergence and respondents who tend to adoption. Those who tend to convergence thought the best time to apply IFRSs in Vietnam is period 2015 to 2016 (Mean = 2.17, SD = 1.022).

Meanwhile, the others who tend to adoption thought the period 2018 to 2019 would be the best to adopt IFRSs (Mean = 3.45, SD = .095).

Five standards should be issued early

To continue improving the legal system on accounting to meet the requirements of development and international economic integration in the near future, Vietnam should soon update and issue accounting standards which are now lacking compared to IFRSs. The result of responses for selecting and ranking five standards should be issued in order of preference which was illustrated in Table 4.11. This table depicted the mean values and frequencies of responses. These standards should issued earlier including: (1) IAS 36 Impairment of Assets (n = 82, mean = 2.32), (2) IFRS 2 Share-based Payment (n= 89, mean = 2.44), (3) IFRS 1 First-time Adoption of International Financial Reporting Standards (n= 76, mean = 2.99), (4) IAS 39 Financial Instruments:

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Recognition and Measurement ( n = 88, mean = 3.03), and (5) IAS 29 Financial Reporting in Hyperinflationary Economic ( n = 90, mean = 3.18).

Table 4.11 Descriptive Statistics of Five Standards Should be Issued Early

N Minimum Maximum Mean Std.

IAS 29 Financial Reporting in

Hyperinflationary Economic 90 1 5 3.18 1.320 1.743 IAS 36 Impairment of Assets 82 1 5 2.32 1.206 1.454

IAS 39 Financial Instruments :

Recognition and Measurement 88 1 5 3.03 1.308 1.711

IAS 41 Agriculture 21 1 5 3.43 1.207 1.457

IFRS 1 First-time Adoption of International Financial Reporting Standards

76 1 5 2.99 1.553 2.413

IFRS 2 Share-based Payment 89 1 5 2.44 1.446 2.090 IFRS 6 Exploration for and

Evaluation of Mineral

Resources 23 2 5 3.65 1.027 1.055

IFRS 7 Financial Instruments :

Disclosures 39 1 5 3.31 1.321 1.745

IFRS9 Financial Instruments 27 1 5 3.15 1.406 1.977

First of all, we should quickly issue IAS 36 “Impairment of Assets” because the world economic crisis has recently revealed clearly the existence of signs both inside and outside entities on the decline of asset values.  The objective of IAS 36 is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. This standard has become important and applied in over 100 countries worldwide. While the current standards of Vietnam as standard on tangible fixed assets, intangible fixed assets have not yet concerned with this issue. The assets figure largely, as an important point in the financial statements of any businesses.

Therefore, to enhance the transparency of financial information and protect the interests of investors, the rapid application of this standard is really necessary.

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Secondly, it is also necessary to quickly issue IFRS 2 “Share-based Payment” in Vietnam. The reason is because Vietnam is currently promoting privatization of business and the development of the stock market so the number of stock companies’

unlisted and listed companies is increasing rapidly. During operation of these companies, many of them have announced profits, but did not pay dividends in cash, which for years paid wholly or partly in shares. While Vietnam has no specific guidance for recognition, valuation and presentation of information relating to transactions in shares as payment in shares, purchases, sales and mergers enterprises by issue of shares, payment of salaries and bonuses to employees in shares. This practice requires Vietnam to quickly promulgate standard about “Share-based Payment” which is as an orientation for accountants in entering in the accounts, on the other hand it will ensure honesty and objectivity of financial reporting, especially with the listed companies.

Thirdly, to be successful in applying IFRSs in the future, Vietnam must quickly issue IFRS 1 “First-time Adoption of International Financial Reporting Standards”. The objective of this standard is to ensure that an entity’s first IFRSs financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information, is transparent for users and comparable over all periods presented and provides a suitable starting point for accounting in accordance with IFRSs (IFRSs resource).

Next, IAS 39 “Financial Instruments: Recognition and Measurement” will be other standards which should be issued early. In more recent years, along with the development of financial markets and the trend of global economic integration, many new economic transactions in Vietnam have been formed as call options, put options, repurchase agreements and securities lending, swap of exchange rate, as well as other derivative instruments. Demand for transparency financial information on transactions requiring urgent need have standard to guide the recognition, valuation and presentation of information on financial instruments in financial statements. Furthermore, the Vietnam Banks have audits conducted under both the Vietnam’s provisions and the IAS so it was not only costly, but also affected the ability of integration process of the Vietnam’s banking system. Therefore Vietnam MOF should urgently promulgate standards on the presentation, recognition and measurement of financial instruments which are suitable to IAS 39.

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Finally, Vietnam should quickly issue IAS 29 “Financial Reporting in Hyperinflationary Economic”. One of the reasons was that Vietnam is a developing country which has demonstrated a very impressive economic growth, an average of about 8% growth rates in the last ten years. However, Vietnam is affected by its economic growth rate which is too huge and fast. Inflation is growing at an alarming rate with two-digit growth, beyond its maximum permissible inflation (9%) of the countries. Facing this situation, one requirement is that Vietnam should rapidly issue standards about financial reporting in hyperinflation economic to ensure the significance of financial information provided in any situation.

In conclusion, this will ensure that the Vietnam accounting system is always consistent with international accounting practices, creating confidence for foreign investors to contribute to promoting foreign investment into Vietnam. 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.