gap-analysis-vas-ifrs-overall-final-english.pdf

Vietnam VAS 21 Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS Vietnam VAS 21 VAS

1. Differences between
Vietnamese GAAP & IFRS
KPMG in Vietnam
—
November 2023

2. Contents
01
Background of Vietnamese GAAP
(“VAS”) & IFRS
3
02
Significant differences between
Vietnamese GAAP and IFRS
6

3. Background of
Vietnamese GAAP
(“VAS”) & IFRS
01

4. 4
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Background of Vietnamese GAAP & IFRS
Conceptual
framework
IFRS 25 IAS 5 SIC
VAS 26 VAS
Circular
200/202
15 IFRIC16 IFRS
Circulars and certain
ad-hoc interpretation
guidance
Vietnamese
Accounting System
for enterprises
Significant differences between VAS and IFRS arise because:
The approach when adopting IAS/IFRS (e.g. modifications, not adopting all IAS/IFRS)
Not all IAS/IFRS were adopted
Certain guidance, circulars and/or interpretation issued are based on local regulators’ view of the transactions which might be
different from how similar requirements are interpreted under IFRS
IFRSs have been continuously developing while VASs have not been updated since their first issuance
During the period from 2001 to 2005, 26 Vietnamese Accounting Standards (VAS) were issued. These VASs were developed based on the old International Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS) which existed at the time
Note: as at
October 2023

5. 5
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
GAAP Hierarchy
•IFRSplaceditsFrameworkasanimportant
sourceofreferenceindevelopingthestandards
•VASplaceditsFrameworkatthesamelevelasthe
otherVASs.Duringthedevelopmentofindividual
standards,theremaybedeviationfromthebasic
principlesoftheframework
Position of
framework
•IFRSallowsmanagementtoconsiderthemost
recentpronouncementsofotherstandard-
settingbodiesthatuseasimilarconceptual
frameworktodevelopaccountingstandards,
otheraccountingliteratureandaccepted
industrypractices.
•Generalpracticewhendealingwithareasforwhich
thereislackofguidanceinVietnameseGAAPistowrite
alettertotheMinistryofFinance(MoF)toseektheir
interpretationandguidance.
•ThecurrentVietnameseAccountingSystemwasissued
usingthesametypeofregulations(sameauthoritylevel)
asthosecoveringVASandwasissuedafterthe
standardswereissued.Insomecases,MoFhas
indicatedthattheVietnameseAccountingSystemshall
prevailthestandardsiftherewasanycontradiction
betweenthetwo.
Dealing with area where there is lack
of guidance in
accounting
standards

6. Significant differences
between Vietnamese
GAAP and IFRS
02

7. 7
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•UnderIFRS:
―Statementoffinancialposition(orcalled
Balancesheet)
―Incomestatementtogetherwithother
comprehensiveincomeformorstatement
ofprofitorlossandothercomprehensive
income
―Statementofcashflows
―Statementofchangesinequity(SOCE)
―Notestothefinancialstatements
•VASonlyrequiresfourcomponents:
―Balancesheet
―Incomestatement
―Cashflowstatement
―Notestothefinancialstatements(includingnoteon
changesinequity)
Components of
financial
statements
•IFRSrequiresentitytopresentitsfinancial
statementsatleastannually.Financial
statementswithperiodlongerorshorterthan1
yearareallowedonlyiftheentitychangesthe
endofitsreportingperiod(i.e.itsaccounting
year-end)
•VASallowsentitytopresenttheirfinancialstatements
foraperioduptoamaximumof15monthsforthefirst
fiscalyear
Period of financial
statements

8. 8
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•IFRSdoesnotprescribetheorderorformatof
chartofaccountsorfixedformoffinancial
statements.
•VASrequiresentitytoapplythestipulatedchartofaccounts
(COA)torecordtransactions. Anysupplementsor
amendmenttolevel1andlevel2accountsspecifiedinthe
COAmustbeapprovedbytheMinistryofFinance(MoF)
•Enterprisesmustusethestandardformoffinancial
statementsstipulatedbytheMoF.Additionsofitemsor
amendmentstoforms,narrativeandcontentoffinancial
statementcaptionsmustbeapprovedbytheMoF.
Chart of accounts
and standard form
of financial
statements
•IFRSrequires:
—Areportingentitymaintainsitsaccounting
recordinitsfunctionalcurrency(i.e.currency
oftheprimaryeconomicenvironmentinwhich
entityoperates)
—Ifthereportingentitywanttopresentits
financialstatementsinacurrencydifferent
fromitsfunctionalcurrency,applythe
translationmethodinIAS21-TheEffectsof
ChangesinForeignExchangeRates
•VAShavenotfullyadoptedtheconceptoffunctional
currency:
—Thedefault“accountingcurrency”isVietnamDong
(VND)
—Anentitymayuseaforeigncurrencyforaccountingand
presentationoffinancialstatementprovidedthatthe
foreigncurrencymeetspecifiedconditionssimilarto
functionalcurrencyconceptunderIFRSandmust
translatetheirfinancialstatementsintoVNDforthe
purposeofsubmissiontoVietnameseauthorities
Accounting
currency and
Functional currency​

9. 9
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Fairvalueisthepricethatwouldbereceivedtosell
anassetorpaidtotransferaliabilityinanorderly
transactionbetweenmarketparticipantsatthe
measurementdate.
•Afairvaluemeasurementrequiresanentityto
determineallthefollowing:
—theparticularassetorliabilitythatisthesubject
ofthemeasurement;
—foranon-financialasset,thevaluationpremise
thatisappropriateforthemeasurement;
—theprincipal(ormostadvantageous)marketfor
theassetorliability;
—thevaluationtechnique(s)appropriateforthe
measurement,consideringtheavailabilityof
datawithwhichtodevelopinputsthatrepresent
theassumptionsthatmarketparticipantswould
usewhenpricingtheassetorliabilityandthe
levelofthefairvaluehierarchywithinwhichthe
inputsarecategorised.
•NoVASequivalenttoIFRS13–Fairvaluemeasurement
—VASaresubstantiallystillbasedonhistoricalcostconcept
—CertainVAS,althoughseemstobesimilarwithIFRS,
prohibitsfairvaluemeasurement:(1)VAS3–Tangible
fixedassets–notrevaluationmodel(2)VÁ5–
Investmentproperty–onlycostmodelisavailable.Fair
valueofthepropertyisonlyfordisclosurebutifentitycan
notdeterminethefairvalue,itmustdisclosethereason
whyfairvaluecannotbedetermined.
•Althoughthereislittleguidance,entitymustdeterminefair
value:
—Inabusinesscombinationforassetsacquiredand
liabilitiesassumed
—Inanexchangeofnon-monetaryassets
—Inashareexchangetransaction:sharereceivedare
measuredatfairvalueatdateofexchange
—Inapurchaseoffixedassetsorinventoriestogetherwith
suppliesorsparepartsforfuturereplacement,fairvalue
ofsparepartsaredeterminedandrecognisedseparately
Fair value​

10. 10
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Anentityshallrecogniseafinancialassetora
financialliabilityinitsstatementoffinancial
positionwhen,andonlywhen,theentity
becomespartytothecontractualprovisionsof
theinstrument.
•UnderIFRS9allfinancialinstrumentsare
initiallymeasuredatfairvalueplusorminus,in
thecaseofafinancialassetorfinancialliability
notatfairvaluethroughprofitorloss,
transactioncosts.
•UnderIFRS9,derivativefinancialinstruments
aremeasureatfairvalueatinitialrecognition
aswellasatsubsequentreportingdates.
Gain/lossduetochangeinfairvalueof
derivativefinancialinstrumentisrecognisedin
profitorloss,exceptwherehedgeaccountingis
applied.
•VASdoesnothaveequivalentstandardsforIFRS9
—FinancialInstrument: Recognition and
Measurement
—Derivativeinstruments:(1)generallyoff-balance
sheetitems(2)ifrecordedinthebalancesheet,it
onlyrepresentedpremiumpaidwhichisamortised
overthetermoftheinstrument(differentaccounting
treatmentisprovidedforbanks)
—Norequirementstore-measureanyfinancial
instrumentatfairvalueatreportingdate(exceptfor
securitiescompaniesandsecuritiesinvestment
funds)
Financial
instruments –
recognition​

11. 11
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Anentityshallclassifyfinancialassetsas
subsequentlymeasuredatamortisedcost,fair
valuethroughothercomprehensiveincome
(“FVOCI”)orfairvaluethroughprofitorloss
(“FVTPL”)onthebasisofboth:
—theentity'sbusinessmodelformanaging
thefinancialassets(i.e.Businessmodel
Test);and
—thecontractualcashflowcharacteristicsof
thefinancialasset(i.e.SPPItest).
•Anentityshallclassifyallfinancialliabilitiesas
subsequentlymeasuredatamortisedcost,
exceptforfinancialliabilitiesatfairvalue
throughprofitorloss.
•InCircular210/2009/TT -BTC(“Cir210”),financialassets
andliabilitiesareclassifiedtothefollowingcategories
solelyforpresentationanddisclosurepurpose(butnot
mandatory),whichwasdevelopedbasedonIAS39:
—Financialassetsatfairvaluethroughprofitorloss
—Held-to-maturityinvestments
—Loansandreceivables
—Available- for-salefinancialassets
—Financialliabilitiesatfairvaluethroughprofitorloss
—Financialliabilitiescarriedatamortisedcosts
Financial
instruments –
classification​

12. 12
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•IFRS9introducesanewimpairmentmodel
basedonexpectedcreditlosses(“ECL”)rather
thanincurredlossasperIAS39.
•UnderthegeneralprincipleofECL,impairment
wouldbemeasuredaseither:
—12-monthexpectedcreditlosses(expected
creditlossesthatresultfromthosedefault
eventsonthefinancialinstrumentthatare
possiblewithin12monthsafterthereporting
date);or
—lifetimeexpectedcreditlosses(expected
creditlossesthatresultfromallpossible
defaulteventsoverthelifeofthefinancial
instrument)
Themeasurementbasiswoulddependonwhether
therehasbeenasignificantincreaseincreditrisk
sinceinitialrecognition.Theassessmentshouldbe
madeateachreportingdate.
•VAShasnotadoptedECLmodel,instead,provisioning
underguidanceofCircular200isapplied,asfollows:
—Provisionfortradeaccountreceivablesarebasedon
theoverduestatus,normallyusingapreset
percentageforeachoverduetenue.
—Provisionforinvestmentsecuritiesarebycomparing
thecarryingvalueandthemarketvalue.
—Provisionforthelong-termequityinvestment:
provisionismadewhentheinvesteesmakelosses.
•Asacommonpractice,measurementofallowanceusually
followsCircularNo.48/2019/TT-BTC(“Cir48”),apartof
thetaxregime.InaccordancewithCir48,allowancefor
overduedebtsismadeusingthespecificallowancerates
thatareappliedcorrespondingtohowlongthedebtis
overdue.
Financial
instruments -
Impairment​

13. 13
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•HedgeaccountingunderIFRSissubjecttocomplex
requirementsincluding:
—Criteriaforqualifiedhedginginstruments;
—Criteriaforqualifiedhedgeditems;
—Criteriaforqualifiedhedgeaccounting,including
evaluatingeffectivenessofhedging; and
—Threetypesofhedgingrelationships,includingfair
valuehedge,cashflowhedgeandhedgeofanet
investmentinaforeignoperation.
•HedgeaccountingisgenerallynotappliedunderVAS.
•AccordingtoVAS10,12(c),whereanenterpriseusesfinancial
instrumentsforhedgingagainstforeignexchangerisk,thehedged
loansandliabilitiesarerecognizedattheexchangeraterulingon
thetransactiondate; theenterpriseismustnotrevaluesuchloans
andliabilities.
Financial instruments –
Hedge accounting​
•IFRS7requiresentitiesincludingbankstoprovide
comprehensivedisclosuresintheirfinancialstatements
thatenableuserstoevaluatethesignificanceoffinancial
instrumentsfortheentity’sfinancialpositionand
performance; thenatureandextentofrisksarisingfrom
financialinstrumentstowhichtheentityisexposedduring
theperiod; andhowtheentitymanagestherisks.
•IFRS9requiresadditionaldisclosuresforimpairment
includingbutnotlimitedtoamountsarisingfromtheECL
model,theeffectofchangesincreditrisk,etc.
•Extensivenewdisclosuresarealsorequiredforthoserisk
exposurestowhichanentityapplieshedgeaccounting
underIFRS9.
•Presentationanddisclosureoffinancialinstruments:
—TheMoFhasissuedCircularCir210whichhascontents
similartoIAS32–FinancialInstruments:Presentationand
IFRS7–FinancialInstrument:Disclosures
—Cir210becameeffectivefromfinancialyear2011
—AsregulatedbyCir200,Cir210isnotmandatoryforFY2015
onwarduntilaVietnameseAccountingStandardonfinancial
instrumentswouldbeissued.
Financial instruments –
presentation and
disclosure​

14. 14
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Anassetregardlessofitsvaluethatsatisfies
therecognitioncriteriaisrecordedasPPE.
•Anentityshallchooseeitherthecostmodelor
therevaluationmodelasitsaccountingpolicy
andshallapplythatpolicytoanentireclassof
property,plantandequipment.
•Costoftheday-to-dayservicingPPEare
recognisedinprofitandlossastheyare
incurred.
•Circular45/2013/TT -BTC(“Cir45”)oftheMoFrequire
costofafixedassetsmustbeVND30 millionormore.
AssetsheldforusebytheCompanyinthenormal
courseofbusinesswhosecostsofindividualitemsare
lessthanVND30 millionareconsideredtoolsand
suppliesandrecognisedaslong-termprepaidexpenses.
•Onlycostmodelisappliedformeasurementof
subsequentexpenditure. Revaluationmodelisnot
providedunderVAS.
•Therepaircostsoffixedassetsarerecordeddirectlyas
anexpenseoramortisedovertheperiodofnotmore
than3years.
•Forfixedassetswhoserepairiscyclical,theenterprises
shallbeallowedtomakeprovisionformajorrepairand
maintenance.
Property, plant and
equipment (PPE)​

15. 15
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•IFRSprohibitsdeferraloftheseexpenses.
•UnderIFRS,landuserightsareconsideredto
bewithinthescopeofIFRS16–Leases.
Indefinitelanduserightisconsideredas
Tangiblefixedasset
•VASpermitstodeferofcertainexpenditureitems(which
aresimilartointangiblefixedassets)suchas:
—establishmentexpenses
—trainingexpenses,advertisingcostsincurredinpre-
operationstage,​
—costsofresearchstage
—reallocationcosts
whicharecharacterisedaslong-termprepaidexpenses.
Theseexpensesareamortisedoveraperiodofmaximum
3years.
•UnderVietnameselaw,entitiesandindividualsarenot
permittedtoownlandbutonlylanduserights.Landuse
rightsarerecognisedasintangiblefixedassetsorlong-
termprepaidexpensesinaccordancewithprevailing
regulations.
Intangible asset​

16. 16
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Propertyunderconstructionordevelopmentfor
futureuseasaninvestmentproperty
(investmentpropertyunderconstruction)is
accountedforundertherequirementsofIAS40
–Investmentproperties,usingthe
measurementmodelelectedforinvestment
property.
•Anentityshallchooseasitsaccountingpolicy
eitherthefairvaluemodelorthecostmodel
andshallapplythatpolicytoallofits
investmentproperty.
•Propertyunderconstructionordevelopmentforfuture
useasaninvestmentproperty(investmentproperty
underconstruction)isnotclassifiedasinvestment
propertyunderVASuntilitcompletesandistransferred
toinvestmentproperty.
•Afterinitialrecognition,investmentpropertyheldtoearn
rentalshouldbemeasuredatcost,lessaccumulated
depreciationtoarriveatnetbookvalueintheholding
period.
Investment
property​

17. 17
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•UnderIFRS,assessmenthastobemadeateach
reportingdatewhetherthereisanindicationthat
anassetmaybeimpaired. Ifanyindicationexists,
orwhenannualimpairmenttestingforanassetis
required,theasset’srecoverableamountis
estimated.
•Animpairmentlossshallberecognised
immediatelyinprofitorloss,unlesstheassetis
carriedatrevaluedamountinaccordancewith
anotherStandard(forexample,inaccordancewith
therevaluationmodelinIAS16).Anyimpairment
lossofarevaluedassetshallbetreatedasa
revaluationdecreaseinaccordancewiththatother
Standard.
•Aftertherecognitionofanimpairmentloss,the
depreciation(amortisation)chargefortheasset
shallbeadjustedinfutureperiodstoallocatethe
asset'srevisedcarryingamount,lessitsresidual
value(ifany),onasystematicbasisoverits
remainingusefullife.
•NoVASequivalenttoIAS36:ImpairmentofAssets
•CertainVASdiscussedtheconceptof“recoverableamount”
whichisthekeyprincipleintheapplicationofaccountingfor
impairmentofassets
•UnderCir200,investmentpropertyheldforprice
appreciationshallnotbedepreciatedbutsubjectto
assessmentofwhetheritisimpaired. Impairmentloss(if
any)isrecognisedtoprofitorlossanddeductedtocostof
asset.However,nodetailedguidanceonimpairmenttesting
provided.
Impairment of
assets​

18. 18
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•IFRS16hassimilarrequirementsforlessors.
However,forlessees,IFRS16introducesa
singlelesseeaccountingmodelsforwhichno
distinctionbetweenfinanceleaseandoperating
leaseisrequired. Entityisrequiredtobring
mostleaseson-balancesheet,recognised
right-of-useassetandleaseliability
•Thereisnosimilarguidance,IFRSfocuseson
substanceoftransactioninsteadofformof
transaction.
•Aleaseisclassifiedasafinanceleaseifittransfers
substantiallyalltherisksandrewardsincidentalto
ownership. Aleaseisclassifiedasanoperatingleaseif
itdoesnottransfersubstantiallyalltherisksand
rewardsincidentaltoownership.
•Anentityispermittedtoenterintoafinanceleaseas
lessorinVietnamonlyifithasafinanceleasinglicense
issuedbyVietnameseauthority.Certainentitiesdonot
havesuchlicensebutenterintoleasesthatare
classifiedasfinanceleasesinaccordancewithVAS6–
Leases.Thereisnoclearguidanceaboutwhetherthe
applicationofVAS6couldbeconflictwiththelicensing
requirementandthereforeacceptableornot.Actual
practicesmayvaryfromentitytoentityduethelackof
guidance.
Lease​

19. 19
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Intheseparatefinancialstatements,investment
insubsidiariesshallbeaccountedforeitherat
costorinaccordancewithIFRS9.Investments
carriedatcostshouldbemeasuredatthelower
oftheircarryingamountandfairvalueless
coststosell.
•Intheseparatefinancialstatements,investmentsin
subsidiariesareinitiallyrecognisedatcostwhich
includespurchasepriceplusanydirectlyattributable
transactioncosts.Subsequenttoinitialrecognition,
theseinvestmentsarestatedatcostlessallowancefor
diminutioninvalue.
Separate financial
statements​
•IAS16.16allowsthecapitalisationoftheinitial
estimateofthecostsofdismantlingand
removingtheitemandrestoringthesiteintothe
costofrelatedassets.
•IFRSdoesnotpermitsuchprovisionsincean
entitydoesnothaveanypresentobligationin
relationtospendingontechnology
development.
•Cir200requirestheprovisionforenvironmental
restorationcosts,cleanupcosts,recoveryandreturnof
premisestobeexpensedoffinprofitorloss.
•Cir200allowstheentitytomakeprovisionfor
technologydevelopmentfundsthatcanbeutilisedfor
spendingontechnologydevelopment.
Provisions​

20. 20
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Entityrecognizesrevenuewhen(oras)ittransfers
controlofgoodsandservicestoacustomer,andatthe
amounttowhichtheentityexpectstobeentitledto.
•IFRS15introduces5-stepmodel:
—Step1-IdentifythecontractwithacustomerStep
2-Identifytheseparateperformanceobligations
inthecontract
—Step3-Determinethetransactionprice
—Step4-Allocatethetransactionpricetoeachof
theseparateperformanceobligations
—Step5-Recogniserevenuewhen(oras)each
performanceobligationissatisfied
•Anentityassesseswhetherittransferscontrolover
time.Ifcriteriatorecogniserevenueovertimeisnot
meet,theentityrecognisesrevenueatthepointintime
atwhichittransferscontrol.Amountsandtimingof
recognisingrevenuemaybesignificantlydifferentunder
VAS.
•IFRS15containsextensivequantitativeandqualitative
disclosurerequirementincludingmoredisaggregated
informationatthereportingdate.
•VASrequirementsaregenerallysimilartothoseofIAS18-
RevenueandIAS11–Constructioncontractwhichhavebeen
supersededbyIFRS15from1January2018.
•However,therearecertainguidanceunderIFRS15whichhave
beenincludedinVASviaguidanceprovidedunderCir200,
includingthefollowing:
—Revenuesonsalestransactionswhicharebundledwithfree
products/services,thenrevenuesshouldbeallocatedtothe
freeproducts/services.
—RevenuesonrealestatesalesarenotallowedtoapplyVAS
15-Constructioncontract,butfollowstheconditionsofrisks
andrewardstransfersforsalesofgoodsasguidedunder
VAS14-Revenueandotherincome
—Revenuesontransactionswithcustomersunderloyalty
programmeswheresomeconsiderationswouldneedtobe
deferredtomatchwiththesubsequentfreegoods/services
tobedelivered.
—Revenuesonconstructioncontractstotakeintoaccount
variableconsiderations.
Revenue​

21. 21
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Accountingbyanentityfordefinedbenefitplans
involvesthefollowingsteps:IFRS 15introduces5-
stepmodel:
—Estimateofultimatecosttotheentity.This
involveestimatesaboutdemographicvariable
(suchasemployeeturnoverandmortality)and
financialvariable(suchasfutureincreasesin
salaries).
—Discountingtheestimatedfuturecoststo
determinethepresentvalueofthedefined
benefitobligationandthecurrentservicecost.
Thediscountrateisdeterminedbyreference
tomarketyieldsattheendofthereporting
periodonhighqualitycorporatebonds.
—Fairvalueofplanassetsisdeductedfromthe
presentvalueofthedefinedbenefitobligation;
—Anyre-measurementofdefinedbenefit
obligation(e.g.duetochangesinassumption)
shouldberecordedinothercomprehensive
income.
•UndertheVietnameseLabourCode,whenanemployee
whohasworkedfor12monthsormorevoluntarily
terminateshis/herlabourcontract,theemployerisrequired
topaytheeligibleemployeeseveranceallowancecalculated
basedonyearsofserviceandemployee’scompensationat
termination.Thisschemehasthecharacteristicofadefined
benefitplans.Therearedifferenceviewsaboutaccounting
forseveranceallowanceasfollows:
—View1:Provisionforseveranceallowanceisrequired
andshouldbeestimatedbaseonexpectedamountsto
bepaidbytheemployerinthefuture.Timevalueof
moneyisgenerallynottakenintoaccountinthe
estimate.
—View2:Provisionforseveranceallowanceisnot
requiredandnottobemade.
•View1appearstobegenerallyaccepted.
Employee benefits –
Defined benefit
plans​

22. 22
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Forequity-settledshare-based payment
transactions,theentityshallmeasurethegoodsor
servicesreceived,andthecorrespondingincrease
inequity,directly,atthefairvalueofthegoodsor
servicesreceived,unlessthatfairvaluecannotbe
estimatedreliably.Iftheentitycannotestimate
reliablythefairvalueofthegoodsorservices
received,theentityshallmeasuretheirvalue,and
thecorrespondingincreaseinequity,indirectly,by
referencetothefairvalueoftheequityinstruments
granted.
•For cash-settledshare-based payment
transactions,theentityshallmeasurethegoodsor
servicesacquiredandtheliabilityincurredatthe
fairvalueoftheliability.Untiltheliabilityissettled,
theentityshallre-measure thefairvalueofthe
liabilityattheendofeachreportingperiodandat
thedateofsettlement,withanychangesinfair
valuerecognisedinprofitorlossfortheperiod.
•UnderVAS,thereisnospecificaccountingstandardor
guidanceonrecognitionandmeasurementinrespectof
share-based payments.
•Inpractice,ifanentityoffersESOPschemes,share-based
paymentsaregenerallyrecognisedatnominalvalue,rather
thanfairvalue,ofsharesgrantedatthegrantdaterather
thanoverthevestingperiodandmayresultsinhigher
expenseinthatyearbutlowertotalexpensereportedover
thevestingperiodinthestatementofincome,comparedto
IFRS. However,whenemployeesaregrantedwithoptions
topurchasesharesatapricelowerthanmarketprice,no
expenseisrecordedintheincomestatementforsuch
options.Thiscauseadilutionofshareholders’valuenot
beingreflectedinthefinancialstatements.
•Unvestedsharesissuedtoemployeesmayberecognized
asequityatthegrantdate.Iftheyaresubsequentlynot
vestedthentheywouldbereversedoutfromequity.
Share-based
payments​

23. 23
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Aninvestorcontrolsaninvesteewhenthe
investorisexposedto(hasrightsto)variable
returnsfromitsinvolvementwiththeinvestee
andhastheabilitytoaffectthosereturns
throughitspowerovertheinvestee.Control
requirespower,exposuretovariabilityof
returnsandalinkagebetweenthetwo.
•Thesteptobefollowedwhendetermining
whethercontrolexistscomprises:
—Identifyingtheinvestee,considerationofits
purposeanddesign
—Identifyingtherelevantactivitiesofthe
investee
—Identifyinghowdecisionsaboutthe
relevantactivitiesaremade
—Assessingwhethertheinvestorcontrols
theinvestee
•Controlisthepowertogovernthefinancialand
operatingpoliciesofanenterprisesoastoobtain
benefitsfromitsactivities.
•Controlexistswhentheparentcompany:
—holdsmorethan50%votingrightinasubsidiary;
—haspowertoremoveorappointthemajorityof
membersofBoardofManagementorGeneral
Director;
—haspowertocastthemajorityofvotesatmeetings
oftheBoardofManagement;
—haspowertogovernthefinancialandoperating
policiesoftheenterpriseunderastatuteoran
agreement;
—haspowerovermorethanonehalfofthevoting
rightsbyvirtueofanagreementwithother
investors;
—haspowertoamendtheCharterofasubsidiary.
Business
combination -
control ​

24. 24
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•Whenlessthan100%ofasubsidiaryisacquired,the
acquirercanelectonatransaction-by -transaction
basistomeasureordinaryNCIoninitialrecognition
eitherat:
—fairvalueatthedateofacquisition,whichmeans
thatgoodwill,orthegainonabargainpurchase,
includesaportionattributabletoordinaryNCI;or
—theholders'proportionateinterestinthe
recognisedamountoftheidentifiablenetassets
oftheacquiree,whichmeansthatgoodwill,orthe
gainonabargainpurchase,relatesonlytothe
controllinginterestacquired.
•Atinitialrecognition,NCIisrecognisedattheirproportionof
identifiablenetassetswhicharerecognisedatfairvalueon
acquisitiondate.
Consolidated
financial statements​
•Goodwillshouldnotbeamortisedbutshouldbetested
forimpairmentatleastannuallyormorefrequentif
thereisanindicatorofimpairment.
•Sameguidance.
•Goodwillshallbeamortisedoveraperiodnotexceeding10
yearsfrominitialrecognition. Beside,underCir202,goodwillis
alsosubjecttoimpairmentassessmentperiodically.However,
thereisnodetailedguidanceonhowtoperformimpairment
testing
•Negativegoodwilltoberecognisedasincomeimmediatelyafter
reassessmentandmeasurementofidentifiableassetsacquired
andliabilitiesassumed.
Goodwill from business combinations​

25. 25
Document Classification: KPMG Public
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law Limited, KPMG Services Company Limited, all Vietnamese one member limit ed liability companies and member firms
of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
IFRSVASAREA
Significant differences between VAS and IFRS
•TherearemanyIFRSsthatcoverspecifictopicsas
listed.
•ThereiscurrentlynoVASdealingwiththefollowingmajor
topicswhicharealreadycoveredbyIFRS
—Governmentgrants(IAS20)
—Agriculture(IAS41)
—Non-currentassetheld-forsalesanddiscontinued
operations(IFRS5)
—Financialreportinginhyperinflationaryeconomies(IAS
29)
—AccountingandReportingbyRetirementBenefitPlans
(IAS26)
—Explorationforandrevaluationofmineralresources
(IFRS6)
—Disclosureofinterestinotherentities(IFRS12);joint
arrangements(IFRS11)
—First-timeadoptionofIFRS(IFRS1)
•ExceptforcertainprinciplesextractedfromIFRIC13
—Customerloyaltyprogram,theMoFofVietnamhasnot
adoptedanyotherIFRIC/SICintoVAS
Other topics​

26. Contact us
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intended to address the circumstances of any particular individual or
entity. Although we endeavour to provide accurate and timely information,
there can be no guarantee that such information is accurate as of the date
it is received or that it will continue to be accurate in the future. No one
should act on such information without appropriate professional advice
after a thorough examination of the particular situation.
© 2023 KPMG Limited, KPMG Tax and Advisory Limited, KPMG Law
Limited, KPMG Services Company Limited, all Vietnamese one member
limited liability companies and member firms of the KPMG global
organization of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee.
All rights reserved.
The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organization.
Scan to visit our website: kpmg.com.vn
Email: [email protected]
Lam Thi Ngoc Hao
Partner, Head of Business Transformation
Pham Thi Hoang Anh
Partner, IFRS Conversion Services Lead