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Enterprises face new accounting rules for leases
A report by auditing and consulting firm Grant Thornton says just 38.5 per cent of enterprises in Viet Nam recognise that changes to lease accounting recommended by international agencies will help improve transparency in financial reporting.
Proposed by the London-based International Accounting Standards Board (IASB) and the US-based Financial Accounting Stands Board (FASB), one of the global accounting changes likely to have major impacts is moving all but short-term leases onto the balance sheet, the report says.
The proposal will "eliminate off-balance sheet accounting; essentially all assets currently leased under operating leases will be brought on balance sheet."
However, up to 53.8 per cent of Vietnamese firms, the highest rate among almost 40 surveyed economies, feel that the suggested changes will make financial costs higher and operations more complicated.
Only 26 per cent said they were aware of the upcoming changes, compared to the highest rate of 69 per cent in the US and the lowest rate of 5 per cent in mainland China.
According to the research, 54 per cent of businesses globally are not aware of, and are therefore, unprepared for the changes.
The global survey of 2,800 businesses also found that of those who were aware of the changes, 33 per cent thought it would increase costs and complexity but only 15 per cent thought it would increase transparency. Twelve per cent of businesses indicated they would alter the way they structure leases in the future.
Latin America and ASEAN are the two regions having the highest ratio of respondents, 73.7 per cent and 67.5 per cent respectively, approving the proposed changes in lease accounting.
Awareness of the change is greatest in the US (69 per cent), Mexico (68 per cent) and Chile (63 per cent), and lowest in mainland China (5 per cent), Denmark (8 per cent) and Turkey (14 per cent).
Amongst those aware of the changes, support is strongest in Latin America (74 per cent) and ASEAN (68 per cent), and weakest in North America (32 per cent). Businesses in the BRIC (Brazil, Russia, India and China) economies (59 per cent) are much more supportive than their counterparts in the G7 (36 per cent), the survey found.
Nguyen Thi Vinh Ha, audit partner at Grant Thornton Viet Nam, said "We welcome any proposals that would improve transparency, as this is key to attracting foreign investment into Viet Nam."
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