What is VAS in Accounting? A Guide to the 26 Vietnamese Accounting Standards FDI Enterprises Must Master

Vietnam Accounting Standards (VAS) are essential for any foreign-invested enterprise (FDI) wishing to operate effectively in Vietnam. Complying with VAS ensures your financial statements are prepared in accordance with local regulations and serves as a critical foundation for transitioning to the International Financial Reporting Standards (IFRS)—a globally recognized accounting framework developed by the International Accounting Standards Board (IASB) and adopted in numerous countries for consolidated reporting to parent companies.

In this article, we will explain what VAS is, outline the roles of all 26 Vietnamese Accounting Standards, and highlight why mastering them is crucial for FDI companies to mitigate financial and legal risks.

What is VAS in Accounting? Key Takeaways for FDIs

Please do not confuse VAS with “Value-Added Services” commonly used in the telecommunications industry. In accounting, VAS stands for Vietnam Accounting Standards—a set of compulsory principles and rules applicable to all enterprises operating in Vietnam.

In 2001, the Ministry of Finance issued the Vietnamese Accounting Standards (VAS), selectively adapted from International Accounting Standards (IAS/IFRS) and modified to align with Vietnam’s unique legal and economic environment. VAS acts as a guiding framework for recording and preparing transparent and standardized financial statements, helping meet domestic financial management requirements.

FDI enterprises need to be especially vigilant. While financial reporting to Vietnamese authorities must follow VAS, many overseas parent companies require financial reports to be prepared under IAS/IFRS for global consolidation purposes. Therefore, companies must understand both accounting systems and know how to convert between them.

List of the 26 VAS – A “Compass” for FDI Accountants

From 2001 to 2005, the Ministry of Finance issued 26 Vietnamese Accounting Standards, which serve as a comprehensive “compass” for corporate accountants, especially those in FDI firms. Below is the list:

1. VAS 01 – General Provisions: Establishes the foundational accounting principles for consistency and transparency.
2. VAS 02 – Inventories: Guidance on the recognition, valuation, and reporting of inventories.
3. VAS 03 – Tangible Fixed Assets: Accounting for tangible assets such as buildings and machinery.
4. VAS 04 – Intangible Fixed Assets: Applies to intangible assets like patents and trademarks.
5. VAS 05 – Investment Property: Accounting for real estate held for capital appreciation or rental income.
6. VAS 06 – Leases: Covers both finance and operating lease accounting.
7. VAS 07 – Investments in Associates: Recognition of investments in associated companies.
8. VAS 08 – Joint Ventures: Financial disclosures and accounting for joint ventures.
9. VAS 10 – Effects of Changes in Foreign Exchange Rates: Handling exchange rate differences in foreign transactions.
10. VAS 11 – Business Combinations: Accounting for mergers and acquisitions.
11. VAS 14 – Revenue and Other Incomes: Recognition of revenue from sales, services, and interest income.
12. VAS 15 – Construction Contracts: Accounting guidance for revenue and costs under construction contracts.
13. VAS 16 – Borrowing Costs: Capitalization of borrowing costs related to qualifying assets.
14. VAS 17 – Corporate Income Tax: Accounting for income taxes, including deferred tax.
15. VAS 18 – Provisions, Contingent Assets, and Contingent Liabilities: Requirements for provisions and disclosure of contingencies.
16. VAS 19 – Insurance Contracts: Applies to accounting for insurance contracts.
17. VAS 21 – Presentation of Financial Statements: Structure and content of financial statements.
18. VAS 22 – Supplementary Presentation for Banks and Similar Institutions: Additional reporting requirements for banks and financial institutions.
19. VAS 23 – Events After the Balance Sheet Date: Treatment of events occurring after the reporting period.
20. VAS 24 – Cash Flow Statements: Preparation and presentation of cash flow statements.
21. VAS 25 – Consolidated Financial Statements and Accounting for Investments in Subsidiaries: Guidelines for group financial reporting.
22. VAS 26 – Related Party Disclosures: Disclosure requirements for transactions with related parties.
23. VAS 27 – Interim Financial Reporting: Preparation of interim (semi-annual or quarterly) financial statements.
24. VAS 28 – Segment Reporting: Reporting by business segments or geographical areas.
25. VAS 29 – Changes in Accounting Policies, Estimates, and Errors: Treatment of changes and corrections in accounting.
26. VAS 30 – Earnings Per Share (EPS): Calculation and presentation of basic and diluted EPS.

Why Ignoring VAS Can Expose FDIs to Significant Risks

Failing to comply with VAS may result in several serious consequences:

Violation of Vietnamese Law

VAS is a legally binding framework for all enterprises in Vietnam, including FDIs. Non-compliance can be seen as an act of intentional fraud, resulting in administrative penalties and, in severe cases, criminal liability.

Financial Misstatements Leading to Tax Risks

Misapplication of accounting principles can lead to incorrect revenue, cost, or asset recognition. This distorts tax calculations, resulting in underpaid taxes and subsequent penalties.

Loss of Credibility with Partners and Investors

Non-compliance may result in non-transparent financial statements, undermining investor and partner confidence in your company’s integrity.

Difficulties in Auditing and Consolidation

Many FDI firms must prepare IFRS-based consolidated reports for their parent companies. Lack of VAS knowledge may cause errors in conversion, complicating audits and extending timelines.

Multi-Standard Solutions from Experts

If the complexities and language barriers of the 26 Vietnamese Accounting Standards are creating challenges for your FDI enterprise, KMC is here to support you. With over 15 years of experience and professional certifications from the Ministry of Finance and the General Department of Taxation, our experts provide comprehensive services in accounting, taxation, and business compliance—from initial setup to ongoing operations.

Contact KMC today at info@kmc.vn for a consultation.

What is VAS in Accounting?
It’s a system of 26 Vietnamese Accounting Standards that enables FDI enterprises to comply with local laws, maintain financial transparency, and seamlessly align with IFRS. Understanding VAS helps reduce legal and tax risks and builds trust with partners. If you’re overwhelmed by its complexity, KMC is ready to assist you.