The history of accounting standard setting in an emerging transition economy: The case of Vietnam

Introduction

The principal aim of this article is to critically examine how accounting standards in Vietnam (Vietnamese Accounting Standards (VAS)) evolved over time, particularly in the last 160 years in the context of political change, economic reform and international integration. Vietnam was selected as a case study in view of its unique combination of factors and the accelerated changes that have taken place in recent years (Nguyen and Richard, 2011). First, it is a transition country. Its gradual transformation from an inward-looking, centrally planned economy to an outward-looking, market-based economy provides an interesting opportunity to study how accounting standards evolved in response to institutional changes. Second, due to its history over the past 160 years, accounting in Vietnam was influenced by accounting conventions in France, China, the former Soviet Union and the United States (Nguyen, 2016). Third, it is an important emerging country with a sizeable population, rapidly growing economy and expanding international and investment trade ties (United Nations, 2015). Its experiences in accounting standard setting may thus be of some assistance to other emerging countries. Fourth, from an academic perspective, the changes in accounting and auditing standards in Vietnam have been relatively under-researched (Nguyen and Kend, 2017). Furthermore, a systematic study of the evolution of VAS using an accepted historical framework for accounting research seems to be still missing.

To achieve the overall objective mentioned above, the following three related research questions can be identified:

What are the various stages in the evolution of accounting practices in Vietnam?

In answering the above questions, the article employs a theoretical framework that incorporates elements of the institutional theory into the 7Ps model proposed by Carnegie and Napier (2002). The 7Ps model is a widely accepted approach in accounting history research. It analyses the issues under study in terms of seven dimensions: periods, places, people, practices, propagation, products and profession. To the best of the authors’ knowledge, the present article is the only study that formally employs an explicit theoretical framework to assess the evolution of accounting standard setting in Vietnam.

By examining the process of development of accounting standards in Vietnam, the article makes three contributions to the International Financial Reporting Standards (IFRS) literature in general and accounting history literature in particular. First, it contributes theoretically to the accounting history literature by applying the 7Ps framework and interpreting the findings in terms of the neo-institutional theory by DiMaggio and Powell (1983). Second, the study of IFRS implementation in Vietnam from the institutional theory perspective not only adds to the IFRS literature but also guides others such as the Association of Southeast Asian Nations (ASEAN) and similar countries in the process of IFRS adoption. Third, the article provides a practical contribution by making some suggestions to the International Accounting Standards Board (IASB) on how to handle the global IFRS transition in emerging economies, which have agreed to participate in the movement to a single set of globally accepted accounting standards, in spite of the challenges imposed by their different histories, cultures and local institutional factors.

The remainder of the article is organised as follows. In section ‘Background and motivation for the study’, a historical overview of the accounting system in Vietnam and motivation for the study is provided. Section ‘Literature review’ presents a review of the relevant literature of English-language studies on accounting standards setting. It is shown that, in this respect, Vietnam can be regarded as one of the relatively under-researched countries. In section ‘Theoretical framework’, the theoretical framework for analysing the three research questions is discussed. Section ‘Findings and discussion: Historical review of the accounting system in Vietnam’ then applies this framework to examine the evolution of accounting practice and accounting standards in Vietnam. It is argued that a combination of international pressures and cooperation has driven changes in accounting practices and accounting standard setting in Vietnam. Section ‘Concluding remarks’ will conclude.

Background and motivation for the study

During its history, Vietnam has been controlled by other more powerful and dominating foreign countries, including China (about a thousand years), France (about 70 years) and Japan (about five years) (Doan and Nguyen, 2013). Under Chinese domination, Confucianism became the foundation of the social and education system in Vietnam. During this period, changes to the self-sufficient Vietnamese economic system could be characterised by the introduction of new economic sectors in addition to traditional agricultural and handicraft industries. Under the new colonial capitalist system, the introduction of light industry was one such example of French influences in Vietnam (Chu, 2004; Bui, 2011). According to Chu (2004) these economic changes were mainly due to France’s exploitation which turned Vietnam into a growing economy in mining, textiles, agriculture, construction and transportation and as a provider of natural resources.

After China, France colonised Vietnam from 1887. French colonialism (1887−1954) brought major changes into Vietnam, politically, socially, educationally and culturally. Vietnam moved from an essentially autarkic economic system towards a colonial capitalistic system with new economic sectors including light industry, trade and finance in addition to the traditional economic sectors of agriculture and handicraft. The previous Vietnamese writing system based on Chinese characters was replaced by a new Vietnamese script sourced from the Latin alphabet, created by French and Spanish clergy. The widespread acceptance of the modern, alphabet-based Vietnamese script over that of traditional Chinese is strong evidence for the open and flexible attitude of Vietnamese when exposed to interferences from other cultures (Duiker, 1983). In terms of economic policy, the French exploitation turned Vietnam into a provider of natural resources. Economic development during the French colonial period was primarily based on mining, agriculture, textiles, construction and transportation.

In the early 1920s, Vietnam opened its markets to the rest of the world, interacting with foreign cultures including the democratic cultures of Western countries. As a result, a number of Vietnamese revolutionary organisations evolved, emerging from a new worldwide trend in ideological thinking in Marxist−Leninist thought. Supported by the international communist movement, Ho Chi Minh led the Communist Party of Vietnam (CPV) to unite all the Vietnamese revolutionary parties between 1930 and 1944 (Corfield, 2008).

Vietnam suffered both French and Japanese colonial rule between 1941 and 1945 and the Japanese presence in Vietnam attracted the attention of the United States (Bradley, 2003). The United States wanted to protect its imports of raw rubber, half of which came from Vietnam. Soon after the withdrawal of the French army from Vietnam, the United States entered Vietnam, Laos and Cambodia under the pretext of preventing the spread of communism in Indochina (Tonnesson, 2010). An internal civil war between North Vietnam and South Vietnam ensued. The North Vietnamese government was supported by the Soviet Union, China and other communist countries, while the South Vietnamese government was supported by the United States, Australia, South Korea and other US allies.

Subsequent to French liberation in 1954, the Chinese accounting model was followed in North Vietnam during 1955 to 1960. After, 1960, North Vietnam followed the Soviet Union accounting model for 15 years until the withdrawal of the US from the South and the unification of the country in 1975 (Bui, 2011).

Vietnam was eventually reunited on 30 April 1975 with withdrawal of the United States from the South and the victory of the North Vietnamese communist government. The CPV formally renamed Vietnam ‘the Socialist Republic of Vietnam’ and led Vietnam towards socialism. The CPV extended the centrally planned economic model, which was based on a Soviet economic model and previously applied in the North, to all provinces in Vietnam between 1975 and 1980. Under this model, private ownership was replaced by state ownership. All key businesses were owned, controlled and managed by the State and, hence, are referred to as state-owned enterprises (SOEs). Private South Vietnamese businesses that had been operating under the pre-1975 capitalist models were obliged to transform themselves into SOEs (Vu, 2012).

Chinese influence in Vietnam increased considerably during 1949–1959 as the Chinese language was introduced in most schools in North Vietnam, and Chinese officials trained Vietnam accounting officials along with other officials in different departments. The impact of this influence was evident in the decision of North Vietnam government to introduce industry-based accounting, more specifically accounting for industrial and capital construction sectors (Sarikas et al., 2009). On the similar lines, Olsen (2006) and Bui (2011) also noticed the training and development activities organised by Chinese officials in North Vietnam.

After the period of Chinese influence (1960–1975), the Vietnam accounting system was influenced by the Soviet accounting philosophy in respect of accounting and record maintenance. Similar to the previous period of Chinese influence, the period between 1960 and 1975 experienced the training and development of Vietnamese accountants and other relevant personnel, and technical assistance support by the Soviet Union (Chu, 2004; Bui, 2011). During this period, the Soviet accounting model was modified to make it more suitable to the needs of Vietnamese industry. Nguyen et al. (2012) and Bui (2011) reported that Vietnamese accounting practices used 12 journal vouchers instead of 17 employed in the Soviet Union accounting system.

The history of early accounting developments in Vietnam suggests that there were no accounting or accounting standards in Vietnam and this may be due to non-existence of professional accounting bodies or less active groups of professional accountants. Accounting practice was primarily regulated by the Ministry of Finance (MoF) and the State played a dominating role in regulating and running the affairs of the accounting profession in addition to its primary function of ensuring the country’s economic development (Bui, 2011).”

In the last three decades, Vietnam has been witnessing a rapid growth of the accounting profession, substantial changes in the accounting systems, connections with international professional accounting bodies and participation in the international harmonisation move initiated by the IASB through its acceptance of the IFRS. For example, in 2006, the MoF replaced the old 1988 accounting system with the new Enterprise Accounting System with the objective of aligning financial reporting requirements with accounting standards. All business organisations incorporated in Vietnam, despite ownership and listing status, are required to comply with this new enterprise accounting system. In the same spirit, in 2011, the MoF formed the Vietnamese Accounting Standards Board (VASB) to revise the existing VAS (Appendix 2) and published new standards to align with the current IFRS. Finally, in 2016, the MoF organised a series of IFRS workshops to obtain feedback from Vietnamese accounting academic and practitioners on IFRS adoption approach and its implementation roadmap for 2025 (MoF et al., 2016).

In summary, Vietnam is a growing economy located in the ASEAN region and has witnessed various streams of social, economic and financial models influenced by its historical and political developments in the past 160 years. These historical influences have significantly shaped the development of the accounting profession in Vietnam, including the development of accounting standards. Moreover, Vietnam’s willingness to participate in the move towards greater international globalisation and the VASB’s updating of the accounting standards in line with IFRS have resulted in fast changes in the accounting profession in this country. The abovementioned historical developments in Vietnam and current trends in Vietnam accounting practices are the primary motivation for this study as this study presents a unique location for understanding the evolution of accounting practices that have been influenced by multiple political and institutional factors. The article explains the history and process of accounting standard setting in Vietnam in the political and economic context of this transition.

Literature review

The conceptual nature of this article is set in transitional economies where Western models of accounting are implemented in countries with diverse histories, sociologies and economic systems. The process of this change is mediated by multiple factors that are beyond accounting as a procedural framework. It elevates the experience of an accounting researcher into an equivalent of a social science researcher. The nature of investigation extends into a multi-disciplinary framework. The difficulty of this task is multiplied because of the highly rigorous academic literature existing in this field. Many authors (e.g. Burchell et al. (1985); Cooper et al. (1998); Robson (1991); Miller and Napier (1993); Bailey (1995); Richard (1995); Mennicken (2008, 2010) have already established a very serious reputation in this domain. This kind of literature review makes the task of a researcher both difficult and easy. It is difficult because the conceptual scale of these works is highly comprehensive but it is also easier. As one comprehends the rigour of the exercise, it becomes a targeted exercise in terms of research goals.

Burchell et al. (1985) revealed in their value adding accounting approach in the United Kingdom its significant social importance. They highlight that an accounting event has specific social reasoning behind its origin. There are issues, institutions and processes involved in this. Robson (1991) extended the specificity of social content into a generalised social environment and located the entire question within the accounting and social changes through a metaphor of translation. Of course, translation here does not only mean linguistic translation but also includes cultural, social and practice-oriented interpretation. It underlines one important fact that audit universalisation may not be seen as delicate an exercise as it seems to be. It may carry with it many invisible forces. Miller and Napier (1993) added a further layer by postulating accounting history within a larger set of genealogy of calculations as if it operates within a larger universe of social anthropology. They posited that accounting as a discipline is an offshoot of a larger need of calculation which is a historical contingent matter and not just a disciplinary one. Bailey (1995) elaborated it with a study of central and east European states in the post-Soviet era when market economies started emerging amidst a complete lack of independent audit firms or an accounting community. From a state-centric accounting system where no autonomous price mechanism exists, the system shifts to a market-based model where prices carry serious economic information. Therefore, the system of accounting is a derivation from the historical change of regime and not vice-versa. Despite being from a common communist system, the post-communist accounting order took two different trajectories (Richard, 1995). Romania copied the French model because of political and cultural reasons, whereas Russia embraced the traditional model derived from Schmalenbach’s chart of accounts steering towards the American systems.

Cooper et al. (1998) took it further into the operational experience of a big accounting firm when it entered Russia. Although the obvious goal was to extend the predominance of the Western accounting systems, the on-the-ground experience of working was unchanged. The actual practice of these goals is mediated through managerial identities, nationalistic feelings and even political values too. Such a case study method illustrated by authors delves deep into the field of globalisation/uniformisation of accounting systems. Mennicken (2008, 2010) highlighted further that such an audit universalisation and global comparability of financial reports is just not an outcome of simple division of labour; rather, this process encounters deeper problems embedded in power distribution and exclusion as well as intra-professional struggles. The critical element is linked ecologies of audit and market where the authors detail the rise of Russia audit firms to portray the fact that market demand for audit firms defined the evolution of a profession and not the other way round. Therefore, in post-Soviet Russia, audit firms are more of a market- and power-related phenomenon and less of a technically skilled set of globally distributed professionals.

To put it in perspective, accounting standards may seem as global and universal at the outset but in reality, the implementation challenge is mediated by multiple factors. In no way can the ecologies of accounting practice be ignored. Their range is huge though in most studies, the predominant factor has been nation, national identity or national history. This is not to deny the variety of the forces at play; rather, this is to highlight that a national zone becomes the largest carrier of multiple narratives within which accounting operates. Ideas may come from outside but accounting as a policy choice (Stadler and Nobes, 2014) is predominantly mediated by factors like country, industry and sectoral topics in order of importance.

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Table 1.

Seven-dimension framework.

Dimension	Meaning	Vietnam context	Prior literature
Periods	Key turning points in broader social, economic or political changes in relation to the location of the study	Phase 1 (1856–1944) Phase 2 (1945–1974) Phase 3 (1975–1985) Phase 4 (1986–2016)	Al-Akra et al. (2009); Hassan et al. (2014); Carnegie (2014)
Places	Selecting location(s) where accounting phenomena changed significantly over the period of study	South Vietnam North Vietnam Central Vietnam	Hopwood (1983); Platonova (2009); Adhikari et al. (2013); Zhang et al. (2013)
People	Those involved in setting up and complying with accounting standards and regulations	Accountants, professional accounting bodies, government agencies	Previts et al. (1990); Parker (2005); Brown (2014); Guthrie and Parker (2016)
Practices	Evidence of accounts and understanding of what they include and exclude; and the processes	Variety of accounting practices during different phases	Altaher et al. (2014); Carnegie and O’Connell (2014); Carnegie (2016)
Propagation	How the accounting ideas are formed and spread: highlighting the interaction of accounting with the social, political and economic environment	Variety of accounting models Influencing during different periods	Gilling (1976); Susela (1999); Chua and Taylor (2008); Carnegie and Napier (2013)
Products	Accounting seen as the object of regulation or what it delivers to the society	Accounting regulations, Accounting standards	Susela (1999); Judge, Li et al. (2010); Alon and Dwyer (2014)
Profession	Developing occupational groups and associations	Emergence of Accounting social network clubs and professional accounting bodies	Parker (2005); Lu et al. (2009); Inglis et al. (2011); Glover (2014); Carnegie (2016);

Source: Authors.

A decision to adopt IFRS is a radical departure from multiple perspectives and it would be an influenced as well as influential decision. McEnroe and Sullivan (2013) investigated the perceptions of auditors and chief financial officers for choosing between rules-based and principles-based accounting standards in the context of US Generally Accepted Accounting Principles (GAAP) versus IFRS. Interestingly, eight out of 10 professionals supported the use of rules-based standards as it was already embedded in the practice domain. This bias is confirmed again in another study by Braun et al. (2015) where auditors’ choice for rules-based standards is preferred despite auditor’s reservations. These studies hint at the fact that accounting standards cannot function in a top-down manner; rather, their effectiveness is achieved by a complex set of factors that are locally prevalent and are practice-oriented. That is why without changing the institutional framework, no serious choices of practice or attitudes can be made. These choices can be critical as well as implementable too as Joshi and Ramadhan (2002) paint an encouraging picture of adoption of International Accounting Standards (IAS) by Bahrain.

Larson and Street (2004), while studying the history of IFRS adoption in the European Union (EU), examined the progress of the system into ‘two standards’ where listed firms adopted the new standards and non-listed firms could continue with existing practices. This anomaly may be because of numerous factors related with nature of convergence, health of capital markets, training infrastructure of accounting professionals or lack of fully viable IFRS-compliant transactions in areas like pensions. Jermakowicz (2004) pointed out the impact of IFRS-like accounting systems on matters of finance and strategy. Nurunnabi (2015) examined the cultural factors behind the adoption and implementation of new accounting standards. Poudel et al. (2014), through case analysis in Nepal, highlighted that IFRS adoption was not supported by local accounting ecologies; rather, it was necessitated by their need for external funding from global bodies. Hassan et al. (2014), while studying IFRS adoption in Iraq from the perspective of institutional isomorphism, realised that coercive isomorphism was critical. Since the end of the Baathist regime, the most pressing need for Iraq was aid from foreign bodies. International military relations in Iraq were also a subtext not out of bounds when new accounting standards were adopted. There is much more to this as standards setting has to meander through many more treacherous paths.

Xu et al. (2013) explored the institutional settings through a unique perspective of ‘cultural hegemony’ as proposed by Gramsci. It is a study of four periods of Chinese history: Confucian period, Maoist period along with that under the Cultural Revolution and Deng period from late 1970s. In these periods, the authors highlight the deep impact of political leadership and ideology on the systems of accounting. The accounting institutional framework was a subset of hegemonic structure imposed by a prevailing political regime. Lu et al. (2009) confirmed the predominance of government’s role in accounting standards’ setting too. This is unlike many nations where the accounting profession leads the development of accounting not the State. Assenso-Okofo et al. (2011) also emphasised the role of institutional factors along with legal, political and economic factors in the evolution of accounting standards in Ghana that has fully adopted IFRS recently. Irvine (2008), while investigating the case of the United Arab Emirates’ (UAE) adoption of IFRS, observed serious isomorphic pressures that belong to all three categories of coercive, normative and mimetic. Within this context, it is reiterated that accounting standards setting is a function of a comprehensive set of factors and they need to be considered in any conceptual framework of accounting standards.

The broader framework of this article is focussed upon exploring past Vietnamese accounting institutions and practices from the nineteenth century till the present so as to develop a chronological sequential effect on the future of the same systems. Such a comprehensive task requires elaboration as well as authentication from various cross-border and inter-disciplinary studies. Some authors (e.g. Albu et al., 2014; Stadler and Nobes, 2014) confirmed the deep inter-linkages of such studies. Albu et al. (2014), while exploring the case of IFRS adoption in Romania, highlighted the importance of local factors as well as their depth and diversity. Rodrigues et al. (2012) explored the history of twentieth-century Brazil through a series of significant events that had serious influence upon the development of financial reporting culture. These are very diverse beginnings from the birth of Brazilian accounting profession in 1931; the impact of American trade as well as their accounting system; the 1960s period of high inflation, development of stock market, financial market reforms and finally the emergence of IFRS adoption in 2007. Furthermore, Muniandy and Ali (2012) found that the colonial past of Malaysia has significantly impacted the financial reporting environment of the country. This encompasses multiple factors like those of social, economic, political and regulatory culture too. For standards setting, serious inputs on such issues are very critical in terms of charting out an adoption trajectory of new accounting standards.

Narayan et al. (2000) observed the correlation between the histories of development of accounting in Vietnam and admission that Vietnamese accounting practices have created a strong connection between military, social and trade practices in Vietnam over recent decades. With similar observations, Adams and Do (2003) concluded that the history of accounting development in Vietnam has paralleled the political history and economic conditions of the country. Doan and Nguyen (2013), while investigating the period from mid-1980s to the present era of VAS, identified their hybrid nature as being a mix of Western style of accounting and Soviet- and French-style systems of financial reporting. This elaboration is narrow and further historical research as well as a conceptualisation framework too. Nguyen and Richard (2011) investigated and challenged the history of Vietnamese accounting system as to why there were two different accounting systems, that is, Uniform Accounting System (UAS) borrowed from the old system of the planned economy and VAS modified from the IAS. This article focusses upon the Vietnamese trajectory of IFRS adoption and the hidden challenges facing it. Vietnam does not have a singular national history: it was a colony for many years; even after its independence, it was impacted by multiple sets of foreign political and military influences, and then, it made a significant shift from a centrally planned economy to a market-based economy. This all has happened in a span of just over 100 years. Accounting systems cannot remain unaffected in these distinct historical shifts. Institutional responses, legal and corporate frameworks and executive decisions are all embedded in this journey. Therefore, this is a continuous process of mutual reactions and adaptations.

Theoretical framework

Findings and discussion: historical review of the accounting system in Vietnam

This section presents the history of accounting standard setting in Vietnam as an emerging transition economy and the social political economic factors that have influenced it. We rely on the 7Ps framework introduced by Carnegie and Napier (2002) as discussed above.

Products

The sixth ‘P’ – product – may be seen as the object of regulation or an outcome that it delivers to its stakeholders including the financial statements. However, in this article, we consider accounting standards, accounting systems and other corporate regulations as products. Circulars and notifications issued by the government may also be described as a communication product that delivers compliance requirements to the companies and other reporting entities. The hierarchy of Vietnamese accounting regulation is described in Figure 1 and it highlights how Accounting Regulators and Corporation Law in Vietnam regulate the process of accounting regulation in Vietnam. Once a regulatory decision is made, it is communicated to various interested parties through circulars and reporting entities are expected to comply with such notified accounting regulation. Accounting standards need to be incorporated into the accounting systems as having the force of company law for entities preparing financial reports. This process of developing and communicating the accounting regulatory framework may be described as a final product of the chronological occurrence of various influences, national and international, as discussed by Carnegie and Napier (2002).

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Figure 1.

Vietnamese accounting regulatory framework.

A key product in the Vietnamese economy during the last phase (1986−2016) was the accelerated privatisation progress which transformed the ownership of key businesses from 100 per cent SOEs to privatised enterprises with more limited government ownership. For example, in 2015, Vietnam offered a 3.47 per cent stake of Airports Corporation of Vietnam to the public, of which 80 per cent was purchased by foreign investors (Petty and Nguyen, 2015). A shift from state to private ownership consistently leads to a more efficient use of capital and labour, and enhances the performance of the reformed SOEs in terms of profitability (Tran et al., 2015). As the SOEs are privatised, their financial and management practices are placed under increasingly greater scrutiny, which raises a demand for improved corporate governance and enhanced disclosures and reporting practices. The efforts made by the Vietnam government to attract foreign investors to invest in their country show little success as the average foreign ownerships of Vietnamese publicly listed firms are still comparatively low with an average of 14.36 per cent (Vu et al., 2011).

Concluding remarks

The article examined the historical development of Vietnam’s accounting practices and accounting standards in its transition towards a market-based economy. Vietnam was chosen as a case study not only because it is an emerging and transitional nature but also because of its lack of systematic inquiry into the historical development of accounting. To contribute to this literature, we employed a theoretical framework that combines the 7Ps (periods, places, people, practices, propagation, products and profession) model proposed by Carnegie and Napier (2002), and institutional theory developed by DiMaggio and Powell (1983). This framework was utilised to address three related research objectives: (1) the various distinctive stages in the evolution of accounting practices in Vietnam, (2) the institutional pressures that have shaped the evolution of accounting standards in Vietnam and (3) the implications of these historical developments on changes in Vietnam’s accounting standards.

The period under study is from 1856 to 2016, and was divided into four phases: 1856−1944 (colonialist economy), 1945−1974 (war economy), 1975−1985 (socialist economy) and 1986−2016 (transition economy). Within Vietnam, the locational factor identified North, Central and South Vietnam for the colonialist phase; North and South Vietnam for the war phase; and Vietnam for the last two phases. Similarly, the stakeholder factor recognises the French accountants and their Vietnamese assistants during the colonialist phase, the socialist and capitalists during the war phase, domestic agencies in the socialist phase, and the accountants, domestic agencies, and international businesses and institutions in the transition phase.

The accounting practices in the first three phases were influenced by the rules and regulations of the ruling countries (France in Phase 1; China, the United States and, to a lesser extent, the Soviet Union in Phase 2; and the Soviet Union in Phase 3), whereas the practices in Phase 4 have been influenced by international funding institutions (WB, IMF and ADB) and, to a lesser extent, foreign investors. In terms of propagation, accounting was mainly utilised as a tool for central planning and budgeting in the first three phases, and only properly used as a reporting means in the transition phase. In terms of key products, it is conceivable to mention accounting standards such as VAS and VASB, and accounting regulation such as the Vietnamese Accounting Regulatory Framework. Finally, the accounting profession in Vietnam can be said to emerge in the last phase with the establishment of the domestic professional organisations (Chief Accountant Club, VAA and VACPA) together with the presence of international professional bodies (ACCA and CPA Australia). We argue that development of the accounting profession during the last phase has been a driving factor for the development of accounting standards in Vietnam. This may be due to change in the Vietnamese economy from a centrally planned economy to a market-oriented economy leading to the emergence of international trade, and thus participation of the Vietnamese accounting bodies in the IFRS convergence move.

Our analysis has confirmed the relevance of the institutional approach in interpreting the history of accounting practices and standards in Vietnam. More specifically, the evolution of accounting in Vietnam was powerfully influenced by external political forces. The first three phases of Vietnam’s accounting history illustrated coercive isomorphism from France, China and the Soviet Union, respectively, whereas mimetic and normative isomorphism only become visible in the fourth phase. As an emerging economy, it is helpful to note that while accounting standards and regulations were tightly controlled by the Vietnamese government, particularly the MoF, there was also increasing demand, especially by the foreign invested sector, for using the best international accounting practices available. Thus, not surprisingly, the current accounting development in Vietnam is strongly influenced by the global move towards a single set of accounting standards.

In recent years, Vietnam has made efforts to strengthen capital market supervision and enforcement of accounting standards. During the time of the preparation of this article, the Vietnamese standards setters considered adopting IFRS (at least for public interest business entities) by 2025; however, the official roadmap is not yet announced. A worthwhile area of research would be to consider the implications of IFRS adoption upon the different stakeholders in a transition economy where the governance structures and source of finance is different to market-oriented countries. For example, disclosure under IFRS in annual reports and financial statements of companies in a transition economy may not be perceived in the same way as in the market of well-developed countries. Finally, the usefulness of IFRS in the context of transition economy could be investigated by regressing market data against financial ratios. In addition, comparative studies of firms in different countries or regions would provide a useful insight into the different institutional arrangements of each country and could be used to explain the differences in accounting practices between different countries.