​Domestic accounting market approaching vast opportunities

Accounting is one of eight fields enjoying total freedom in the ASEAN after the ASEAN Economic Community (AEC) was established at the end of 2015. Could the Law on Accounting be in a position to protect accounting firms as well as the domestic accounting services market?

Compared to accounting firms in other regional countries, local firms prove to be weaker in terms of financial capacity, human resources quality, and track record. Therefore, on one side, Vietnam will open up the market for accounting services to match its undertakings under the AEC, while on the other side, it will limit foreign firms to only provide accounting services in the form of capital contribution with local firms on an equal footing or establish branch offices in Vietnam, but they will not be allowed to open wholly foreign-owned units.

In addition, we have erected technical barriers to shield the domestic market.

Accordingly, anyone, including foreigners, providing accounting services in Vietnam need to acquire accountants’ or auditors’ certifications. To get the certificate, they must undergo an exam in Vietnamese held by the Ministry of Finance (MoF). Even those already holding certifications granted by foreign organisations, including international accounting organisations which were accepted by the MoF, must take an exam on Vietnam’s economic, financial, and accounting regulatory systems—in Vietnamese language.

Not only Vietnam, other regional countries have also applied similar measures to safeguard their domestic service trading markets.

Why only certain types of companies are allowed to provide accounting services in Vietnam?

Like several other kinds of services, such as auditing or notary services, accounting firms hold high responsibilities, so that risks are high if even joint stock firms, co-operatives or joint ventures were allowed to provide these services.

For example, when joint stock firms are authorised to provide accounting services, they could also be the shareholder of the companies leasing their accounting services. In that case, it would be difficult to ensure transparency and objectivity. Therefore, as per global practices. only limited liability companies consisting of at least two members, consortiums, and private firms are eligible to provide these services.

Do you think that imposing a cap on capital contribution to accounting firms will prevent certified accountants from opening businesses?

Accounting services do not require much capital, but are very reliant on the quality of human resources (accounting team). Therefore, controlling capital contribution does not discourage certified accountants from establishing their own businesses.

Therefore, governmental Decree 174/2016/ND-CP regulates that corporate members of limited liability companies must contribute at most 35 per cent of the chartered capital. In case many entities jointly contribute capital, the total contribution of these entities must not surpass 35 per cent.

Besides, at least two capital polling members must be certified accountants and the share of certified accountants must exceed 50 per cent of the chartered capital.

These requirements are to help ensure the independence of accountants’ activities as well as their responsibility.

How will the accounting services market fare in the upcoming time?

Each year, 100,000 new companies will join the market, opening up enormous opportunities for accounting services. Besides, from this year, businesses and administrative organisations are allowed to hire accounting firms and are not required to open their separate accounting departments.

Thus, I believe the accounting services market will enjoy great opportunities in the upcoming time.