In this article
Every period, an FDI company must send a reporting package to its parent company in the group's format and accounting framework, usually IFRS, while its books in Vietnam are kept under VAS. The most sustainable approach is not to change the books but to build a conversion schedule (bridge) that can be reused every period. This article walks through the steps the way the accounting team at ACCA Consulting Vietnam does it for FDI clients.
1. What a parent-company reporting package contains
It varies by group, but a reporting package typically includes: a trial balance mapped to the group chart of accounts, an income statement and balance sheet in the group format, an intercompany balance reconciliation, notes on material line items, and a VAS-to-IFRS adjustment schedule. Many groups submit through consolidation software, but the underlying logic is the same.
2. Steps to build the VAS→IFRS bridge
- 1Close the VAS books
Complete period-end entries under VAS and export a detailed trial balance.
- 2Map the accounts
Assign each detailed account to a group account using the approved mapping table.
- 3Post adjusting entries
Record IFRS adjustments in a separate adjustments ledger, without changing the VAS books.
- 4Calculate deferred tax
Calculate the tax effect of the adjustments on temporary differences.
- 5Reconcile intercompany
Match balances and transactions with group companies before the cut-off.
- 6Control variances
Reconcile VAS and IFRS equity and profit, explaining each line.
- 7Review and submit
The CFO approves, the package is submitted and the working papers are filed.
The mapping step determines the quality of the whole package; if you do not yet have a standard mapping table, see mapping the VAS chart of accounts to the group.
3. Common adjusting entries (bridge template)
The illustrative example below uses a hypothetical company with profit before tax under VAS of VND 4,000 million. Each adjustment line has a code, a description, its effect on profit and supporting documentation.
| Code | Adjustment | Effect on PBT | Supporting documentation |
|---|---|---|---|
| Profit before tax under VAS | 4,000 | VAS income statement | |
| ADJ-01 | Office lease under IFRS 16 (depreciation + interest − rent) | -83 | Lease liability schedule |
| ADJ-02 | Additional expected credit loss | -150 | Aging schedule and loss rates |
| ADJ-03 | Accrual of annual bonus | -120 | Bonus policy, calculation |
| ADJ-04 | Deferral of revenue for bundled warranty service | -100 | Contracts, transaction price allocation |
| Profit before tax under IFRS | 3,547 | Approved bridge | |
| ADJ-05 | Deferred tax on the adjustments (20%) | +91 | Temporary differences schedule |
Illustrative example. Assets increase due to the right-of-use asset of 3,464 and deferred tax asset of 91, less the allowance of 150; liabilities increase due to the lease liability of 3,547, bonus accrual of 120 and deferred revenue of 100.
View as table
| Under VAS | Under IFRS | |
|---|---|---|
| Revenue | 50,000 tr | 49,900 tr |
| Profit before tax | 4,000 tr | 3,547 tr |
| Total assets | 30,000 tr | 33,405 tr |
| Liabilities | 12,000 tr | 15,767 tr |
Explaining each adjustment
ADJ-01 arises when a lease is expensed under VAS but IFRS requires a right-of-use asset and lease liability. ADJ-02 reflects the difference between an aging-based allowance and the expected credit loss model. ADJ-03 is common when bonuses are recorded only when paid, whereas IFRS requires recognition when the obligation arises. ADJ-04 separates the value of the bundled warranty service so that the revenue is recognized over time.
ADJ-05 is the step most often forgotten: each adjustment reduces accounting profit but does not change the tax payable in Vietnam, so it creates a temporary difference. At the standard corporate income tax (CIT/TNDN) rate of 20%, total adjustments of −453 million create a deferred tax asset of about 91 million. The rate for a particular company may differ if it falls under the 15% or 17% rates or enjoys incentives, so use the rate expected to apply when the difference reverses.
4. Variance controls so the package is not sent back
- Total profit adjustments match the change in equity for the period (example above: −453 + 91 = −362).
- The IFRS balance sheet balances: total assets equal liabilities plus equity.
- Prior-period adjustments are carried forward as opening balances, not redone from scratch.
- Intercompany balances agree with group counterparties, with differences explained.
- No VAS account is left unmapped.
- Currency translation follows the group's instructions.
5. Monthly package submission timeline
- Working day 1
Close the VAS books; cut off revenue, expenses and accruals.
- Working day 2
Map accounts and send intercompany balance confirmations.
- Working day 3
Post IFRS adjusting entries and deferred tax.
- Working day 4
Reconcile, explain fluctuations, CFO approval.
- Working day 5
Submit the package and file the period's working papers.
To meet this schedule, local processes such as payroll, receivables/payables and tax returns must run on time; see also the monthly payroll process.
FAQ
Should IFRS entries be posted directly into the VAS books?
No. The VAS books serve the financial statements and tax in Vietnam; IFRS adjustments should be recorded in a separate ledger or bridge so every figure remains traceable.
Does the reporting package need to be audited?
It depends on the group's requirements. Many groups ask local auditors to perform procedures on the year-end package, separate from the statutory VAS audit.
Does the bridge have to be rebuilt every month?
No. Prior-period adjustments become opening balances, and each month only the movements are updated. That is why a stable template saves a lot of time.
Does a small company need a complex reporting package?
It depends on the group's requirements. Small companies often need only a mapped trial balance and a few material adjustments.
Build a reusable VAS→IFRS bridge template
ACCA Consulting Vietnam designs the bridge, the list of adjustments and a submission calendar tailored to your parent company's requirements.
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