The urgency of research
From the fact of Vietnam public sector accounting of today is far different from the worldwide public
sector accounting. The Public Sector Accounting Vietnam has not provided useful information for
accountability and decision making. Therefore, public sector accounting has not been a useful tool for
management and control of public financing source. In addition, the process of globalization of the world
economy has established international relationships and created demand that provided information must be
standard and comparable and is accepted internationally (Ministry of Finance, 2011). Therefore, a research on
improvement of the public sector financial statements in Vietnam to improve the usefulness of the information
in the financial statements for the purpose of making decision, assessing accountability and corresponding
with international accounting practice is an urgent and very useful study for Vietnam in the current period.
2. Research objectives and research questions
- General objectives: Improving financial statements for general purpose of public sector to ensure that public
sector financial statements provide useful information, are in accordance with international accounting rules to
meet the requirements of international integration and match with Vietnam economic and social conditions in
the short term as well as long term.
- Specific objectives:
+ Identifying the factors that affect public sector accounting reform in Vietnam to ensure public sector
financial statements provide useful information and in accordance with international accounting practices.
+ Proposing the background measures to ensure for reform and renewal of Vietnam public sector accounting is
feasible, thereby creating a legal basis for the system establishment of financial statements for general purpose
in the public sector in general and ANB unit in particular to provide useful information to the user towards
international public sector accounting standard and general trend for public sector accounting in countries in
the world while satisfying conditions of Vietnam.
- Research questions
+ The first research question: What are limitations of the present public sector financial statements and how do
they affect supplement of useful information for users?
+ The second research question: What are the factors affecting to the public sector accounting reform in
Vietnam to ensure public sector financial statements provide useful information and in accordance with
international accounting practices?
+ What are content and structure of financial statements for general purpose in Vietnam public sector to the
public sector financial statements can provide useful information and in accordance with international
3. Research objects and scope of research
- Research objects of Thesis
The thesis researches financial statements system applied to units in the Vietnam public sector and
related regulations as well as a number of international regulations on this issue. Specifically, the research
+ Accounting regime and financial statements of units under the Vietnam public sector.
+ International public sector accounting standards and trends of public sector accounting in the world.
+ The factors affecting to the public sector accounting reform to provide truthful, useful information on the
financial statements and consistent with international accounting practices.
- Scope of research
The author focuses on studying information on the financial statements for general purpose of the
public sector in Vietnam, trends for public sector accounting of countries in the world and the factors affecting
to the Vietnam public sector accounting reform to the Vietnam public sector accounting can provide useful
information in accordance with international accounting practices. Research of International Public Sector
Accounting Standards (IPSASs) and public sector accounting of the United States, Australia and South Africa
guide the improvement of financial statements for general purpose of the public sector to improve the quality
of information on the public sector financial statements.
However, the public sector is too large asevery industry and sector in public sector has different
characteristics, special professional features and the financial management. Therefore, in terms of the research
of detailed content improvement forFS for general purpose in the public sector, author chooses the
Administrative and Business (ANB) as a typical public unit and to present concrete solutions with purpose of
completing targets in the FS for general purpose. The reason for selecting ANB unit to propose concrete
solutions is that ANB units occupy majority of public sector in Vietnam and the implementation of accounting
easily changing to accrual basic adapt to the application of IPSASs
4. Research methodology
Thesis concurrently uses qualitative and quantitative research. Content of the methodology shall be
presented in more detail in chapter 3 of this summary.
5. Contribution of the thesis
The research results of the thesis have contributed at a certain level to theoretical and practical aspects
of public sector accounting include:
+ Distinguishing and clarifying theoretically of two types of the public sector FS are FS for general purpose
and FS for special purpose.
+ Assessment of the status of the usefulness information in the public sector FS in general and FS of ANB
units in particular.
+ Identifying the factors that affect the public sector accounting reform in Vietnam to ensure the Vietnam
public sector FS providing useful information in accordance with international practices.
+ Proposing background solutions to the Vietnam public sector FS can be made and presented accordingly to
international accounting practices and provide useful information.
+ Completing information content on FS for general purpose the public sector in general and administrative
and business units in particular to provide useful information for decision making and accountability,
consistent with international accounting practices, match with theconditions of Vietnam.
6. Structure of thesis
The thesis includes 5 chapters in addition to introduction and appendix:.
Chapter 1: Overview of Public Sector Financial Statements and issues related to public sector accounting
Chapter 2: Theoretical Foundations of financial statements applied to the public sector
Chapter 3: Research methodology
Chapter 4: Findings and discussion
Chapter 5: Conclusions and recommendations
OVERVIEW OF PUBLIC SECTOR FINANCIAL STATEMENTS AND ISSUES RELATED TO
PUBLIC SECTOR ACCOUNTING
The author presents an overview of research on two aspects: (1) Overview of conditions and factors
that affect the public sector accounting improvement and (2) An overview of public sector FS and public sector
OVERVIEW OF THE ABROAD RESEARCH
By using the method of qualitative research, the previous studies of Luder (1992); Ouda (2004, 2008);
J.L Chan (2005); Upping Phetphrairin Olive and Judy (2011); Harun Harun and Haryono Kamase (2012);
Silvia Cristina Nistora and her coworker (2013) confirmed that to enhance the information quality of the public
sector financial statements to strengthen the usefulness and truthfulness and meet the need of providing
information for decision making and accountability evaluation; the countries need to implement public sector
accounting on an entire accrual basis. Besides, by utilizing the method of quantitative and qualitative research,
the previous studies have identified factors affecting to the transformation of accounting to accrual basis of
developed nations (Klaus G. Luder, 1992; Hassan Ouda AG, 2004; CristinaSilviaNistora and her coworker,
2013) and the factors affecting the transformation of accounting to accrual basis of the developing countries
(Chan JL, 2005; Hassan Ouda AG, 2008 ; Phetphrairin Upping and Judy Olive, 2011; Harun Harun and
Haryono Kamase, 2012; CristinaSilviaNistora et al, 2013).
In terms of the public sector FS, the previous studies of Tyrone Carlin M (2003), Daniela Artemisa
Calu et al (2008), Colin Clark (2010), Janet Mack (2003, 2006) confirmed that the target of the public sector
FS is only to provides useful information for decision making but also for the assessment of accountability.
However, when preparing FS on an accrual basis to achieve the target, the FS must be implementing fully and
completely, if performed in
few fields and some states, they shall not achieve the level of efficiency
comparing with the cost (M Tyrone Carlin, 2003) and the FS for the general purpose, which provide useful
information, must include a Accounting balance sheet, Operation result report, Cash flow statements, Notes fo
financial statements and Audit report of FS (Janet Mack, 2006). Yasuhiro Yamada (2007), Maria Kapadis and
Colin Clark (2010) identified the public sector financial statements presenting information about the financial,
the operation situation, cash flow statement, description information about the financial and non-financial
resources to provide useful information for decision making and accountability assessment. The study of
preparation and presentation of financial statements in accordance with IPSASs including five reports named
Accounting balance sheet, operation result report, cash flow statements, statement of change in capital owner
and notes to financial statementsto ensure that the provided information is more valuable anduseful.
(CarmenCretu et al, 2011).
1.2 OVERVIEW OF THE NATIONAL RESEARCH
In Vietnam, the author found no intensive studies, using quantitative research method and survey
carried out in Vietnam to determine the factors affecting to the tranformation of the public sector accounting
to the accrual basis as well as in-depth study of public sector FS in Vietnam.
Le Thi Cam Hong (2013) and Phan Thi Thuy Quynh (2012) studied the FS for the ANB unit in
Vietnam. However, the studies only researched deeply on the current state and the FS solutions for ANB unit –
a kind of units in public sector.
COMMENT ON OVERVIEW OF RESEARCH CONDITION
The previous studies concerning the
public sector FS, the factors affecting the public sector
accounting reform studied other countries such as Australia, Romania, Indonesia, Egypt, Thailand, etc, not
1.4. GAP IN RESEARCH AND RESEARCH ORIENTATION OF AUTHOR
1.4.1 The gap in research
From the review and evaluation of related research projects inhome and abroad countries, researching
on general trend of the public sector accounting in countries in the world, the author found that the public
sector accounting implemented on accrual basis provides multiple benefits and is in accordance with the
general trend of worldwide public sector accounting. As Vietnam has committed to implement the public
sector accounting on accrual basis in compliance with IPSASs (IPSASB, 2013) and issued the Vietnam
accounting standards basing on IPSASs. It was confirmed by Vietnam accounting policy issuing units with a
specific announced roadmap (Bui Van Mai, 2007; Dang Thai Hung, 2011); up to now, the Vietnam public
sector accounting standards are under preparation for publishment. Therefore, the future of Vietnam public
sector accounting performing on the basis of Vietnam public sector accounting standards and IPSASs is the
matter planned and has a clear strategy route of Vietnam government. However, in Vietnam, the author found
no studies identifiing the factors which affect the reform of Vietnam public sector accounting to accrual basis
in accordance with international accounting practices; thereby making measures to reduce obstacles to
innovation of public sector accounting. Moreover, there are no studies researching deeply on the FS in the
units in public sector in Vietnam on an accrual basis so that the FS provide useful information in accordance
with international accounting practices and match with the context of economic management, the public sector
finance of Vietnam.
1.4.2 Research orientation of author
With the viewpoint of inheritance and further development of the previous studies, the thesis will
continue researching on the public sector accounting in Vietnam and focus on studying and testing the factors
affecting the Vietnam public sector accounting reform on transforming the Vietnam public sector accounting
from Vietnam to the accrual basis. This is a steady platform for completion ofthe public sector FS so that the
Vietnam public sector FS will provide useful informationin accordance with international accounting practices.
However, as the public sector is too large withmany types of units under the public sector such as
administrative and business unit, treasury, tax, customs office, wards and etc. In addition, these units perform
accounting under various regulations of Ministry of Finance. Therefore, as explained in the scope of research,
the thesis of financial statements improvement for the public sector will analyze and illustrate specific content,
structure of the financial statements for administrative and business unit.
THEORETICAL FOUNDATIONS OF FINANCIAL STATEMENTS APPLIED TO THE PUBLIC
21. PUBLIC SECTOR FINANCIAL STATEMENTS ACCORDING TO INTERNATIONAL PUBLIC
SECTOR THEORETICAL MODEL AND INTERNATIONAL PUBLIC SECTOR ACCOUNTING
2.1.1 Definition: Public sector FS is a formal record which is presented in a structured manner about the
financial situation of the organization and the transaction is carried out by a unit under public sector. The
objective of financial statement is to provide information about the financial condition ,the operation situation
and cash flow of a unit in the public sector.
2.1.2 Classification of the public sector FS
IPSASs classify two different types of the public sector FS are: FS for general purpose and FS for
Table 2.1: Comparison sheet of financial statements for general purpose and financial statements for special purpose
FS for general purpose
FS for special purpose
All users who wish to use the information
without the ability or power to require the
public unit to provide information.
All users who have the ability or power to
require the public unit to provide
information for their usage ofinformation.
For example, the tax authorities, the state
budget management, superior unit, the state
audit, banking, special customer, creditor,
international organizations, etc .
Providing useful information for decision
making and explanation
Providing useful information for their own
purposes. Objectives depend on on the
and quantity of
FS provide the following information:Information on operations condition Information on financial position; - Information
on changes in net assets; Information on cash
flow; -Explanation information, and additional
note; The information is presented on 5 reports:
Results of operations report, Financial position
report, Changes in net assets report, Cash flow
statements, and Notes to Financial statements.
Provided Information on the financial
statements are not modeled. Depending on
the needs of the information users, the
financial statements will provide relevant
information to meet the needs of
principles have to be complied. Most of the
accounting standards in countries
around the world, IPSASs are issued to serve
for providing information on FS for general
Depending on the regulations in each
country, but the general trend is not to
require full compliance. .
The level of open to
public information in
It is compulsory that this information must be
widely and transparently published for the
It is not compulsory that this information is
widely published. Information is provided
solely for the requesting users.
Objective of FS
Source: Collecting from IPSASs
2.1.3 The purpose of public sector financial statements for general purpose.
The main purpose of the financial statements for general purpose is to provide useful information to
the user for the purpose of accountability and decision making.
2.1.4 Characteristics of information on public sector financial statements for general purpose:
Comprehensiveness, relevance and reliability, materiality, honesty, neutrality, comparable property, verifiable
2.1.5 The principles for the preparation and presentation of FS for general purpose: Continuous
operation, consistent presentation, critical and synthesis, compensation.
2.1.6 Quantity, content and structure of the FS for the general purpose of the public sector
a. Quantity of financial statements: Report on the financial situation of unit, Results of operations report,
Changes in net assets report, Cash flow statements and Accounting policy and explanation of financial
statements (Notes of FS).
b. The content and structure of FS
b1. Report on the financial situation: The financial condition report must present at least the following
items: Assets: Assets are divided into the short-term and long-term assets; Liabilities: Liabilities are divided
into short-term and long-term liabilities; Net assets (equity capital).
b2. Results of operations report: In addition to the title, the report on results of operations must have at least
the following items: Surplus or deficit from the operations of organization; financial cost, surplus or net deficit
of the joint- venture or association units by the equity capital method; Surplus or deficit from ordinary
activities; the extraordinary items; the interest of minority shareholders in surplus or net deficit; total of surplus
or net deficit of the unit in the accounting period.
b3. Changes in net assets report (equity capital): The unit has to indicate changes in net assets during the
reporting period for each content: surplus or net deficit in the accounting period; each item of income and
expense directly related to the net assets as total of the item (by the other requirements standards); the effects
of changes in accounting policies and the correction of fundamental errors as required by the standard method
of IPSAS 3.
b4. Cash flow statements
The information in the report on cash flow helps to assess the ability of the unit to generate cash and cash
equivalents as well as to meet the demand for cash flow of the unit. Cash flow report should report on cash
flows during the period classified according to the primary activities (operating normally as purposes of unit),
investing and financing activities.
b5. Explanation of financial statements ( Notes to financial statements)
Explanation of financial statements of the unit must display the following information: Basic information for
financial reporting and accounting policies used and other events in the organization; Information as required
by the public accounting standards, which has not been presented in the report; provide additional information
that is not presented in the financial statements but required to reflect truthfully.
2.2 THE PUBLIC SECTOR FINANCIAL STATEMENTS IN SOME NATIONS AND LEARNED
LESSON FOR VIETNAM
According to the IMF (2009), Australia and the United States are two of the seven countries have completed
the disclosure of information on public sector FS on an accrual basis in a broad and complete manner. South
Africa is the developing country that is regarded as the most successful country in reform of public accounting
regime. The public sector financial statements of South Africa are highly the appreciated in transparency and
usefulness by international organizations. Learned lesson from the study accounting regime of public sector in
Australia, US, South Africa, as follows:
- The issuing agency of accounting standards is not purely state agency but a board preparing the standards,
which is independent from state management units and established by mutiple user types that use the
information on FS.
- Issuing accounting standards for their own country while maintaining compliance to IPSAS and other
regulations of IPSASs, if not regulated by IPSASs, the standards are in compliance to Internal Accounting
- Identifying clearly the targets of financial statements is to provide useful information for decision making and
improvement of accountability.
- FS are divided into FS for general purpose and FS for special purposes.
- Uniforming general regulations on the content of information, the number of reports on the financial
statements for all public sector organizations.
2.3 CURRENT CONDITION OF PERFORMANCE OF PUBLIC ACCOUNTING IN THE WORLD
2.3.1 The implementation of transforming public sector accounting into accrual basic in the world
Table 2.2 Statistics on the implementation of public sector accounting on an accrual basis of countries in the world
Accounting on currency basic
Combination of currency
accounting and accrual basis
Accounting on a full accrual basic
Austria, Belgium, Czech Republic, Germany,
Netherlands, Norway, Slovak Republic,
Cambodia, Finland, Iceland, Israel,
Jordan, Mexico, Sweden
Australia, Canada, Colombia, France,
New Zealand, United Kingdom,
Source: IMF report in 2009
2.3.2 Current condition of applying IPSAS into public sector accounting
According to the statistic of IPSASB (2014), only the following nations and economic organizations
official apply or have official commitments to apply IPSASs: Austria, Brazil, Cambodia, Costa Rica, Kenya,
Peru, South Africa, Spain, Switzerland, Vietnam, the Commission of the European Union, NATO, OECD,
CHAPTER 3: RESEARCH METHODOLOGY
3.1 RESEARCH STRUCTURE OF THE THESIS
To achieve the research objectives, the author construct the following structure in Diagram 3.1
Diagram 3.1: Research structure diagram
3.2 QUALITATIVE RESEACH METHODOLOGY
Qualitative research methodology is employed to describe, analyze the condition of public accounting,
financial statements and to examine the usefulness of the information provided in FS in public sector; Analyse
and summarize the regulation IPSASs and the theoretical accounting model in public sector; Research the new
accounting trend in the world and experience of other nations in creating and presenting FS in public sector;
Analyze and decide the optical solution to complete FS in public sector in general and in other forms of ANB
in particular in Vietnam; Consolidate and confirm the recommendations for FS completion in public sector as
well as other entities are reasonable and adequate to the need of information users. Meanwhile, the researcher
employed qualitative research to gather the factors that influence the transformation of Vietnamese public
accounting to the accrual basis. The author utilized the following particular methods: System approach
method, Reasoning method, synthesis method, analysis method, the method of comparison, examination,
survey, collection of general opinions and expert’s opinions, descriptive statistics.
3.3 QUANTITATIVE RESEARCH METHODOLOGY
Employed to test the hypothesis on the factors influencing the transformation of public accounting to
accrual basis so that FS provides useful information and in consistent with international norms.
Determination of the factors influencing the reform of public accounting to accrual basis need to
Silvia Cristina Nistora et al (2013) suggested that the development of public sector accounting from
developing countries affected by six factors (1) the political environment, (2) Legal environment, (3)
Economic environment, (4) Educational environment, (5) Socio-cultural environment, (6) Employment
environment. However, Zhang (2005) combined environmental education and environmental factors into one
factor. Meanwhile, the previous studies of Ouda (2004, 2008); J.L Chan (2005); Upping Phetphrairin Olive
and Judy (2011); Harun Harun and Haryono Kamase (2012) confirmed the International factors would
influence the reform of the public accounting in a country , especially developing countries. Referring to the
previous studies, the author initially identified six factors that affect the accounting reform of the public sector
should be inspected in Vietnam including: (1) Political Environment, (2) Legal Environment, (3) Economic
Environment, (4) Vocational and educational environment, (5) International Environment , (6) Cultural
3.3.2 Determination of analysis tool to test the factors affecting the transformation of public accounting
to accrual basis
The author will ustilize exploratory factor analysis (EFA) to test the factors affecting the
transformation of accounting to the accrual basis of accounting in the public sector in Vietnam. Estimating
equation has the general form as follows:
CCKT = β0 + β2F2 β1F1 + + + β5F5 β4F4 β3F3 + + β6F6
- CCKT: Factors affecting reform public sector accounting to accrual basis
- Β0 : coefficient of the model, the impact of other factors, in addition to the main factors in the model.
- Β1, β2, β3, ...: standardized regression coefficients indicate the level of importance of the factors affecting
the quality of financial statements information.
- F1 (Environmental Politics) includes variables: MTCT1, MTCT2, MTCT3 respectively refer to: The political
support of law enforcement agencies and legislators; The democratic and political competition; The
strengthening of parliamentary financial oversight of the public sector.
- F2 (Environmental Education) includes variables: MTGD4, MTGD5, MTGD6, MTGD7 respectively refer
to: education level of the people; Qualifications of accounting experts, professionals and policy of recruitment
and training for public sector accountants; Propaganda policy to enlist popular support and consensus of all
classes; The capability in information technology.
- F3 (economic environment) variables include: MTKT8, MTKT9, MTKT10, MTKT11 respectively refer to:
The financial pressures on the public sector; The financial scandals in the public sector, such as fraud, errors
and corruption; Income and living standards of the people; Funding for public sector accounting reform ;
- F4 (Legal Environment) includes variables: MTPL12, MTPL13, MTPL14, MTPL15, MTPL16, MTPL17,
MTPL18 respectively refer to: Regulation on publish information of public sector FS; The internal control
system; Accounting standards of public sector; The needs of public sector FS's information users; The
regulations on the management of state budget and public sector financial management; The objective of
public sector FS; Professional organizations and agencies that issue accounting standards.
- F5 (International Environment) includes variables: MTQT19, MTQT20, MTQT21 respectively refer to: The
professional support of international experts; Pressure in implementing commitment when joining international
organizations; Strong financial intervention and sponsorship of international organizations.
- F6 (cultural environment) variables include: MTVH22, MTVH23, MTVH24, MTVH25 respectively refer to:
Culture of bureaucratic management and innovation sentiment; The strict observance of the accounting rules ,
ethical and professional standards of accountants; Culture of expressing, demanding rights for controlling state
budget, the public use of public finance; Individualism and corruption.
- CCKT include variables: CCKT1, CCKT2, CCKT3 respectively refer to: Providing truthful information and
useful to users; Improving the explaining accountability of ANB; In accordance with international accounting
practices and gaining international recognition.
3.3.3 Statistical data
Primary data by actual and valid survey of the 311 people, who work, study and teach related to public
sector accounting. Besides, the author surveyed, and consulted 12 experts in the field of accounting.
3.3.4 Determining sample size and scale
According to Tabachnick & Fidell (2007) when using the MLR (multiple regression), the sample size
n should be calculated using the following formula: n> = 50+ 8p (p: number of independent variables). In a
questionnaire concerning the factors affecting quality of information on the financial statements, the author
observed 25 variables; sample size should be reasonable, sample size is greater than 250 observations.
However, for the purpose of improving the reliability of the research, the author investigated 345 subjects,
however in the process of collecting data, there were 330 subjects responded with 19 invalid responses. The
remaining 311 responses were used for analysis. The author used the Likert scale quantitative research.
3.3.5 The process of peforming statistics on EFA model
The author will determine the relevance of these factors to the reform of public sector accounting by
exploratory factor analysis EFA. The sequence of steps as follows: Step 1: Scale checking. Step 2: Exploratory
factor analysis (EFA). Step 3: Multivariate regression analysis. Step 4: Testing the model.
CHAPTER 4: RESEARCH FINDINGS AND DISCUSSION
4.1 RESEARCH FINDINGS
4.1.1 Qualitative research findings
In this part, author only summarizes findings of qualitative research from statistics of 311 surveyed
subjects and 12 experts.
220.127.116.11 Research findings about condition of public sector FS.
a. Results of survey of accounting regime: Majority of respondents suppose that the current accounting
regime in public sector contain many inadequacies, internal control is loose and lacks of adequate attention.
b. Results of survey of FS’s objectives, information users of FS and content and presentation in FS: With
high proportion >65% of respondents suppose that public sector FS has not provided useful information,
without necessary information on financial condition, operation, cash flow condition and explanation.
Presentation and form are lengthy, complex, and contain too many forms etc…
c. Results of survey of quality characteristics of information provided in FS: With relatively high
proportion >50% of respondents disagree with the statement public sector FS satisfies quality characteristics of
information of FS.
18.104.22.168 Research findings on usefullness of information in public sector FS when applied for ANB and
the need of transformation in public sector accounting basis.
a. Results of survey of experts’ level of satisfaction about financial statements for general use in public
sector applied for particular ANB demonstration revised by the author: From the results of survey of
public sector financial statements with 12 experts in public sector accounting. The proportion of unsatisfaction
accounts for approximately 8.3%, the proportion of satisfaction accounts for >80%. This suggests that
financial statements has reached a certain level of completion.
b. Results of survey of transformation of public sector accounting basis: 100% of experts agree that there
is a need to transform the public sector accounting basis to accrual basis to create reliable and useful public
sector FS and to meet international practices.
4.1.2 Results of quantitative research (research on the factors affecting the public sector FS)
To analyze research data and verification of factors affecting the quality of information on public
sector FS author uses analytical tools exploratory factor analysis (EFA). After performing the verification
steps such as scale testing, KMO and Bartlerrs inspection, correlated variables testing, the level of
interpretation of the observed variables for factors testing, multivariate regression analysis, the results are
concluded as follows:
Factors affecting the reform of public sector accounting from Vietnam to the accrual basis in the order
1. The political environment (including factors: the strict supervision of Parliament, and the democracy and
political competition; Political support of law enforcement agencies and the legislature.)
2. The international environment (including factors: Pressure implementing the commitment when joining
international organizations; Intervention and strong financial sponsor of international organizations,
professional support of international experts)
3. The economic environment (including factors: Expenses of public sector accounting reform; Financial
pressures; Income, standard of living of the people)
4. The legal environment (including factors: regulations on management and use of state budget and financial
management of the public sector; public sector accounting standards, professional associations and agencies
producing public sector accounting standards, public sector FS objectives; The system of internal control)
5. Education environment, occupation, professionalism (including factors: The qulalifications of experts,
accounting professionals and recruitment, training policy; Information technology capability; Propaganda
policy; Education, education of the people.)
6. The cultural environment (including factors: Individualism and corruption; strict enforcement of the
professional standards and ethics; culture of bureaucratic management innovation sentiment of officials ,
leaders, manager of entities.)
4.2 EVALUATION OF CURRENT CONDITION OF ACCOUNTING, FINANCIAL STATEMENTS
IN PUBLIC SECTOR
The public sector accounting system has played a very important role in the safe management of
money and property of the State, to provide timely information on finance, budget for the authorities; The
accounting system of the region are now issued in details, with sector-specific characteristics, particular
professions in the public sector.
There are too many documents on financial management and accounting regime applied in public
sector; The public sector financial statements is lengthy, complex, contains too many forms, does not
seperate financial statements and settlement reports on the use of budget in the public unit; The objectives of
public sector financial statements are not clearly defined, not in accordance with international accounting
practices; There are two parallel cash basis accounting and accrual accounting in the public sector units;
Internal control mechanisms in the public sector are loose, without the proper care of the unit heads and
bodies of state management at higher level.
4.3 DISCUSSION OF PUBLIC SECTOR FS IMPROVEMENT
4.3.1 The improvement perspective: The perspective to establishing and improving the public sector
financial statements, including:
1. In accordance with the regulatory environment, culture, political environment, education, occupation, and
economic environment of the public sector units especially ANB units.
2. Improving the usefulness of the information provided to subjects related to the unit in general and ANB
units in particular.
3. Access and gradual integration with the international accounting practices in the public sector.
4.3.2 Improvement Orientation
1. To provide useful information, it is necessary to distinguish and separate FS for general use and FS for
2. Utilize IPSASs on the accrual basis to improve public sector FS in Vietnam to ensure FS provides useful
information for decision making and explanation responsibility assessment.
4.3.3 Discussion of improvement solution
22.214.171.124 Foundation solution
The foundation solutions are based on the research on identifying factors affecting the public sector
accounting reform to accrual basis.
1. Transformation of accounting basis: Applying accrual basis for public sector accounting.
2. Improvement solution for political environment issues
a. Strengthening the supervision of the agencies overseeing public sector finances.
b. Improving decocracy and political competition following direction of Socialist.
c. Strengthening the political support of the executive and legislative entities.
3. Improvement solution for international environment issues
Vietnam needs to actively enlist the international financial and professional support. Vietnam is a
follower in reforming the public sector accounting so Vietnam only needs the international support, especially
the professional support of the international accounting organizations and the support of expertise and
experience of countries that have successfully implemented FS on an accrual basis for the reform of the public
sector accounting to be most effective, least expensive.
4. Improvement solution for economic environment issues
The government needs to plan and estimate financial source to perform public sector accounting
reform explicitly and in long-term. An unstable inadequate fiancial source shall affect continuity of the project
of public sector accounting reform and directly affect quality of the reform.
5. Improvement solution for legal environment issues
a. Completion of the budget law and related documents
b. Construction and issue of accounting standards for Vietnamese public sector or temporarily using IPSASs
adjusted for Vietnam.
c. Development of profession association and establishment of independent and objective entity preparing
public sector accounting model.
d. Clear indentification of public sector FS’s objectives.
e. Completion of internal control and FS quality control in public entities.
f. Completion of regulations of publishing public sector FS
6. Improvement solution for education and occupation environment issues
a. Improvement of the professional qualifications of the staff working on public sector accounting and
enhancement of training, recruitment for high quality professionals.
b. Increase of the application of information technology in the public sector accounting.
c. Propagation and dissemination of policy reform public sector accounting to all strata of society.
7. Improvement solution for cultural environment issues
a. Limit and elimination of individualism and corruption
b. Building up the culture of respect for professional ethics, seriousness in implementing the standards, the
accounting regime of accountants.
c. Elimination of bureaucratic culture, innovation sentiment of officials, leaders, executives who issue
accounting policies, public sector management and administration of public sector units.
126.96.36.199 The specific measures to improve public sector FS
1. Establishment of the general purpose for financial statements
To conform with international accounting practices and in accordance with the conditions of Vietnam.
General purpose financial statements of the public sector in Vietnam in general and for the general purpose
financial statements of ANB particular unit will consist of four reports: Financial situation report; Results of
operations report; Cash flow statement; Notes to financial statements.
2. Establishment of the contents of the balance sheet (Financial situation report)
Balance sheet items include columns, notes, starting year figure, end period figure. Note column
provides reference for details of the spending in the notes the financial statements. Starting year figure and end
period figure column present the data of at least 02 periods for user to compare. Column items include the
- Property: Divided into:
+ Current assets include: Cash and cash equivalents, investments in short-term financial investments
in short-term, inventory, other short-term assets.
+ Long-term assets include long-term receivables, fixed assets, real estate investment, financial
investments for long-term, long-term assets.
- Fund: Divided into:
+ Liabilities: The liabilities should be divided into two groups of short-term debt and long-term debt.
+ Net assets (equity capital) includes these items: Capital by government units, the funds formed from
a net surplus, the state fund or organization, other units non-refundable, net surplus or deficit accumulated etc
c. Establishment of contents of results of operations report
In addition to the header information, the statement of operations includes columns: Target, notes, period,
previous period. In this period and the previous period column each column is divided into the main activities
of the unit and the total operations of the unit. For example, business operations, production and business
activities. Note column provides reference for details of the spending in the notes the financial statements.
This period and previous period collumn present data of the targets from at least 02 accounting periods closest
for user to compare. In addition, the separation unit revenues and costs for each activity of this period and
previous period should be made for the presentation in the statement of operations. In the case of the common
expenses for multiple activities, the unit should develop criteria for allocation of costs for each activity
accordingly. Indicators column on the performance report must include the following information:
- Surplus or deficit from ordinary activities; surplus or deficit from other activities; Net surplus or deficit in the
- Surplus or deficit from ordinary activities = Revenues from ordinary activities - Expenditures for normal
- Surplus or deficit from operations = Income from the sale of fixed assets Other - Expenses + Income from
sale of fixed assets other activities - Expenses for other activities.
- Net surplus or deficit in the period = Surplus or deficit from ordinary activities + surplus or deficit from other
d. Establishment of cash flow statement
Unit must present cash flow in the period on Cash flow statement under 3 activities: Activity ordinary
(i.e. non-business and production business activities), investing activities and financing activities.
Cash flow from ordinary activities
The cash flow from operating revenues in normal units typically include: The money collected from
taxes, fees and fines; Proceeds from the sale of goods and services by the units; Proceeds from sponsors or
transferred and nationalized or expropriated by the government or other entities performing other public sector;
Revenues from royalties, fees and charges, commissions and other charges related to the operation of the units.
The cash outflow from ordinary activities of units often include cash payments to other public sector units to
finance their operations (not including loans); Cash payments to suppliers of goods and services; Cash
payments to employees or on behalf of employees; The receipts and cash payments of insurance unit of
commissions and premiums, annual expenses and other policy benefits etc. ...
The principal cash flows from investing activities, including: Money spent for the purchase of
property, plant and equipment, intangible assets and other long-term assets. These payments include amounts
related to development costs are capitalized and build assets, machinery and equipment; Proceeds from sale of
property, plant and equipment, intangible assets and other long-term assets; Money just to get the equity and
debt instruments of other entities and interests in joint ventures benefit (except payments for these tools are
considered as cash equivalents or they are held for trading) Proceeds from sale of assets or debt instruments of
other entities and interests in joint ventures (except for the revenues from these instruments is considered as the
and cash equivalents are held for trading); The advance payment and the loan amount to the other party (except
for advances and loans to public financial institutions); Proceeds from the account to repay cash advances and
loans to other parties (except for UNH before and the first loans of financial institutions); Cash paid for futures
contracts, forward contracts, option contracts and swap contracts except when the contracts held for trading
purposes or expenses are classified as financing activities; The cash proceeds from the futures contracts, option
contracts and swap contracts except when the contracts are held for trading purposes or receipts are classified
as financing activities.
Cash flows arising from financing activities generally include: Cash received from loans, grants, the
level of capital expenditure of the government or other unit, the money spent on the operation returns or repay
the original loan, transfer of funds under the orders of the superior units etc ... The unit must be presented in
the Cash flow statement cash targets and cash equivalents at the beginning and end of the period, the effect of
change the exchange rate conversion of cash and cash equivalents in foreign currency to keep the data for
comparison with the corresponding items on the accounting Balance sheet . Unit must present value and reason
of cash and cash equivalents held by the unit but not used due to the limitations of law or other binding unit to
e. Improvement of note to financial statements
Notes to financial statements must show the following information: Features of the unit as the information in
the field, business, operational characteristics, headquarters and legal form, scope operation of the unit, the
nature of the activities of the unit, state management agencies relating to the operation of the unit, control unit
name; Accounting period and the currency used; Accounting standards (if any), Accounting Policies and
applicable accounting basis; Policies, methods and accounting principles used; Additional information for
items presented in the statement of financial position. In that required explanations about the volatility of net
assets; Additional information for items presented in the statement of operations; Additional information for
items presented in the statement of cash flows; Additional information such as commitment, potential events,
and other information about the financial, non-financial information (if any) etc. ......
CONCLUSIONS AND RECOMMENDATIONS
By studying on research project related to the topic in the home and abroad countries. The author
determines that research on improvement of the public sector financial statements to provide useful
information for users is necessary in Vietnam. Through a combination of qualitative and quantitative research
method, the author determines FS to aim to accountability and decision-making, so it is necessary to separate
public sector FS into FS for general purpose and FS for special purpose. The public sector FS for general
purpose including four reports: Report on financial position, Operations condition reports, Cash flow
statements, Notes to FS. Vietnam needs to act on factors in the political environment, legal environment,
educational environment, international environment, economic environment, cultural environment to facilitate
the preparation and presentation of public sector FS in accordance with international accounting practices and
enhance the usefulness of information in the FS.
5.2.1 Recommendations for Congress
Congress should urge the management and control of the public sector accounting reform to be able to
provide useful information. Also it should create a board that compile standards, the public sector
accounting regime and modify the state budget law. In addtion, Congress should increase the supervision
role of Congress.
5.2.2 Recommendations for the State administration management agencies
Propagating, pressing and mobilizing other state management agencies to co-operate coordinate
management regulations of reasonable public spending and build public accounting regime providing
transparent information in accordance with international accounting practices. Enhancing internal control such
as internal control, internal auditing for public sector units. Improving the professional qualifications of public
financial management, public accounting for experts, and specialists of state management agencies relating to
public financial management. Organizing synchronization accounting information system and upgrade
transmission of information to ensure that all accounting information relating to the public sector is updated on
a common system.
5.2.3 Recommendations for State audit agency
Improving operational capacity, quality and performance efficiency of the State Auditor as an effective tool
of the inspection and supervision of the management and use of budget fund and state property of Congress .
Standardizing team of professional auditors in professional skills and career ethics. Strengthening the role of
advice and consultancy for Congress in monitoring state management agencies implement public expenditure,
monitoring establishment of legislation document on public financial management of the state agencies .
5.3 RESEARCH LIMITATIONS AND FURTHER RESEARCH DIRECTIONS
The thesis is a serious study of the author, but according to the author, there are some research
limitations as follows:
The limitations of the thesis:
- The thesis just only focuses on studying proposes a complete solution for FS for general purpose which
has not mentioned FS improvement for special purpose.
- Only illustrate the public sector FS model for a type of public sector organization is the Administrative
and Business, not shown, to prove to other types of organization in the public sector.
Further research solutions
From the limitations of research project. Author proposes further research is as follows:
- Researching solutions for building special purpose FS the public sector units in Vietnam.
- Continuing to study and complete the FS of other public sector units such as State budget and state
administrative agencies, etc.
- Proposing solutions to unify accounting rules, forming a common accounting regime for the public sector in
- In addition, there should be studies that develop mechanisms of strengthen internal control, internal control
for the public sector to enhance the efficiency of public resources usage. /.
PUBLISED PROJECTS OF THE AUTHOR
1. Nguyen Thi Thu Hien, 2009. Transparency of information in the public sector financial statements,
HCMC: Bank Magazine No 40 on July 2009.
2. Nguyen Thi Thu Hien, 2012. Analysis of the limitations of current Administrative and Business
accounting regime, HCMC: Scientific research work on basic level (Ho Chi Minh City University of
3. Nguyen Thi Thu Hien, 2014. Orientation of financial statements creation for purposes of the public
sector accounting organization in Vietnam, Ho Chi Minh City University of Industry Magazine, Volume
3, August 2014
4. Nguyen Thi Thu Hien, 2014. Application of IPSAS to improve inventory accounting in the
administrative and business organization, HCMC: scientific research work on basic level (Ho Chi Minh
City University of Industry)