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Journal of Applied Accounting Research
Compliance with accounting standards by SMEs in transitional economies: evidence from
Vietnam
Son Dang-Duc

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Son Dang-Duc, (2011),"Compliance with accounting standards by SMEs in transitional economies: evidence
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JAAR
12,2

Compliance with accounting
standards by SMEs in transitional
economies: evidence from Vietnam

96

Son Dang-Duc
Faculty of Banking and Finance, College of Economics,
Vietnam National University, Hanoi, Vietnam
Abstract

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Purpose – The purpose of this paper is to report the findings of a survey examining the factors
that affect compliance with accounting standards by small and medium-sized enterprises (SMEs) in
the transitional economy of Vietnam.
Design/methodology/approach – The study is in the form of a postal questionnaire survey with
accounting practitioners working in SMEs in Vietnam.
Findings – The paper reveals that SMEs’ compliance with accounting standards is limited. An
analysis of empirical evidence finds that compliance with accounting standards was largely a legal
issue and SMEs perceived little benefits from that. Legal requirements and perceptions of external
uses of accounting information were the main drivers of the companies’ compliance with accounting
standards. The perception of cost-benefit relationship and the management and accounting skills had
a limited impact on SMEs’ compliance with accounting standards.
Research limitations/implications – Since the study focuses on accounting practitioners in a
transitional economy, the generalisability of the research findings is highly contextual and restricted.
Practical implications – Legal requirements were the main factor affecting the SMEs’ compliance
with accounting standards. SMEs lacked accounting skills and infrastructure to implement accounting
regulations and standards. The accountants were not convinced of costs and benefits associated with
the implementation of the accounting standards.
Originality/value – The study contributes to the light literature of accounting standards for SMEs
by providing empirical evidence on the practice of accounting by SMEs in transitional economies. The
paper reveals the relevance of accounting standards to SMEs and how the application of these
standards affects their reporting practices.
Keywords Vietnam, Accounting standards, Small and medium-sized enterprises,
Cost-benefit analysis, Emerging economies, Transitional economies
Paper type Research paper

Journal of Applied Accounting
Research

Vol. 12 No. 2, 2011
pp. 96-107
r Emerald Group Publishing Limited
0967-5426
DOI 10.1108/09675421111160673

1. Introduction
The importance of small and medium-sized enterprises (SMEs) in a country’s economic
development is undisputable. In most countries, SMEs take a large share of the number
of enterprises, employment, sales revenues andexports (OECD, 2002). They are also
considered as the major source of employment and innovation (Le and Quang, 2005).
Although SMEs play a critical role in transitional economies, their accounting practice
is a controversial matter. SMEs are required to prepare their financial statements in
accordance with a complicated regime of accounting and financial reporting
regulations and standards. However, they have often complained of the reporting
burdens imposed by such laws and that they have to apply reporting standards
that are not created for them, but for large and listed companies. This establishes
The author is grateful to the respondents who participated in the survey, as well as to those who
commented upon the presentation at the Global Academy of Business and Economic Research
Conference, Bangkok, Thailand, 28-30 December 2008.


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the calls for a different reporting regime for SMEs, known as the “big GAAP/little
GAAP debate”.
The objective of this study is to investigate the factors that affect compliance
with accounting standards by SMEs in the transitional economy of Vietnam. The
study deploys a postal questionnaire survey with accounting practitioners working in
SMEs. An analysis of empirical evidence finds that compliance with accounting

standards was largely a legal issue and SMEs perceived little benefits from that. In
addition, SMEs lacked accounting skills and infrastructure to implement accounting
regulations and standards. SMEs was not convinced of costs and benefits associated
with the implementation of the accounting standards.
The remainder of the paper is organised as follows. Section 2 provides a literature
review of related studies. Section 3 provides the context of the study. The section that
follows describes the research methodology. Section 4 provides the results and
discussion and Section 5 sets out the conclusion of the study.
2. Literature review
The rationale for the adoption of accounting standards is based on “decisionusefulness” theory (Staubus, 1961, 1977), which defines accounting as a process of
providing the relevant information to the relevant decision makers. The theory has
become fundamental to information disclosure and its theoretical and practical
implications play a significant role in the history of financial accounting and standard
setting in developed countries (Staubus, 2000; Sharma and Iselin, 2003).
Although SMEs play a crucial role in any economies, it is surprising that little
has been known about SMEs’ compliance with accounting standards. Unlike large
firms, SMEs have somewhat different objectives, motivations and actions. The
decision-usefulness theory seems not to apply to small firms. In a survey with 385
smaller companies in the UK Collis and Jarvis (2000) found that the user of SME
financial statements was seen as limited and the main users of the financial statements
have been identified as tax authorities, banks and owner-managers themselves and the
separation of ownership and control is not common. The accountants were perceived to
have great influence on whether or not SMEs adopt accounting standards (Joshi and
Ramadhan, 2002). However, in the case of smaller firms, the access to skilled
accountants who can understand and apply the standards tends to be limited (Martin,
2005). The users’ perceptions of low quality financial information have been evidenced
by Dang et al. (2006). In this context, compliance with full accounting standards is
likely to place cost burdens on the small business and they are not compensated
adequately by the benefits that owner-managers or external users may gain from the
provision of such information.

The adoption of accounting standards by SMEs has been a controversial topic for
many years. However, most of the debate has focused on the development and adoption
of international accounting standards by large industrialised countries rather than
developing countries (Zeghal and Mhedhbi, 2006). Contrary to developed countries
where the regulatory framework for corporate financial reporting has been long
established, transitional countries experience light theory and radical changes in
reporting regulations (Peng et al., 2008). While accounting and market infrastructure
are important to standard-setting process (Prather-Kinsey, 2006), the changes likely
lead to the increase in the volume and complexity of financial reporting standards
as a response to economic development causing SMEs’ disproportionate cost burden
imposed by accounting regulations (Martin, 2005). SMEs are required to prepare their

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transitional
economies
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98

financial statements in accordance with accounting standards that are not primarily
designed for them.
Since accounting standards are an integral part of the national accounting system,
they should be the subject of empirical studies so that the accounting regulators are
informed about the potential costs and benefits of application to SMEs. If the cost

exceeds the benefit, SMEs should be exempted from the compliance requirements.
However, it is recognised that very little is known about the cost-benefit relationship,
especially in the context of transitional economies. As a result, financial reporting was
seen as being ineffective for the business communication (Cassar and Holmes, 2003).
For example, in an interview survey on investment readiness with 158 SMEs in
Thailand, Sarapaivanich and Kotey (2006) found that if the SMEs’ accounting systems
were not transparent enough for potential investors to rely on in making an
investment, they might face difficulty in accessing finance and higher costs. Barker
and Noonan (1996) also found that accountants dealing with the financial statements
of SMEs became increasingly concerned at the volume of standards and the perceived
lack of relevance to small companies. In another study of 64 developing countries,
Zeghal and Mhedhbi (2006) examined five factors: economic growth, education level,
the degree of external economic openness, cultural membership in a group of countries
and the existence of a capital market. They found that developing countries
that enjoy the highest literacy rate, that have a capital market, and that belong to an
Anglo-American culture are the most motivated to adopt international accounting
standards. However, the study tended to focus on the factors at a macro level and no
evidence was collected in terms of the size of business. The lack of the accounting
standards’ relevance to SMEs poses a call named “designed to fit” in the issuance of
accounting standards to remove inappropriate disclosure requirements for SMEs.
In spite of the lack of relevant academic literature of accounting standards for
SMEs, compliance of accounting standards by SMEs has recognised an international
regulatory matter. Most accounting regulatory regimes recognise differences between
larger and smaller enterprises. Many countries exempt smaller enterprises from
statutory audit and subject them to differential reporting requirements (UNCTAD,
2002; IASB, 2009). Recently, the International Accounting Standards Board has
published a single set of accounting standards for SMEs and this represents a major
simplification of financial reporting for smaller entities (IASB, 2009).
3. The context of the study
Vietnam is a medium-sized country located in the South East Asia region with 365,000

square kilometres and the population over 80 millions. The recent economic reform in
Vietnam is one of the greatest success stories in economic development and has
brought remarkable results in economic growth and poverty reduction with the annual
GDP growth rate was approximately 7.0 per cent for nearly ten years (WB, 2008). The
Statistics Year Book 2008 supplied by the General Statistics Office (GSO, 2008) shows
that SMEs[1] account for more than 90 per cent of total number of firms and more
than 89 per cent of job creation. In another report, SMEs also have been stated to be the
fastest growing sector (GSO, 2006). The encouragement of SMEs is one of the key
components to boost economic development (Baughn et al., 2004).
One of the main features of the Vietnamese accounting and reporting regime is
that the main financial reporting purpose is for government and related agencies
rather than for financial management and business communication (Yang and
Nguyen, 2003). The Vietnamese approach to accounting standard setting is also


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different from other transitional economies. Unlike some other neighbour countries
such as Malaysia, Thailand or China, the Vietnam Ministry of Finance, which has been
authoritative body dealing with accounting regulations, develops accounting
standards in the absence of a conceptual framework. The development of
accounting standards was guided by two principles: the standards should be
adapted to a socialist market economy and the standard setting should draw on
international standards and Vietnam’s practices. However, little is known about
whether the standards are consistent with the international accounting standards for
SMEs issued by the IASB.
In September 2006, The Vietnam Ministry of Finance issued the Decision No. 48/
2006/QD-BTC to change the requirements on how SMEs apply national accounting
standards. The major change made by Decision No. 48 was that SMEs were exempted
from some of VASs. In total of 26 issued, 19 accounting standards were considered as

applicable to SMEs, including seven standards with full compliance and 12 standards
with exemptions. According to Decision No. 48, the VASs applicable to SMEs were
classified into two types:
(1)

VASs that require full compliance of SMEs, including seven VASs: VAS No. 01 –
“Framework”, VAS No. 05 – “Investment property”, VAS No. 14 – “Revenue and
other incomes”, VAS No. 16 – “Borrowing costs”, VAS No. 18 – “Provisions,
contingent assets and liabilities”, VAS No. 23 – “Events after the balance sheet
date”, VAS No. 26 – “Related parties”. There is no exemption of both
presentation and recognition and measurement in financial reporting.

(2)

VASs that require partly compliance, including 12 VASs: VAS No. 02 –
“Inventories”, VAS No. 03 – “Tangible fixed assets”, VAS No. 04 – “Intangible
fixed assets”, VAS No. 06 – “Leases”, VAS No. 07 – “Accounting for investments
in associates”, VAS No. 08 – “Financial reporting of investments in joint
ventures”, VAS No. 10 – “The effect of changes in foreign exchange rates”, VAS
No. 15 – “Construction contract”, VAS No. 17 – “Corporate income taxes”, VAS
No. 21 – “Presentation of financial statements”, VAS No. 21 – “Cash flow
statements”, VAS No. 29 – “Changes in accounting policies, accounting estimates
and errors”. With these standards, SMEs are required to comply with the core set
of reporting requirements of the VASs. However, they are exempted from the
requirements and guidance which seem to be too complex for them, such as
selling and buying leased assets, accounting for deferred taxes. It is noted that
the compliance with VAS No. 7 – “Cash flow statement” is optional for SMEs.

The exemption of SMEs from the requirements of some VASs is a development by the
accounting standards setters to reduce the reporting burden on smaller entities.

However, little is known about the relevance of those accounting standards to SMEs
and how these changes affect the reporting practices of SMEs. More empirical evidence
is therefore needed to justify the issue and this is the motivation for this paper.
4. Research methodology
4.1 Hypothesis development
The study is a research attempt to provide answers to one main research question:
What factors affect the compliance with VASs in SMEs? The literature review on
financial reporting by smaller firms has shown that seven factors that might have
an impact on the compliance of accounting standards, including the effect of legal

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transitional
economies
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100

requirements, the decision-making process by the directors of SMEs, the external
users’ perception of accounting information, the demand for improvement in
information quality, the size of business, the consideration of the cost-benefit
relationship and the lack of management and accounting skills. Based on these
conclusions, seven hypotheses were constructed in the form of null-alternative
hypotheses (Creswell, 2003).
H1. H0: There is no effect of legal requirements on compliance by SMEs with

accounting standards.
This hypothesis is about the effect of legal requirements on the SMEs’ compliance with
accounting standards. In Vietnam, there is a legal requirement for SMEs to comply
with accounting standards. However, very little is known about what is the real
motivation of SMEs’ compliance with accounting standards.
H2. H0: There is no association between the compliance with accounting standards
and the decision-making process by the directors of SMEs.
This hypothesis considers the role of accounting standards in the use of financial
information of SMEs. The review of the relevant literature shows that more research
was needed how the accountants perceive the role of accounting standards in the
director’s use of financial information.
H3. H0: There is no association between the external users’ perception of
accounting information and compliance by SMEs with accounting standards.
Since accounting information presented in the financial statements are intended for
external use of financial information. This hypothesis assumes that the external users
such as banks or tax authorities have no effect on the SMEs’ compliance with
accounting standards.
H4. H0: There is no association between the demand for an improvement
in the information quality and compliance by SMEs with accounting
standards.
This hypothesis is about the relationship between the quality of information and the
compliance of accounting standards. The findings from previous studies demonstrated
that the quality of information was a major concern of the users about the financial
information provided by SMEs and the application of accounting standards is likely to
improve the quality of financial information.
H5. H0: There is no association between the size of business and compliance by
SMEs with accounting standards.
Since standards are designed to enhance comparability of financial statements, this
hypothesis assumes that accounting standards are applied universally to permit
comparability of large vs small companies.

H6. H0: There is no association between the perceptions of cost-benefit perceptions
and compliance by SMEs with accounting standards.


This hypothesis considers the awareness of the accountants about the cost-benefit
considerations of the provision of financial information. There was evidence from the
literature that there was a lack of cost-benefit considerations among the preparers of
information and the relationships between the costs and benefits were also not well
perceived.

Compliance in
transitional
economies

H7. H0: There is no effect of management and accounting skills on compliance by
SMEs with accounting standards.

101

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The review of literature has shown that lack of management and accounting skills has
a negative impact on the provision of financial statements. Therefore, this hypothesis
was constructed to examine the findings in the context of Vietnamese SMEs.
4.2 Data collection and analysis
Quantitative methods are used to examine the factors affecting the application of
accounting standards in SMEs. The survey method is the most common approach to
provide empirical evidence on characteristics and sociological variables (Dillman, 2000).
The construction of hypotheses and variables for the study was followed by the
questionnaire development. The study involves a postal questionnaire survey of

the preparers of financial information of SMEs. Barker and Noonan (1996) state that
“it was felt that a survey of practitioners would give the best indication of the issues
surrounding the preparation of financial statements in compliance with accounting
standards” (p. 10). Therefore, the survey was conducted with accounting practitioners
working in SMEs.
Data collection involved handing out the questionnaires to accounting practitioners
currently working in SMEs in early April and August 2008. To fulfil the aims of the
survey, the sample should be representative of the population. However, the identification
of the sampling frame was a difficult issue since there was a lack of a comprehensive
database of accounting practitioners in Vietnam. After all the available databases were
considered, the most comprehensive one was the list of accounting practitioners
registered as part-time learners in Spring and Autumn semester at the Centre for Parttime Learning in Hanoi and Ho Chi Minh City. A total of 1,280 participants were asked
whether they were working in SMEs before they received the questionnaire. In total,
480 copies of the questionnaire were distributed. After five weeks, a total of 158
questionnaires were returned, generating 152 usable questionnaires, accounting for an
overall response rate of 32.92 per cent. Quantitative data analysis was performed based
on the data collected from the questionnaire. A coding process was performed to examine
the impact of the above factors on the compliance with accounting standards.
5. Results and discussion
5.1 The relevance of VASs to SMEs
Accounting standards are expected to influence the provision and use of financial
information of SMEs. Therefore, the first question was used to identify the
respondents’ perception of the suitability of VASs to SMEs. The question resulted in
46.71 per cent of the respondents perceiving VASs as suitable for SMCs, 36.84 per cent
of the respondents perceiving the VASs as not suitable and 16.45 per cent of the
respondents having no knowledge of the issue. There was evidence that SMEs tended
to comply with some accounting standards than the others. Figure 1 presents the
relevance of VASs to SMEs.

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The effects of changes in foreign exchange rates
Tangible fixed assets
Revenue and other income
Provisions, contingent assets and liabilities
Investments in joint ventures
Investments in associates

102

Investment properties
Inventories
Intangible fixed assets
Income taxes
Events after the balance sheet date

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Construction contracts

Figure 1.
The relevance of VASs to
SMEs – compare means

Cash flow statements
Borrowing costs
Accounting policies, changes in accounting estimates and errors
-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

In-depth analysis on the perceptions of the relevance of specific standards has shown
that the respondents perceived measurement standards involving tangible fixed assets,
inventories and income taxes are the most applicable to SMEs. Accounting standards
dealing with investments in associates, investment properties and investment in joint
ventures were perceived not relevant to SMEs, even though these standards were the
subject of full compliance requirements.
5.2 The factors affecting the compliance by SMEs with accounting standards
As suggested by the literature, the survey adopted a list of eight factors that may have
an effect on the SME reporting practices. The respondents were asked how they

perceived the importance of eight factors that may have an impact on their financial
reporting activities, including the impact of:
(1)

legal requirements on the compliance with accounting standards (FACLAW);

(2)

external use of financial information (FACUSERS);

(3)

the availability of information communication facilities (FACPREMI);

(4)

lack of management skills (FACMGNT);

(5)

size of business (FACSIZE);

(6)

lack of accounting staff skills (FACSTAFF);

(7)

demand for improvement in quality of information (FACIMPQLT); and

(8)

cost-benefit considerations (FACCOST).

These factors were presented to the respondents for their responses. Table I presents
the results.
Table I shows that external use was not the main driver of the firms’ financial
reporting practices. This tends to support the findings of previous studies (Martin,
2005; Dang et al., 2006) that the decision-usefulness theory might not be applicable to
smaller firms since the external use of financial information provided by SME
reporting practices is limited.


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Martin (2005) argues that lack of management and accounting skills was perceived as
having a negative impact on the application of accounting standards. This study tended
to support these findings. Table I reveals that legal requirements and accounting staff
skills were perceived as the most important factors affecting the application of
accounting standards. The size of business and cost-benefit considerations were seen as
having less effect on the provision of financial information than other factors.
Amongst the 152 respondents, 132 (86.8 per cent of the respondents) perceived that
accounting regulations were the main motivation for the application of the national
accounting standards. However, it is surprising that an improvement in information
quality is not among the most effective to the application of accounting standards.
More than half of the respondents reported that this factor had a limited impact on the
application of the national accounting standards.
The main reason for a separate set of accounting standards for SMEs is that the
complexity of current accounting regulations has placed cost burdens on the financial
reporting practices of smaller enterprises. Therefore, as suggested by the previous

studies (e.g. Collis and Jarvis, 2000; Joshi and Ramadhan, 2002), seven elements of
the costs associated with the application of accounting standards were presented to the
respondents. The results are presented in Table II.
Table II shows that accounting staff costs were seen as the most identifiable cost of
compliance with accounting standards. The costs of information dissemination had a
low ranking, which tends to support the findings of Collis and Jarvis (2000) that the
users of SME annual accounts are limited so that the cost of dissemination was not
seen as burdensome.
Similar to the findings of Keasey and Short (1990), but contrary to those of Joshi and
Ramadhan (2002), this study found that there is a lack of benefit recognition among the
Factors
Complexity of legal requirements
Accounting staff skills
Management skills
Demand for improvement in quality of information
Information communication facilities
External use of financial information
Size of business
Cost-benefit considerations

Accounting staff costs
Legal update costs
Costs of accounting software
Costs of office equipment
Costs of stationery
Costs of dissemination
Other costs

Min

Max

Mean

SD

1
1
1
1
1
1
1
1

5
5
5
5
5
5
5
5

4.33
4.28
4.19
4.03
3.86
3.69

3.56
2.95

0.960
0.994
1.019
1.109
1.107
1.152
1.299
1.363

Min

Max

Mean*

SD

1
1
1
1
1
1
1

5
5

5
5
5
5
5

4.28
4.11
4.01
3.82
3.39
3.24
3.00

1.040
1.098
1.145
1.164
1.151
1.322
1.320

Note: *Percentage of no response was excluded

Compliance in
transitional
economies
103

Table I.

Factors affecting the
SME financial reporting
practices

Table II.
Perceptions of the costs
of the application of
accounting standards


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104

respondents and the main perception of benefits of the application of accounting
standards was to support tax declarations and to fulfil legal requirements. Table III
presents the results.
Table III shows that the main benefits that the respondents perceived from
compliance with accounting standards were to support tax declarations and to fulfil
the legal requirements.
It is surprising that although the respondents might recognise the cost-benefit
elements, the cost-benefit relationship was of little interest to them. Supporting the
findings of Sarapaivanich and Kotey (2006), this study also found that while the
respondents may recognise the benefits they might obtain from compliance with
national accounting standards, it was difficult for them to compare these with the costs
incurred. Fulfilling tax declarations was seen as the most important benefit derived
from the provision of information and the cost of accounting staff was seen as the most

significant cost.
The main purpose of the study is to assess the effect of the above factors on SMEs’
compliance with accounting standards. Therefore, the independent variables were
included in Chi-square tests to measure the association between the categorical
variables and the dependent variable measuring whether the firms comply with
accounting standards (VASORNOT). Table IV presents the results of the tests.

Min
Support tax declarations
1
Fulfil legal requirements
2
Support internal use
1
Archive better public image
1
Tender for business contract
1
Support loan applications
1
Table III.
Join in business associations
1
Perceptions of the benefits Others
1
of the application of
Note: *Percentage of no response was excluded
accounting standards

Table IV.

Factors affecting
compliance with
accounting standards:
chi-square tests

Max

Mean*

SD

5
5
5
5
5
5
5
5

4.69
4.47
3.89
3.86
3.83
3.49
3.48
3.58

0.714

0.783
1.199
1.284
1.256
1.361
1.418
1.165

Factors

Variable

Complexity of legal requirements
External use of financial information
Demand for improvement in quality of information
Accounting staff skills
Management skills
Information communication facilities
Size of business
Cost-benefit considerations

FACLAW
FACUSERS
FACIMPQLT
FACSTAFF
FACMGNT
FACPREMI
FACSIZE
FACCOST

Pearson
chi-square
valuea

df

Asymp. sig.
(2-sided)

15.502
13.642
5.556
9.291
2.007
5.088
8.215
1.171

4
4
4
4
4
4
4
4

0.004*
0.009*
0.235

0.054
0.734
0.278
0.084
0.883

Notes: aFour cells (40.0 per cent) have expected count less than 5. The minimum expected count is 0.75
*The results are significant at 0.05


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The above results suggest that there is significant association between some of the
factors and whether the choice of companies in the application of accounting
standards. Therefore, these results can be used to reject or support the hypotheses
addressed in Section 4. For ease of reference, the hypotheses related to this section are
reported in Table V with an indicator of whether the null hypothesis has been accepted
or rejected.
Table V shows that among seven hypotheses tested in this study, only hypothesis
H1 and H3 were rejected. The results have shown that legal requirements were the
main factor affecting the companies’ compliance with accounting standards. The
results support the findings of Yang and Nguyen (2003) that the purpose of financial
reporting by smaller firms is limited and government control and regulation was
the main driver for the preparation of smaller firms’ financial information in Vietnam.
In addtion, this study supports the findings of Joshi and Ramadhan (2002) that
although the perception of external use of accounting information was not the main
factor affecting the current reporting practices by SMEs, this factor was the main
reason of the firms’ compliance with accounting standards. Therefore there is a need to
raise the awareness of smaller firms to meet the needs of the real users of their financial
statements rather than merely complying with government regulations. The study

also reveals that the internal control and use of accounting information had a little
impact on whether the company complies with accounting standards. The association
between the size of business and compliance with accounting standards were found
not significant.

Compliance in
transitional
economies
105

6. Conclusion
This study aims to investigate the factors that affect the compliance with accounting
standards by SMEs in the transitional economy of Vietnam. The study is in the form of
a postal questionnaire survey with accounting practitioners working in SMEs.
Through an analysis of empirical evidence we concluded that a less decisionusefulness theory was found in SMEs’ reporting practices and compliance with

Hypotheses

Null hypothesis (H0)

H1

There is no effect of legal requirements on compliance by SMEs with
accounting standards
There is no association between the compliance with accounting
standards and the decision making process by the directors of SMEs
There is no association between the external users’ perception of
accounting information and compliance by SMEs with accounting
standards
There is no association between the demand for an improvement in the

information quality and compliance by SMEs with accounting
standards
There is no association between the size of business and compliance by
SMEs with accounting standards
There is no association between the perceptions of cost-benefit
perceptions and compliance by SMEs with accounting standards
There is no effect of management and accounting skills on compliance
by SMEs with accounting standards

H2
H3
H4
H5
H6
H7

Accepted/
Rejected
Rejected
Accepted
Rejected
Accepted
Accepted
Accepted
Accepted

Table V.
Hypotheses on the factors
affecting compliance with
accounting standards

JAAR
12,2

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accounting standards was largely a legal issue. SMEs perceived little benefits from
compliance with national accounting standards. Legal requirements and perceptions of
external users of accounting information were the main drivers of the companies’
compliance with accounting standards. The perception of cost-benefit relationship and
the management and accounting skills had a limited impact on SMEs’ compliance with
accounting standards. In other words, there was evidence that SMEs lacked accounting
skills and infrastructure to implement accounting regulations and standards. SMEs
were not convinced of costs and benefits associated with the implementation of the
accounting standards. The findings of this study are expected to benefit accounting
regulators, practitioners, the accountancy research community as well as smaller
companies in Vietnam and other countries with economies in transition.
Since the study focuses on accounting practitioners in a transitional economy,
the generalisability of the research findings is restricted. These limitations provide a
basis for further research to be conducted in other contexts or with another sample,
such as the directors of smaller firms, to verify the findings of this study.
Note
1. SMEs are defined as independent companies with less than 300 employees or registered
working capital of less than ten billion VND (equivalent to USD 605,000) VieGov (2001).
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Corresponding author
Son Dang-Duc can be contacted at:

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