In the volatile business environment and increasingly complex legal regulations in Vietnam, financial reporting is no longer simply the job of the accounting department, but has become a major challenge in terms of compliance and governance. Even small errors in financial statements can lead to large administrative fines, tax arrears, and even serious legal risks.
Professional financial reporting service was born as a comprehensive 3-in-1 solution, helping businesses:
- Ensure compliance with 100% laws
- Optimize legal tax costs
- Provide reliable management data to leaders.
- This article is built on the practical experience of accounting and auditing experts, committed to helping you choose the most reputable accounting service company, ensuring safety and transparency for financial activities.
Professional background: Why do businesses need professional financial reporting services?
Many businesses, especially small and medium-sized enterprises (SMEs), often take financial statements lightly and consider them only as a procedure to submit to the tax authorities. However, a financial statement with accurate financial reporting is a mirror reflecting the financial health and operational capacity of the business. To ensure absolute compliance and have a sharp management tool, seeking financial reporting services is the optimal choice.
Financial statements: Not just a submission, but a management tool
The real value of financial statements lies in their ability to inform strategic decisions. Financial statement services not only help you prepare, but also analyze and interpret the data.
- Explain the role of financial statements to stakeholders (Owner, Bank, Tax Authority).
- For example, when a business needs to borrow money, the bank will rely on the Balance Sheet to evaluate the debt-to-equity ratio and current solvency. A “clean” and strong financial statement will help you easily access capital at a better interest rate. Similarly, investors use the Income Statement to evaluate operating efficiency and profit margins.
Legal risks when preparing financial statements independently
Lack of expertise, lack of updating new regulations, or negligence in the process of preparing financial statements are the main causes of legal risks.
Some common mistakes and serious consequences include:
- Common Errors: Recording revenue at the wrong time (especially in the construction and service industries), lacking valid documents for large expenses, and making provisions incorrectly.
- Consequences: The direct consequence is administrative fines for late or incorrect submission of financial statements. In the long term, businesses may be subject to tax collection (both Corporate Income Tax and Value Added Tax) along with late payment interest, or even prosecution (if there are signs of serious tax evasion). Hiring a financial reporting service is an insurance investment for businesses.
Standard and streamlined financial reporting service process
A professional financial reporting service needs to have a clear workflow, focusing on overcoming backlogs and optimizing legitimate benefits for customers. This process is usually divided into three main phases:
Phase 1: Preliminary assessment and eligibility review
This phase is the foundation to ensure the safety of financial statements:
- Review all documents, contracts, and invoices to ensure compliance with Tax Laws, especially the legality of sales transactions.
- Identify major backlogs (old debts, phantom inventory, missing assets) that need to be addressed.
- Propose solutions to handle backlog and collect additional documents (for example, request additional minutes of liquidation of fixed assets, economic contracts).
Phase 2: Accounting Adjustment and Tax Optimization
This is the phase where deep expertise is used to adjust journal entries and optimize costs in preparation for formal financial reporting:
- Make final adjustment entries according to VAS (Carryover, allocation, provisioning).
- Make adjustments to optimize deductible expenses according to the law. For example, the expert will advise on how to convert invalid expenses (missing invoices, insufficient documents) into legally deductible expenses through completing the documents.
- Ensure accounting and tax figures are consistent before submission.
Phase 3: Establish, hand over and commit to accountability
This phase includes the formal completion of the financial statements and post-service commitments:
- Complete the financial report with 4 required components (Balance Sheet, Business Results, Cash Flow, Notes).
- Submit financial statements and corporate income tax and personal income tax finalization on time via electronic system.
- Hand over complete books, printed, stamped with confirmation from a reputable accounting service company and committed to accompanying and explaining to the Tax Authority during inspections.
Expert Corner: Important Financial Terms Explained
For business leaders to be able to use financial statements as a management tool, understanding core terminology is essential.
Distinguishing VAS and IFRS (Vietnam and international)
Below is a comparison table to help businesses easily grasp the basic differences between Vietnamese Accounting Standards (VAS) and International Financial Reporting Standards (IFRS) - two systems that coexist in financial reporting activities:
| Criteria | VAS (Vietnamese Accounting Standards) | IFRS (International Financial Reporting Standards) |
|---|---|---|
| Nature | Form over Substance Thinking. Focus on compliance with legal regulations. | Substance over Form Thinking. Focus on the real economic reflection of the transaction. |
| Application | Mandatory for most Vietnamese businesses. | Applicable to listed companies, multinational companies, or businesses that want to raise international capital. |
| Flexibility | Less flexible, detailed form regulations. | Flexible, allowing for a wide range of accounting policy choices to suit the nature of the transaction. |
Note: For FDI enterprises or companies intending to IPO, high-quality financial reporting services will support the conversion/consolidation of data from VAS to IFRS accurately, ensuring international transparency.
Understanding Core Management Metrics
Instead of just looking at total revenue or profit, leaders need to analyze the following core management indicators to evaluate the actual performance of the business:
- ROA (Return on Assets): Return on total assets. Shows how much profit each dollar of assets generates. This is a measure of asset efficiency.
- ROE (Return on Equity): Return on equity. The most important indicator for investors, assessing the efficiency of shareholders' capital use.
- ROS (Return on Sales): Profit margin on sales. Reflects the business's ability to control costs and net profit per dollar of revenue.
- Current ratio: Assesses the ability to pay short-term debts with short-term assets (ideal ratio > 1.5).
- Debt-to-Equity Ratio: Assesses the financial risk of a business. The higher the ratio, the greater the risk.
Upgrading governance: Financial reporting services in the digital age
In the context of digital transformation, financial reporting services do not stop at preparing year-end financial reports, but also participate deeply in building a data management system, bringing immediate efficiency to operations.
System integration (ERP/CRM) and digital accounting transformation
A reputable accounting service company will act as a bridge, advising on how to integrate data from business management systems (ERP, CRM) into accounting software. This ensures that accounting data is always synchronized with business data, helping financial statements reflect the actual situation promptly and accurately.
Internal control and transaction risk management
Professional financial reporting services help businesses re-establish strict accounting and document processes from the beginning, including:
- Establish a clear expense approval process and specific responsibilities for each department.
- Detailed instructions on storing and managing electronic invoices according to the latest regulations.
- Helps minimize loss and risk of cost exclusion during tax audits.
Online Management Information System (MIS)
This is a big added value. The difference between legal financial statements (for tax purposes only) and management reports (MIS – Management Information System) is huge. Financial reporting services will help build:
- Real-time financial dashboard instead of waiting for the end of the period.
- Report profits by department, project, or product to analyze investment performance.
- Early Warning System on cash flow or budget overruns, helping the Board of Directors react promptly.
Criteria for choosing a reputable accounting service company
Choosing a financial reporting service partner determines the safety and transparency of your business. Below are the EEAT (Expertise, Experience, Reputation, Reliability) criteria that you need to consider when looking for a reputable accounting service company:
Team expertise
A team of experts is key. You should prioritize the following units:
- Must have a Chief Accountant with a Practicing Certificate (Required).
- The team consists of experts who have obtained Certified Public Accountant (CPA) or Master of Accounting/Finance.
- Don't hesitate to ask specific questions to the service provider to test their expertise, for example: "How will you handle unpaid social insurance payroll expenses?"
Industry experience
Specialized experience in your industry (e.g. E-commerce, Real Estate, Manufacturing, F&B Services) helps them understand unique transactions and related tax risks.
- Short Case Study: A reputable accounting service company can help manufacturing businesses optimize depreciation costs, allocate general production costs and handle inventory appropriately, minimizing the risk of tax arrears.
Reputable unit: Choose based on practical experience
In addition to the Big 4 auditing firms, small and medium-sized enterprises should consider professional, highly dedicated units:
- Typical example: In addition to international auditing units, SME enterprises can refer to reputable accounting service companies specializing in SMEs. A typical example is MAN - Master Accountant Network, which is highly appreciated by many enterprises for its dedication, deep expertise in tax and reasonable cost solutions, becoming a reliable choice for financial reporting services.
Technology and data security
- Ask about the accounting software (MISA, Fast, SAP) they use and data connectivity capabilities.
- Require a confidentiality agreement (NDA) and secure electronic data storage procedures.
Ability to explain and protect businesses during tax inspections
The greatest value of financial reporting services is the ability to protect businesses when facing tax authorities.
The difference between just filing and having protection services
If you only hire someone to submit your financial statements, you will have to face the inspection yourself. On the contrary, when you hire a reputable accounting service company, they will:
- Work directly with tax authorities on behalf of businesses.
- Provide records, explain figures and defend the legitimacy of transactions made.
Solving complex problems
Experienced experts of financial reporting services know how to negotiate, dialogue and resolve complex issues in a reasonable manner, avoiding businesses being unfairly fined or having to pay back taxes due to misunderstandings about regulations.
Frequently asked questions about financial reporting services
To clarify more about financial reporting services, here are the most common questions:
How much does the financial statement service cost?
Costs depend on the size of the business, the number of documents generated monthly, and the complexity of the business industry.
Does the financial statement service include tax advice?
Usually yes, but need to clarify the scope of consulting (regular consulting or only consulting when preparing financial statements)
Are newly established enterprises required to make financial statements?
Yes, after each accounting period (usually the end of the calendar year), businesses must prepare financial reports and submit them to the regulatory agency.
Do small businesses need to prepare financial statements according to IFRS?
Not required, but if you intend to call for foreign investment or expand the market, preparing additional financial statements according to IFRS will help increase transparency and reputation.
Does the service support adjusting old financial statements when errors are detected?
Yes. Reputable accounting service companies will review the books of previous years, prepare adjusted financial statements and submit them to the tax authorities.
Conclusion and call to action
Financial reporting services are not an additional cost but a strategic investment that helps businesses develop sustainably, transparently and legally. Cooperating with a reputable accounting service company ensures that your financial statements are not only compliant but also a sharp tool in management.
Contact information MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
