In the context of a rapidly developing digital economy and increasingly deep integration into the international financial system, mastering accounting principles is not only a mandatory requirement for professionals but also a foundation for businesses to build a transparent management system. Entering 2026, with the significant shift from outdated circulars to a new system of legal regulations (typically Circular 99/2025/TT-BTC), accountants need to update their thinking on accurately recording and presenting financial statements to ensure compliance.
This article will provide a comprehensive overview of fundamental accounting principles, groundbreaking new developments in current regulations, and practical applications to ensure the highest level of accuracy in financial reporting.
The importance of accounting principles in business management.
Accounting principles are a set of generally accepted standards, regulations, and methods that guide the collection, processing, and delivery of financial information. If accounting is considered the "language of business," then these principles are the "grammar" that ensures information is presented consistently, comparably, and reliably.
Strict adherence to accounting principles helps businesses:
- Ensuring legal compliance: Avoiding serious violations that could lead to administrative penalties, tax arrears, or other financial and legal risks.
- Transparency with investors: Building a truthful data system creates strong trust among shareholders, banks, and strategic partners both domestically and internationally.
- Optimizing management capabilities: Providing accurate and timely data to enable leadership to make effective investment, restructuring, or cost-cutting decisions.
The system of 7 basic accounting principles
Despite updates to presentation styles and international approaches, the following seven fundamental principles remain core to our work. Vietnamese Accounting Law No. 88/2015/QH13 and current Vietnamese Accounting Standards (VAS).
Accumulator basis
This is a crucial principle in determining business results. All economic and financial transactions must be recorded at the time they occur, regardless of when the money is actually received or disbursed. According to the accrual accounting principle, profit reflects the economic efforts of the business during the period more accurately than net cash flow.
For example: The business sold and delivered the goods to the customer in December 2025, but the customer only transferred the payment in February 2026. According to the accrual principle, this revenue must be recognized in the 2025 financial statements.
Continuous operation
Financial statements must be prepared on the assumption that the business is a going concern and will continue to maintain normal business operations for the foreseeable future (at least the next 12 months). If there are indications that the business is about to go bankrupt or be dissolved, the accountant must change the basis for recognizing asset values from cost to liquidation value and provide a detailed explanation.
Original price
This principle requires that assets be recorded at their historical cost, that is, the amount of money or equivalent paid, due, or calculated at the fair value of the asset at the time it was initially recognized. Although the global trend is shifting strongly towards fair value in 2026, in Vietnam, historical cost remains the most reliable basis for most transactions. Accounting principles regarding historical cost help prevent arbitrary and unfounded revaluation of assets.
Fit
Revenue and expenses must be logically matched. When you recognize revenue, you must simultaneously recognize a corresponding expense directly related to generating that revenue. This prevents the practice of "beautifying" financial statements by listing revenue before expenses.
Consistency
To ensure comparability across years, the accounting policies and methods chosen by the enterprise must be applied consistently for at least one accounting year. In the event of mandatory changes (due to changes in legal regulations or to better reflect the nature of the transaction), the enterprise must provide a detailed explanation of the impact of these changes in the Notes to the Financial Statements, in accordance with accounting principles.
Circumspect
Prudence requires accountants to exercise careful consideration and foresight when making accounting estimates under conditions of uncertainty. The principles of prudence in accounting require:
- Do not create excessively large provisions (tax evasion).
- Do not overvalue assets and income.
- Do not underestimate the value of liabilities and actual costs.
Important
Information is considered material if its absence or inaccuracy could completely alter the economic decisions of users of the financial statements. Applying accounting principles of materiality helps the accounting department focus resources on large items that have a profound impact on the financial health of the business.
New and groundbreaking points regarding accounting principles according to Circular 99/2025/TT-BTC.
From January 1st, 2026, Circular 99/2025/TT-BTC Officially replacing the old guidelines, it brings about revolutionary changes to align with International Financial Reporting Standards (IFRS).
Emphasizing the principle of substance over form.
This is the most significant step forward in Vietnam's accounting principles system in 2026. Accountants will no longer just look at the contract title or invoice (legal form) but must deeply analyze the economic nature of the transaction to record it.
For example: If a sales contract includes a buyback clause at a specified price, it is essentially a loan transaction secured by collateral, rather than a sales transaction that generates revenue.
Maximum autonomy in designing the documentation system.
Circular 99 completely eliminated mandatory accounting forms and ledgers. In 2026, businesses will be allowed to independently design their own electronic document systems and chart of accounts to suit their business models, provided they fully comply with accounting principles and mandatory financial reporting requirements.
Update the Financial Statement Reporting system.
The change in terminology from Balance Sheet to Statement of Financial Position is not simply a change in wording, but a shift in thinking about resource management. The presentation of the report now focuses on the ability to generate cash flow and the liquidity of assets, in line with modern accounting principles.
Comparing VAS and IFRS: A Practical Perspective for Accountants in 2026
Understanding the differences between Vietnamese Accounting Standards (VAS) and International Financial Reporting Standards (IFRS) is key to enhancing professional expertise in the era of globalization.
| Comparison criteria | Vietnamese Standards (VAS) | International Financial Reporting Standards (IFRS) |
| Main measurement base | Original Price Priority | Prioritize Fair Value |
| Property damage | Only provision for impairment of inventory and securities. | Annual asset impairment assessment is mandatory. |
| Business performance report | Classification of costs by function | Allows for the classification of costs by nature or function. |
| Revenue recognition | Focus on risk transfer and ownership transfer. | According to the 5-step process for determining performance obligations. |
Understanding these differences helps accountants accurately handle complex transactions involving multinational companies according to recognized accounting principles.
Applying Case Studies to Accounting Principles in Businesses
Here are two typical scenarios that accountants frequently encounter during the tax year:
Case 1: Applying the principle of prudence when handling bad debts.
Company X has a customer debt that is one year overdue. Although the customer has not declared bankruptcy, their financial situation is seriously deteriorating. Applying the principles of prudential accounting, Company X's accountant is required to make a provision for doubtful receivables at a rate of 50 - 70% of the debt value to ensure that the assets on the financial statements are not inflated.
Case 2: The Principle of Conformance in Construction Enterprises
A construction project lasts 3 years (2023 – 2025). In 2025, the company incurred significant material costs, but the project has not yet reached the acceptance and payment stage. According to accounting principles, the accountant cannot transfer all of these costs to the 2024 loss but must hold them as work-in-progress production costs, awaiting recognition in line with revenue upon project acceptance.
Conclude
Understanding and applying key accounting principles is the golden key to building a strong financial system. Always remember that transparent financial data is the best record of a business's capabilities. And the foundation of that transparency is strict adherence to accounting principles throughout all business operations.
The information in this article is compiled and analyzed based on the current Accounting Law and draft implementing guidelines. For specific application, businesses should refer to the relevant regulations. accounting services For detailed support, contact reputable and experienced organizations like MAN – Master Accountant Network.
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 is moderated by: Mr. Le Hoang Tuyen – Founder & CEO of Man, CPA Vietnam Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Answering questions about accounting principles.
The direct consequence is inaccurate financial reporting, leading to erroneous decision-making by management. Legally, the business may face administrative penalties for accounting violations or have its taxes assessed by the tax authorities due to unreliable accounting records.
Because cost is the most reliable method, based on actual invoices and supporting documents, while fair value is sometimes difficult to determine accurately in the Vietnamese market. This combination helps to harmonize the reliability and timeliness of accounting principles.
It is necessary to develop detailed internal financial regulations and accounting manuals, and to regularly conduct cross-checks and update training on new regulations from the Ministry of Finance. What are the consequences of misapplying any of the accounting principles?
Why will the Cost Principle still exist alongside Fair Value in 2026?
How can the chief accountant monitor compliance with accounting principles internally?
