Deloitte chips in with reporting advice

Vietnam’s public companies might need a narrative report to increase their transparency to investors - illustration photo

“As annual report does not meet increasingly strict requirements of investors, companies need refreshing their annual reports and they should further establish narrative reporting according to global practices,” said Thai Thi Thanh Hai, deputy director for Deloitte Vietnam.

Narrative reporting, which give investors evaluation on company’s performance and new information on its prospects, is actually new in Vietnam although it has been popular among developed countries.

Under Circular 09/2010/TT-BTC, public companies are regulated to periodically disclose financial statements Financial statement, Note to financial statement and Annual report.

There have been some ideas among analysts which proposed legal requirements for narrative reporting, aiming to make public companies more transparent and protect investors’ benefits.

While local companies are often criticised as lacking of transparency, information they provide in annual reports, according to Deloitte, is “lengthy” yet “vague” and “is little of quantified”.

“These information little guide their investors in terms of investment direction,” stated the report.

Hai pointed out that local companies needed to involve further information on business strategies and prospects as well as possible risks or influential factors on their business performance.

However, several companies argued that they had been overloaded already by current compulsory reports. Otherwise, narrative reporting might have some overlapping points, wasting their time and cost.

Dang Thai Hung, head of the Ministry of Finance’sDepartment of Accounting and Auditing Policies, said narrative reporting was new and needed careful study. “It’s essential to specify the differences between narrative reporting and audited financial and annual reports, as well as the relations between them,” said Hung.

Hung indicated that relevant legal documents needed weighing up to avoid placing burdens on companies in terms of cost and time.