HANOI — The
implementation of an accrual-based accounting system has been empirically
proven to significantly enhance the quality, transparency, and reliability of
financial reporting within Vietnam's public sector. This key finding comes from
a recent scientific study conducted by Dr. Le Thi Thanh Huyen from the Banking
Academy of Vietnam, Hanoi, published in 2026. The research highlights that
modernizing government financial reporting systems is a crucial step toward
strengthening national fiscal governance and public accountability.
Background of Public Sector Accounting Transformation
Over recent decades, public financial management reform has become a
primary priority globally to improve budget transparency and resource
allocation efficiency. Traditional cash accounting systems have often been
criticized for failing to provide timely and comprehensive data regarding
public assets, future liabilities, and fiscal risks.
To address these limitations, the Vietnamese government initiated a
gradual transition toward accrual accounting by developing the Vietnam Public
Sector Accounting Standards (VPSAS), which align closely with international
IPSAS standards. Unlike cash-based systems that record transactions only when
money changes hands, accrual accounting recognizes revenues and expenses when
economic events occur, providing a complete and realistic picture of a nation's
financial position.
Research Methodology
The study utilized a quantitative research approach, surveying 300
financial professionals across Vietnam's public sector. Respondents included
senior accountants, chief accountants, financial managers, and internal
auditors from various government entities, including administrative agencies,
public service units, state universities, and public hospitals.
The collected survey data was analyzed using Structural Equation
Modeling (SEM) to evaluate the structural relationships between accrual
accounting adoption, information technology capabilities, staff competencies,
top management support, and financial information quality.
Main Findings
The structural analysis revealed that the supporting factors of
accounting reform collectively explain 64% of the variance in financial
information quality improvement ($R^2 = 0.64$) across Vietnam's public
sector. The key findings include:
- Positive
Direct Impact of Accrual Accounting ($\beta = 0.48; p < 0.001$): Accrual accounting adoption served as the
strongest direct predictor, enhancing the transparency, relevance,
comparability, and reliability of financial statements.
- Strengthening
Role of Information Technology ($\beta = 0.19; p < 0.001$): IT capabilities and infrastructure
positively moderate the relationship, amplifying the benefits of accrual
accounting adoption on reporting quality.
- Accounting
Staff Competency ($\beta = 0.27; p < 0.001$): Technical skills and professional
understanding of accounting standards significantly minimize reporting
errors.
- Top
Management Support ($\beta = 0.36; p < 0.001$): Executive leadership commitment
facilitates resource allocation and reduces organizational resistance to
systemic change.
- Organizational
Variations: Public
hospitals (mean reporting score $4.20$) and state universities (mean
reporting score $4.15$) achieved higher implementation success than
traditional administrative government agencies ($3.78$). Furthermore,
larger public entities transitioned more effectively due to superior
resources and IT infrastructure.
Implications and Impact on Public Policy
The study offers strategic implications for policymakers and public
financial managers. Adopting accrual accounting is not merely a change in
bookkeeping techniques, but a foundational requirement for evidence-based
decision-making, long-term fiscal planning, and building public trust.
Dr. Le Thi Thanh Huyen emphasizes the importance of a comprehensive
reform strategy. Implementing new accounting standards must be accompanied by
continuous investments in integrated financial management information systems,
ongoing professional training for accountants, and strong leadership
commitment. Policymakers are advised to adopt tailored, phase-based strategies
that account for the varying capacities and sizes of individual public
entities.
Author Profile
- Full Name: Dr. Le Thi Thanh Huyen
- Affiliation: Banking Academy of Vietnam, Hanoi City,
Vietnam
- Area of
Expertise: Public Sector
Accounting, State Financial Management, and Financial Reporting Standards.
Research Source
- Article
Title: The Impact of
Accrual Accounting Adoption on Financial Information Quality in Vietnam's
Public Sector
- Journal: International Journal of Advanced
Technology and Social Sciences (IJATSS), Vol. 4, No. 7, 2026, pp.
675–694.
- DOI: https://doi.org/10.59890/ijatss.v4i7.289
- URL: https://aprmultitechpublisher.my.id/index.php/ijatss/index
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