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

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.