International Journal of Business and Management; Vol. 10, No. 2; 2015 ISSN 1833-3850 E-ISSN 1833-8119 Published by Canadian Center of Science and Education 176 An Analysis of the Factors Affecting the Adoption of Accounting Legislation by Small and Medium-Sized Enterprises (SMES) in Vietnam Tran Thi Thanh Hai 1 1 University of Economics Hochiminh City, Vietnam Correspondence: Tran Thi Thanh Hai, University of Economics Hochiminh City, Vietnam. E-mail: luulihaithanh@yahoo.com or thanhhai@ueh.edu.vn Received: December 3, 2014 Accepted: December 16, 2014 Online Published: January 20, 2015 doi:10.5539/ijbm.v10n2p176 URL: http://dx.doi.org/10.5539/ijbm.v10n2p176 Abstract The purpose of this paper is to identify the factors affecting the adoption of accounting legislation by Vietnamese SMEs. The process of qualitative and quantitative research with Exploratory Factor Analysis (EFA) procedures, reliability test of the rating scale with Cronbach’s Alpha coefficients and regression analysis showed that: the main factors affecting the application of accounting legal framework to Vietnamese SMEs are indicated as follows: accounting infrastructure, mandatory compliance of these regulations, accountants, cost–benefit relationship and the accounting legislation itself. Keywords: SMEs, Vietnam, accounting legislation 1. Introduction With a view to facilitate accounting tasks as well as ensure truthful and rational economic information, it is of the essence to study and promulgate complete a legal documents system guiding the implementation of accounting tasks in the enterprises, especially in SMEs. However, due to such barriers as economic characteristics, the legal system as well as the accountants’ capacity and habits, it is still a challenging process from the phase of promulgation of these regulations to that of their application in practice (Choi et al., 2011; according to Tran D. K. Nguyen, 2013). Hence, it is equally important to study the factors affecting this implementation, based on which a number of viable solutions can be considered to enhance the efficiency of accounting legislation in SMEs. 2. Literature Review 2.1 Small and Medium Enterprises In Vietnam, according to the Decree No. 56/2009/ND-CP, SMEs are generally defined as a registered business establishment prescribed by law and are divided into 03 scales namely: micro, small and medium according to the total capital (the total capital is equal to the total assets specified in the balance sheet) or the average number of labourers per year. Details are as follows. Table 1. Definition of SMEs in Vietnam Type of SMEs Sector Micro Small Medium Number of labourers Total capital Number of labourers Total capital Number of labourers I. Agriculture, Forestry and Fishery ≤ 10 ≤ 20 billion VND 10 to 200 20 to 100 billion VND 200 to 300 II. Industry and Construction ≤ 10 ≤ 20 billion VND 10 to 200 20 to 100 billion VND 200 to 300 III. Trade and Service ≤ 10 ≤ 20 billion VND 10 to 50 20 to 50 billion VND 50 to 100 Source: Decree No. 56/2009/ND-CP dated June 30 th 2009 of the Government.