■ Initiation
The Financial Supervisory Commission (FSC) set out to study the implementation of the International Financial Reporting Standards (IFRSs), aiming to enhance the international competitiveness of our capital markets, extend the influence of Taiwan in the Asian capital markets, and lower the costs of overseas capitalization for domestic companies.
■ Roadmap toward IFRSs Adoption in Taiwan
◆ | Background
In response to globalization, the Accounting Research and Development Foundation (ARDF) has been developing domestic accounting standards for a number of years now. During the course of this work, the IFRSs has served as a primary reference. With the trend towards full adoption of IFRSs in the international capital markets, IFRSs has recently become virtually a single set of global accounting standards, and today more than 115 countries have adopted or are planning to adopt IFRSs. Considering the international trend, encouraging local companies to prepare IFRSs financial statements is a matter of some urgency if we are to enhance the international competitiveness of our local capital markets, make them more attractive to foreign investors, and to help domestic companies raise capital overseas. |
◆ | Adoption Method
The ARDF has translated (following specific review procedures) and issued Taiwan-IFRSs, i.e. IFRSs translated into traditional Chinese, in accordance with which domestic companies will prepare financial statements. |
◆ | Adoption Scope and Timetable I. | Phase I companies: listed companies and financial institutions supervised by the FSC, except for credit cooperatives, credit card companies and insurance intermediaries: | (I) They are required to prepare financial statements in accordance with Taiwan-IFRSs starting from January 1, 2013. (II) Early optional adoption:
Firms that have already issued securities overseas, or have registered an overseas securities issuance with the FSC, or have a market capitalization of greater than NT$10 billion, are permitted to prepare additional consolidated financial statements in accordance with Taiwan-IFRSs starting from January 1, 2012. If a company without subsidiaries is not required to prepare consolidated financial statements, it is permitted to prepare additional individual financial statements on the above conditions. | II. | Phase II companies: unlisted public companies, credit cooperatives and credit card companies: | (I) They are required to prepare financial statements in accordance with Taiwan-IFRSs starting from January 1, 2015. (II) They are permitted to apply Taiwan-IFRSs starting from January 1, 2013. | III. | Pre-disclosure about the IFRSs adoption plan, and the impact of adoption：To prepare properly for IFRSs adoption, domestic companies should propose an IFRSs adoption plan and establish a specific taskforce. They should also disclose the related information from 2 years prior to adoption, as follows: | (I) Phase I companies: i. They are required to disclose the adoption plan, and the impact of adoption, in 2011 annual financial statements, and in 2012 interim and annual financial statements. ii. Early optional adoption: (i) Companies adopting IFRSs early are required to disclose the adoption plan, and the impact of adoption, in 2010 annual financial statements, and in 2011 interim and annual financial statements. (ii) If a company opts for early adoption of Taiwan-IFRSs after January 1, 2011, it is required to disclose the adoption plan, and the impact of adoption, in 2011 interim and annual financial statements commencing on the decision date. (II) Phase II companies are required to disclose the related information from 2 years prior to adoption, as stated above. | |
◆ | Work Plan
I. Translation, review, and issuance of Taiwan-IFRSs;
II. Study on possible IFRSs implementation issues and resolutions;
III. Modification to related regulations and supervisory mechanisms; and
IV. Enhancement of related publicity and training activities. Year | Work Plan | 2008 | ● Establishment of IFRSs Taskforce | 2009 ~ 2011 | ● Acquisition of authorization to translate IFRSs ● Translation, review, and issuance of IFRSs ●Analysis of possible IFRSs implementation problems, and resolution thereof ● Proposal for modification of the related regulations and supervisory mechanisms ● Enhancement of related publicity and training activities | 2012 | ● IFRSs application permitted for Phase I companies ● Study on possible IFRSs implementation problems, and resolution thereof ●Completion of amendments to the related regulations and supervisory mechanisms ● Enhancement of the related publicity and training activities | 2013 | ● Application of IFRSs required for Phase I companies, and permitted for Phase II companies ● Follow-up analysis of the status of IFRSs adoption, and of the impact | 2014 | ● Follow-up analysis of the status of IFRSs adoption, and of the impact | 2015 | ● Application of IFRSs required for Phase II companies | |
◆ | Expected Benefits I. | More efficient formulation of domestic accounting standards, improvement of our international image, and enhancement of the global rankings and international competitiveness of our local capital markets; | II. | Better comparability between the financial statements of domestic and foreign companies; | III. | No need for restatement of financial statements when local companies wish to issue overseas securities, resulting in reduction in the cost of raising capital overseas; | IV. | For domestic companies with investments overseas, use of a single set of accounting standards will reduce the cost of account conversions and improve management efficiency. | |
■ Implementation
The FSC announced launching of IFRSs in 2013 on May 14th 2009. Over the four years since the announcement, the efforts of all sectors in the community made the IFRSs implementation possible. The Phase I companies, a total of 1,436 listed companies, have successfully produced their first IFRSs financial statements and declared their first 2013 interim financial statements. The phase II companies have also begun to propose the IFRSs adoption plans from April 10th 2013. This progress signifies that the accounting standards in Taiwan are now synchronized with the international trend. This is a huge milestone in the international development of our domestic capital markets.
■ Follow-up Matters
I. In coordination with the work plan for IFRSs implementation, the FSC will continue to launch IFRSs-related tasks, including collecting, analyzing, and solving IFRSs problems and impacts, reviewing the related laws, regulations, and supervisory mechanisms, planning timely upgrade for domestic versions of IFRSs, and updating the information regarding the differences between IFRSs versions and the newest announcements through continuous seminars and training programs.
II. To achieve the phase II companies’ implementation of IFRSs in 2015, the FSC forwarded memorandums to unlisted public companies on March 18th 2013, requesting companies to propose an IFRSs adoption plan and establish a specific taskforce from April 10th 2013. The FSC will continue to monitor the progress of the phase II companies scheduled to make the conversion.
■ Sidelights on Important Activities
I. Establishment of IFRSs service center:
The FSC set up the IFRSs Service Center on June 8, 2011, and served as an integrated platform to assist domestic companies in solving problems when adopting IFRSs.
Chen Yuh-chang, chairman of the Financial Supervisory Commission (FSC)
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II. The IFRSs kick-off ceremony:
Listed companies and financial institutions supervised by the FSC shall set up the account for the adoption of IFRSs on Jan 1, 2012. To announce the marching toward the first year of IFRSs, FSC held the IFRSs kick-off ceremony on Sep 5, 2011. The chairman of FSC, Chen Yuh-chang, attended the ceremony in person and delivered a speech to express the goal of IFRSs implementation.
The pictures of the IFRSs kick-off ceremony
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Sir David Tweedie, ex-chairman of the International Accounting Standards Board (IASB)
