Result of AOSSG members’ survey

Result of AOSSG members’ survey Korea Accounting Standards Board (KASB) 30 September 2010

Purpose of the survey • Overview • Issues to discuss • Results • Conclusion & Suggestions Contents

I. Purpose of the survey Understand the members’ profile and the different status on IFRS adoption or convergence Recognize country specific issues that members want AOSSG to deal with Explore additional activities that AOSSG can do

II. Overview Survey questionnaire prepared by KASB, assisted by MASB and ASBJ We have received 15 replies (54%) out of 28 countries as of 25 September List of respondents: Your replies are greatly appreciated!

II. Overview (cont’d) Categorized in 6 sections

III. Issues to discuss Challenges in adopting IFRSs (Q7) AOSSG’s roles (Q9) New topics (Q17) Operational manner of WG (Q18) Other issues (non-profit entities) (Q19)

IV. Results : Section I 1. How is your organisation being funded? Government : 4 Members : 3 Corporates : 1 Mixed : 5 Others : 2 The funding source is found to be diverse among the membership.Some rely on public funding to some extent, while others rely more on funding from private sector

IV. Results : Section I (cont’d) 2. Is your organization independent of Government? Yes : 11 No : 4 Of 15 replied countries, 11 countries’ organizations were independent of Government

IV. Results : Section I (cont’d) 3. Please name the organisation(s) responsible for regulating and enforcing accounting standards Regulators such as Securities Exchange Commission : 8 Standards Setter : 5 Others : 2

IV. Results : Section I (cont’d) 4. Does the organisation as stated in 3 above have the power to amend the accounting standards issued by your organisation? Yes : 3 No : 6 N/A : 5 Others : 1 (Theoretically yes; but there has been no case to date)

5. USE OF IFRSs • *source: IAS PLUS IV. Results : Section II

5. USE OF IFRSs (cont’d) IV. Results : Section II (cont’d)

IV. Results : Section III 6. Status of Adoption of IFRSs Most countries have adopted (converged) or made announcement to adopt (converge) IFRS

IV. Results : Section III (cont’d) 7. What are the challenges you faced/would face in adopting IFRSs? Application/Practical difficulties : 9 Local laws that are inconsistent with the requirements of IFRSs Difficulties in fair value measurement Issues addressing particular requirements of Islamic Finance under IFRS Lack of technical references : 6 Complexity of IFRSs IFRS is crafted from the perspectives of highly developed capital markets which is not the case yet in developing countries Lack of support from the community : 3 Strong objections from the industry on a specific standard Financial constraints : 2 Other : 6 Language barriers ( Interpretation & translation) Difficulties in learning new standards

IV. Results : Section III (cont’d) 8. How would you address the challenges stated in 7 above? More participation on the IASB standard setting process Investment in training and education of IFRS Establishment of discussion forum aiming to share experiences and issues Involvement of stakeholders in the adoption and implementation process References to the technical position papers of the Big 4

IV. Results : Section III (cont’d) 9. What type of roles do you expect to the AOSSG in resolving the challenges? Increasing active role of Asia-Oceania region in participating in IASB and IFRSs setting Leverage on a stronger voice to convey Asia-Oceanian concerns and issues to the IASB Focus on commenting to IASB EDs Further development of guidance and illustrations on complex standards like IAS 12, 19, 36, 38, 39 and IFRS 4, 7 etc. Organization of regional workshops or seminars on complex IFRSs Urge the IFRS Foundation to speed up the translation of IFRSs into other languages Providing and sharing knowledge among members Joint research on accounting issues such as revenue and consolidation

IV. Results : Section IV 10. How important is adoption of or convergence with IFRS to your country and why? Very important : 13 Essential for listed companies so that they remain internationally competitive To produce financial information of a high quality that is relevant, comparable, consistent and transparent so as to serve the needs of the stakeholders To improve the quality of financial reporting and improve the comparability Improve the degree of liquidity Reduce the cost of obtaining funds

IV. Results : Section IV (cont’d) 11. How do you deal with conflict between the accounting and tax requirements? Regularly communicate major accounting changes that may have tax implications to tax authority Tax Department revised the tax forms Work closely with regulatory bodies, government agencies, and other relevant bodies to educate and explain the financial reporting standards Prepare reports for financial reporting purposes under accounting standards and reports for taxation purposes under tax legislation Amendments are proposed in the tax legislation to overcome the conflict Establish a committee to examine the differences between the GAAP and tax laws

IV. Results : Section IV (cont’d) 12. How do you deal with conflict between accounting standards and other rules / regulations? The local rules and regulations make references to International Accounting Standards and do not create parallel standards Adjustments will be made in accordance with corresponding rules or regulations. In that case, preparers cannot state compliance with accounting standards but rather compliance with those rules and regulations Deal with conflicts between accounting and other rules/regulations on a case-by-case basis When conflict exists, preparers are required to comply with the laws, rules, or regulations of higher hierarchy Entities apply the requirements relevant to the report being prepared

IV. Results : Section IV (cont’d) 13. How do you intend to educate the users of financial statements, such as regulators, investors, and academia? Conduct regular “Out reach” sessions for the stakeholders to update on relevant issues Hold regular technical update evenings, financial reporting forums and issues staff summaries of newly released standards, etc. Organize training courses Inform users of financial statements through articles, standards board updates etc. Train the trainers, establishing TFRS Clinic, producing CD or e-Learning classes, issuing application guidance

IV. Results : Section IV (cont’d) 14. How do you ensure that preparers of financial statements and auditors are well-trained to apply the IFRS? Hold IFRS seminars and provide training courses Review the audit working paper files to ensure its compliance with IFRSs Has a compliance and quality assurance function, the former being handling complaints from third parties on practising CPA on their practices whereas the latter being regular review of CPA practices on rotation basis Have CPE requirements Put more focus to train, coach, mentor and share best practices to assist medium and small national accounting firms

IV. Results : Section IV (cont’d) 15. How do you ensure that the university students, i.e. the future accountants are well-trained on IFRS before they join the workforce? Work with the colleges / universities to revise the syllabi to include IFRSs as a part of their curriculum Arrange IFRS training courses and provide assistance on teaching material for professors and lecturers IFRS is tested in the professional qualification examinations. Set up qualification programme which is a comprehensive training programme that provides the knowledge and skills necessary to become a CPA

IV. Results : Section V 16. Do you agree with current topics of the WGs? Since 2009 : IAS 39, Fair value measurement, Revenue, Financial statement presentation Since 2010 : Consolidation, Leases, Insurance Contracts, Emission Trading Schemes, Islamic Finance, Website Yes : 15 (100%)

IV. Results : Section V(cont’d) 17. Is there any technical topic which should be added other than current topics of the WGs? Besides, do you want the AOSSG to deal with IFRS implementation issues as well? IAS 41 Agriculture Disclosures IFRS for SMEs Rate-regulated activities Conceptual Framework Business combination under common control IAS 12 Income Taxes Dealing with IFRS implementation issues (Yes : 7) Though we recognize that IFRS implementation issue is important, we tend to think that it is the issue for future consideration Should be sending implementation issues to the IFRS Interpretation Committee rather than trying to deal with them at AOSSG

IV. Results : Section V(cont’d) 18. Is there any operational manner of WG which should be complemented or revised? Need to clarify the working procedures of WG, for example, how to consolidate comments from WG member, if there has been disagreement among the group Sufficient time should be given to the working group members to provide feedback particularly for IASB exposure drafts issued close to the AOSSG meeting date Some AOSSG Discussion Paper prepared for presentation at the AOSSG annual meeting were prepared based on staff view of the working group members which may not represent the official views of the AOSSG member

IV. Results : Section VI 19. Are there any issues for the AOSSG to deal with besides IASB work program? AOSSG can deal with accounting standards for non-profit entities (5) Although we can take note of accounting standards for non-profit entities or public entities, for the time being, AOSSG should focus on IASB’s work program, in order to make the best use of our resources Accounting standards for non-profit entities can be dealt in the future In New Zealand, we have traditionally prepared accounting standards that apply to all entities – for-profit, not-for-profit and public sector AOSSG should be able to deal with auditing standards for cross border transactions

IV. Results : Section VI(cont’d) 20. Do you have any additional comment for the AOSSG? AOSSG should have strong representatives sitting at the IASB level so that the comments will directly impact at the right level AOSSG should be involved on research & study on Accounting Standards also

V. Conclusion & Suggestions Challenges in adopting IFRSs Application/Practical difficulties Lack of technical references AOSSG’s roles Continuing participation in IASB and IFRSs setting Organizing of regional workshops or seminars on complex IFRSs Providing and sharing knowledge among members We suggest holding additional sessions during the AOSSG meeting - Educational session by IASB - Discussion session to share experiences among members

V. Conclusion & Suggestions (cont’d) New topics IAS 41 Agriculture Disclosures IFRS for SMEs Rate-regulated activities Conceptual Framework Implementation issues Business combination under common control IAS 12 Income Taxes Operational manner of WG To be discussed Other issues Non-profit entities can be dealt in the future

Questions or Comments? Do you agree with the suggestion? AOSSG’s roles New topics Operational manner of WG Other issues (Non-profit entities)

Result of AOSSG members’ survey