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The Mindset Taiwanese Entities Should Have in this IFRS Era

The Mindset Taiwanese Entities Should Have in this IFRS Era. Mushen Chen, CPA Chair, Accounting & Auditing Committee Taipei City CPA Association August 11, 2010. The Mindset We Have Now. Limited observations/thoughts when a draft standard is seeking public comments.

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The Mindset Taiwanese Entities Should Have in this IFRS Era

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  1. The Mindset Taiwanese Entities Should Have in this IFRS Era Mushen Chen, CPA Chair, Accounting & Auditing Committee Taipei City CPA Association August 11, 2010

  2. The Mindset We Have Now • Limited observations/thoughts when a draft standard is seeking public comments. • Limited attendance to the public hearing of a draft standard offered by the ARDF. • Request for postponement of effective dates when they are approaching. • Asking for waiver when a new standard is about to become effective. 2

  3. The Mindset We Have Now • The ARDF (Accounting Research & Development Foundation, Taiwan) issued 9 comment letters to the IASB in 2009, and 3 others in 2008. Various companies, standard-setters, and CPA firms in the world also contribute many comment letters regularly, whereas public companies in Taiwan do not seem to be participative. 3

  4. What Happens Post-IFRS • Local government/standard-setter will soonlose control of accounting standard-setting. • Unable to negotiate with the government/standard-setter to postpone the effective dates of new accounting standards because they will not have the authorities to do so. 4

  5. What Happens Post-IFRS • Even though a consultation document might make the financial statements of a specific entity/industry in Taiwan so distortive, unless we react in a very early stage to the IASB, we will still have to follow/(swallow) it. • Once a new/revised IFRS is issued/effective, all adopters must follow the new standard or face a at least qualified opinion. 5

  6. The Mindset We Should Have • The Taiwanese entities should start to act pro-actively in getting involved in the standard-setting process by familiarizing themselves with those consultation documents that may have an impact on their own financial statements. It may no longer be feasible to count on any third parties. 6

  7. The Mindset We Should Have • Anytime a consultation document might cause the adopter’s financial statements to be distortive, the adopter should write a comment letter (needs to be specific and constructive) to the IASB before respective due dates with a view to have the IASB modify the draft IFRS. 7

  8. The Actions We Should Take • Always familiarize ourselves with the consultation documents (Discussion Paper, Exposure Draft, …) in a timely manner. • Research the impact of the consultation documents to the financial statements. Kickoff a field-testing project as necessary. 8

  9. The Actions We Should Take • Work as a group, among those in the same industry or thru the industry association, to see if the impact would be common to the entire industry. For example, the impact of insurance accounting (IFRS 4) toward the insurance industry in Taiwan. 9

  10. The Actions We Should Take • Draft comment letters to the IASB to express concerns, and language for revision as applicable, to the consultation document. • Communicate with entities in other countries (for example, China, Japan, and/or Korea) on a regular basis to seek possible alternative solutions. 10

  11. Questions or Comments? Mushen Chen, Managing Partner Chen & Wen, CPAs a member of IGAF Worldwide http://www.cwcpa.com.tw/

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