Update on IFRS Adoption
in Taiwan
Conrad Chang
Chairman
Financial Accounting Standards Committee
Accounting Research and Development Foundation
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IFRS Adoption Roadmap


In May 2009, Financial Supervisory
Commission announced a roadmap for
the adoption of IFRS
Two-phased Adoption
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The First phase

All listed companies and financial
companies



Except for credit cooperatives, credit card
companies, and insurance intermediaries
Mandatory adoption in 2013
Voluntary adoption in 2012
3
The Second Phase



All other public companies
Mandatory adoption in 2015
Voluntary adoption in 2013
4
Early adopter case:
CLEVO co. (藍天電腦)

Book value per share will increase to $65
from $13 after early adoption of IFRS




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Mainly the revaluation of PP&E from cost to fair
value
Stock price also increases as well
Self-selection bias?
A comprehensive picture?
What can we learn from this case?
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Task Force for IFRS Adoption
A. Adoption of IFRS (ARDF)
B. Introduction of IFRS into Taiwan
(Taiwan Stock Exchange)
C. Laws and Monitoring Mechanism
(Securities and Futures Bureau of FSC)
D. Education and Promotion (Over-theCounter Market)
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A. Adoption of IFRS (ARDF)
Translation of IFRS
1.


All IFRS and IAS are already translated except
for IAS 39
The translation of IFRIC and SIC is under way
Active participation in international activities
2.




World Standards Setters (WSS)
National Standards Setters (NSS)
Asia and Oceania Standards Setters Group
(AOSSG), hopefully
Regional Standard Setters, etc.
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B. Introduction of IFRS into
Taiwan (Taiwan Stock Exchange)
Analysis on the challenges and impacts of
IFRS adoption in Taiwan
1.






Application of principled-based accounting
standards
Difference analysis of Taiwan GAAP vs. IFRS
Formation of professional judgment
Interpretations of accounting issues
Issues for the first-time adoption and transitional
period
Practice guidance from other countries
8
B. Introduction of IFRS into
Taiwan (Taiwan Stock Exchange)
2. Solving the issues of adopting IFRS


Adjustments of accounting systems and
IT systems (including XBRL) for public
companies
Changes in CPA audits
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B. Introduction of IFRS into
Taiwan (Taiwan Stock Exchange)
3. Adjustment of the public information
disclosure systems


Amendment of regulations on filing public
information
Revision of M.O.P.S (Market Observation Post System, 公
開資訊觀測站)


Revision of account titles and codes
Revision of XBRL
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C. Laws and Monitoring Mechanism
(Securities and Futures Bureau of
FSC)



Amendment of Security Laws
Revision of regulations on the
preparation of financial statement for all
adopting companies (public companies,
insurance industry, banking industry,
securities and futures industry, etc.)
Gaps between IFRS and domestic tax
laws
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D. Education and Promotion
(Over-the-Counter Market)


Promotional brochures for IFRS
Training and educational seminars for
accounting managers of public
companies


They have to take at least 15-hour IFRS
accounting courses before the adoption
Even TV ads!
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Some special issues in Taiwan



Preparation basis of financial
statements
Determination of functional currency
Land appreciation tax
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Preparation basis of financial
statements
Financial
Preparation basis
statement
When subsidiary exists; equity
Consolidated
statement (in IFRS) method for associates
Required?
yes
Individual
statement (in IFRS)
Separate
statement (in IFRS)
When subsidiary does not exist; yes
equity method for associates
FVPL for subsidiaries and
associates
no
Entity statement
(non-IFRS)
Equity method for subsidiaries
and associates (non-IFRS)
yes
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Determination of functional
currency




How to determine for export-oriented
companies?
If so, do they have to file dual-currency
financial statements?
Can they pay dividends in functional
currency?
Which statement for filing domestic
income tax returns?
15
Land Appreciation Tax



(土地增值稅)
Very unique tax system
Do IAS 12 Income Taxes apply to it?
If so, for companies using cost method
for PP&E, do they have to accrue
deferred tax liabilities in case that the
current appraisal value (目前公告現值) had
been adjusted?
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