Taiwan rethinks reporting standards
Regulators are keen to align Taiwan's reporting standards with IFRS practices, but the move may set off mark-to-market debates once again.
With most global financial centres already moving towards adopting the International Financial Reporting Standards (IFRS), TaiwanÆs financial regulator says it is breaking its present æconvergenceÆ mode for setting accounting rules to a likely adoption of the principles on the island by 2014.
The FSC says it is already studying the issue with a think-tank formed with experts from the islandÆs stock exchanges, over-the-counter trade operators, the local Accounting Research & Development Foundation, various industry and trade bodies and relevant government bodies on areas where the principles might require fine-tuning for full adoption in Taiwan.
The FSC says the move will take Taiwanese corporatesÆ reporting standards close to the international par, and hence lower their overseas fund-raising costs. It is aimed at further enhancing TaiwanÆs capital markets infrastructure.
The latest announcement follows the regulatorÆs recent decision to revise accounting standards under the International Accounting Standards Board (IASB) rules.
Of the practices that Taiwanese entities will have to adopt under IFRS standards, the fair valuation rule under notice 34 is causing the most concern. The rule would require entities to mark-to-market their assets instead of being able to conceal these losses by reclassifying assets that have dropped in value as æassets for trading purposesÆ to other categories such as æassets held to maturityÆ or æassets held for the purpose of saleÆ.
For the local insurance industry, the debate is likely to focus on notice 40, under which insurers might have to book marked-to-market losses for their assets straight to their profit and loss accounts û a rule that has had more flexibility under the FSCÆs æconvergenceÆ mode.
The FSC says it is already studying the issue with a think-tank formed with experts from the islandÆs stock exchanges, over-the-counter trade operators, the local Accounting Research & Development Foundation, various industry and trade bodies and relevant government bodies on areas where the principles might require fine-tuning for full adoption in Taiwan.
The FSC says the move will take Taiwanese corporatesÆ reporting standards close to the international par, and hence lower their overseas fund-raising costs. It is aimed at further enhancing TaiwanÆs capital markets infrastructure.
The latest announcement follows the regulatorÆs recent decision to revise accounting standards under the International Accounting Standards Board (IASB) rules.
Of the practices that Taiwanese entities will have to adopt under IFRS standards, the fair valuation rule under notice 34 is causing the most concern. The rule would require entities to mark-to-market their assets instead of being able to conceal these losses by reclassifying assets that have dropped in value as æassets for trading purposesÆ to other categories such as æassets held to maturityÆ or æassets held for the purpose of saleÆ.
For the local insurance industry, the debate is likely to focus on notice 40, under which insurers might have to book marked-to-market losses for their assets straight to their profit and loss accounts û a rule that has had more flexibility under the FSCÆs æconvergenceÆ mode.
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