Speaking at a seminar about corporate governance among listed companies yesterday, Chanin said coal giant Banpu had postponed plans for 100-per-cent compliance with the IFRS this year. The international standard, which the World Bank hopes Thai listed firms finally will adopt, would result in a higher debt-to-equity ratio for his company.

"Most of our accounting standards already comply with the IFRS, but there are three or four issues that will affect our balance sheet once we comply fully. Looking at our three-year plan, we must leave full compliance with the IFRS as an internal experiment," he said. The IFRS is most popular in Europe and widely accepted internationally, while most Thai corporations currently adopt the Thai General Accepted Accounting Principles, which is locally adapted from international standards, as their accounting standard.

The World Bank had earlier suggested a goal of this year for Thai companies to adopt the IFRS. However, Thai authorities and relevant parties - the Federation of Accounting Professions, the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) - are currently surveying views from Thai listed firms to create a new platform of accounting and internal-control standards. They expect to hand out the first draft of an accounting guideline for listed firms in May.

Citing one example, Chanin said the IFRS required a company to make provision for staff on the assumption that the company would have to lay off all of the staff some day. This would cost Banpu several hundred millions of baht, causing the company's equity to decline and its debt-to-equity ratio to rise.

He said this would consequently affect some of the company's loan contracts. With several expansion plans over the next three years, Banpu cannot afford to comply with the strict IFRS standards at present.

Chanin added that a higher debt-to-equity ratio would make it difficult for the company to raise funding, because most funds were not allowed to invest in a company whose debt-to-equity ratio was above a certain level.

"The IFRS is good, but capital in our country is too small. Smaller companies would have even lower capital," said Chanin.

As president of the Listed Company Association, Chanin said that organisation would like to participate in seeking a neutral way to draft a new accounting standard for Thai companies.

SEC assistant secretary-general Chalee Chantanayingyong said at the same seminar that fraud and breach of accounting standards among Thai companies are mostly caused by a lack of proper internal controls.

Drawing on his experience at the securities watchdog, Chalee gave examples of problems with financial statements that were caused by improper internal controls.

With a lack of good internal controls and accounting standards, many companies have been penalised by the SEC, because they could not file their financial statements on time. Moreover, some companies suffer from fraud in the lower ranks of management, but the lack of good internal controls prevents their CEOs from discovering this. Worst of all is when the CEO himself commits fraud.

He added that some companies would comply with good accounting standards at first, then ignore them after being listed on the SET.