Guru Speak

On June 15, the chief financial officers of 50 SET companies gathered at a Federation of Accounting Profession (FAP) meeting for a roundtable discussion on the implementation of IFRS in Thailand. The meeting was jointly organised by FAP, the SET and the Listed Companies Association.

At this meeting, the road map for adopting IFRS for all businesses was announced. Different timelines have been set according to types of company status in the stock market.

The first group that needs to start preparing their financial statements using all IFRS from January 1, 2011 onwards are the SET 50 companies.

The second group are the SET 100 companies, whose adoption of IFRS will start from January 1, 2013.

Other listed companies and those in the Market for Alternative Investment will adopt IFRS from the beginning of 2015.

For non-listed companies that have publicinterest exposure, the adoption of IFRS is subject to the consideration of the Commerce Ministry and the companies' regulators.

From now on, the major concern for financial officers will be how to effectively implement all the IFRS standards within the specified timeframes.

Companies with experience in adopting IFRS said that this job was certainly not easy, but achievable. The most significant step for its adoption is to make top management aware of the financial and nonfinancial importance and impact of the IFRS standards.

The responsibility should not be solely left with finance and accounting departments, since IFRS will change the way the business operates. Key units from throughout the business should be involved at the first stage.

The degree of impact on company financial statements from applying each IFRS can be greatly diverse, depending on the nature of the firms.

For example, financial institutions will see bigger impacts from IAS 32, IAS 39, and IFRS 7, which are the accounting standards for financial instruments, than from other IFRS standards, whereas realestate companies will get a huge impact from IAS 11, dealing with construction contracts.

Adoption of IFRS will require the close attention of users of financial statements, as standards regarding assets, liabilities, equity, as well as revenues and expenses, will be changed.

Obviously, under IAS 39, derivatives will be markedtomarket, and recorded as assets or liabilities, instead of being recorded as off-balancesheet items.

Fee incomes of commercial banks may decrease, as they need to be included in the cost of granting loans and amortised over the expected life of loans.

Knowledge about IFRS should be widely promoted to enhance the benefits of adopting these international standards. Going forward, users of financial statements need to understand the consequences of IFRS to carefully analyse financial results.

New accounting concepts have been closely related to finance theories, thus making the accounting information more complicated.

With increased transparency, users should also recognise the rational behind the accounting records so as to get full benefits from using financial information and to make the right economic and financial decisions.

Views expressed are the author's own.