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IFRS accounting measures to take effect for all listed companies in Taiwan in 2013

TAIPEI, Taiwan -- International Financial Reporting Standards (IFRS, 國際會計準則) will take effect this year, affecting all publicly traded companies based in Taiwan.

Foreign companies listed in Taiwan will be required to adopt the IFRS, American or Taiwanese accounting standards at their discretion, the Financial Supervisory Commission (FSC, 金管會) stated.

The change represents an effort to ensure that company accounts are understandable and comparable across borders, and to expedite international trade. All companies and financial institutions must prepare financial statements in accordance with the stipulations of Taiwan-IFRS starting next year.

Institutional investors said that — with the exception of land assets — current Taiwanese accounting standards already include numerous stipulations that conform to the spirit of IFRS.

The semiconductor fabrication and testing industry has indicated that it has begun the process of migrating toward IFRS, and stands well-prepared for the coming change. A number of companies in the industry have said that the IFRS will not affect the figures in their financial statements in any significant way.

The construction industry has pointed to the change from listing percentage-of-completion to completed-contract in how revenue is recognized as the most significant impact of IFRS. Many companies are switching to the build-then-sell model over the conventional presale model. In addition, companies will need to stagger the completion dates of their projects to ensure a consistent revenue stream. This is due to IFRS stipulations that revenue can only be recognized at the completion of construction and after a sale has been concluded.

China Telecom (CHT,中華電信), which holds a large portfolio of land assets, will be affected by IFRS as land assets will be recognized differently. CHT said it will see its consolidated stockholders' equity decrease by NT$3.2 billion, representing a decrease of NT$0.41 in its book value per share.

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