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Updated Sunday, January 11, 2009 4:49 am TWN, The China Post news staff

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Ma, Liu support new accounting regulations

Taipie, Taiwan -- Both President Ma Ying-jeou and Premier Liu Chao-shiuan voiced their support for the Financial Supervisory Commission's decision to implement the No. 10 Basic Financial Statements on schedule.

Presidential Office spokesman Wang Yu-chi told a press conference that making a decision on whether to enforce the new accounting criteria involves financial professionalism, and therefore the Presidential Office fully respects the decision by the Cabinet and the FSC on the matter.

A financial and economic consulting panel headed by Vice President Vincent Siew recently proposed that implementation of the No. 10 Basic Financial Statements be postponed, while firms operating in Hsinchu Science Park also suggested President Ma postpone the enforcement of the new accounting rule.

But Chairman Sean Chen of the FSC asserted that the new accounting rule has been put into practice on Jan. 1, 2009 as scheduled, because it's a good time for the rule to be enforced right now.

In response, Wang told reporters that the proposal raised by the financial and economic consulting panel is just for reference by the Cabinet, adding that President Ma fully respects the decision made by the Cabinet and FSC on the implementation of the new accounting rule.

Also yesterday, Premier Liu Chao-shiuan said that the FSC will keep implementing the No. 10 Basic Financial Statements, but will also study complementary measures needed for smooth enforcement of the rule.

The new rules require the adoption of “net realizable value” in calculating the value of inventories, or equivalent to current sale prices deducted by sale cost and product processing cost. This is different from the current practice of gauging the replacement cost, or cost of reproduction, of the past.

The rules also require the itemized comparison in calculating the loss of inventory value, a practice that could possibly raise the amount of losses on the financial books.

This is different from the old method of “aggregate cost comparison” that enables the offsetting of losing items with profitable items.

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