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8/10/2019 One Economic Region
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One economic region, one accounting framework
By Josephine Adrienne A. Abarca
Business World (02/10/2014 p.S1/6)
BUSINESS is at the forefront of globalization with markets becoming more interconnected,
investors gaining a more sophisticated worldview, and foreign investments becoming more
expansive. The n ature of competition is also changing, with companies increasingly doing cross-
border offerings. Domestic companies now find themselves competing with both local counterparts
and international companies underscoring the need for reliable and comparable financial
information. This necessity becomes even more pressing with the Association of Southeast Asian
Nations (ASEAN) Economic Community (AEC) on the horizon.
Adopt in g a high-quali ty an d co nsi stent se t of ac co un tin g st an da rd s is vit al for co mpan ies in the
AS EAN membe r st at es if they wi sh to remai n co mpe ti tive. A lo ok at the ac co unt in g st an da rd s
adopted by the various member states shows a single theme: that these standards are based (for
the most part) on the International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB). Some were based on the old International
Ac count ing Stan da rds (I AS) , the for er un ner of th e cur rent IFRS .
The IASB is actively pushing for the global adoption of the IFRS. Based on surveys conducted by
the IASB, more than 100 countries have either already adopted or committed to adopt IFRS as the
single set of global accounting standards.
With the push towards global IFRS adoption and the need to have a single set of accounting
standards in the ASEAN, how are the ASEAN member states faring in terms of the adoption of and
compliance with the IFRS?
ASEA N ADOPT ION OF IFRS
Brunei announced that it would ful ly adopt IFRS as issued by the IAS B by Jan. 1, 2014. Initial ly,
full IFRS adoption will only be required for entities with public accountability such as banks,
financial institutions, insurance companies and takaful companies (those that are similar to mutual
insurance companies).
Cambodia s accounting standards, the Cambodian Financial Reporting Standards (CIFRS), are
aligned with IFRS with no modifications. CIFRS is required for listed entities; however, mandatory
adoption for banks, insurance companies and microfinance institutions has been deferred to Jan.
1, 2016.
Indonesias Indonesian Financial Accounting Standards (IFAS) are based on the IFRS that were
effective Jan. 1, 2009, with some modifications. Indonesias approach is to gradually converge the
IFAS with the IFRS.
Laos plans to fully adopt IFRS this year. This will cover listed companies or companies that are in
the process of being l isted.
Malaysia has already fully converged its Malaysian Financial Reporting Standards with the IFRS.
With the exception of Transitioning Entities (TEs), all non-private entities were mandated to adopt
these standards for annual periods beginning on or after Jan. 1, 2012. TEs are the entities that
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are subject to the application of MFRS 141, Agriculture, and/or the Malaysian Interpretation 15,
Ag reemen ts fo r Co nst ru ction of Real Es tat e.
Myanmar uses the Myanmar Financial Reporting Standards (MFRS) and Myanmar Accounting
Standards (MAS), which are identical to the IFRS issued as of end-2010. Myanmar plans to update
these standards to capture subsequent issuances of the IASB.
Singapore uses the Singapore Financial Reporting Standards (SFRS). To date, Singapore has
adopted most of the IFRS (as SFRS). Singapore has yet to adopt the amendments to IFRS 10,
Consolidated Financial Statements, and IFRS 12, Disclosure of Interests in Other Entities, on
investment entit ies and IFRS 9, Financial Instruments.
Thailands Thai Accounting Standards (TAS) are based on the 2009 version of IFRS. TAS excludes
industry-specific IFRS such as IFRS 4, Insurance Contracts, and IAS 41, Agriculture, and the
standards on financial instruments IAS 32, Financial Instruments: Presentation; IAS 39,
Financial Instruments: Recognition;IFRS 7, Financial Instruments: Disclosures; and IFRS 9.
Thailand plans to complete adoption of IFRS by 2016.
Vi et name se li st ed com panies ar e requ ired to us e the Viet namese Ac count ing St an da rd s, wh ic h are
based on the IAS issued up to 2003. However, IFRS is required for state-owned banks and
permitted for commercial banks.
In the Philippines, the convergence with IFRS has been progressing well since 1997, when the
country began to move towards IFRS. By 2005, we had fully adopted IFRS, which were renamed
Philippine Financial Reporting Standards (PFRS). New and amended IFRS issued by the IASB
thereafter were also adopted. The only exception to this is the deferral of IFRIC 15, Agreement for
Construction of Real Estate. Except for small- and medium-sized entities and micro-entities (as
defined by the Philippine Securities and Exchange Commission), all companies are required to
comply with PFRS.
ARE WE RE ADY FO R THE AE C 2015 ?
Based on the above, it would seem that some ASEAN member states are ready or almost ready for
ful l IFRS adoption in time for, or shortly after, the 2015 ASEAN integration. On the other hand, i t
cannot be denied that other member states still have a long way to go in this aspect. However, it
is very encouraging to see how we and our close neighbors are working to standardize accounting
standards across the region.
Ultimately, implementing IFRS fully across the region will increase transparency and credibility for
firms in the ASEAN. It will also increase global competitiveness as financial results become more
acceptable and comparable, resulting in more consistent information made available to ca pital
markets and decision makers.
We should also consider how important adopting IFRS will be to Philippine accounting
professionals. By gaining mastery of IFRS, practit ioners can elevate themselves to regional -level
(and even global-level) competence and can expand their services to other countries. We have
always believed that the Filipino accountant is of world-class caliber. With the upcoming ASEAN
economic integration, we wil l soon have even more opportunities to prove this claim.
Josephine Adrienne A. Abarca is the head of the accounting standards group of SGV & Co.
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This art icle is for general information only and is not a substitute for professional advice where the facts and
circumstances warrant. The views and opinion expressed above are those of the author and do not necessari ly
represent the views of SGV & Co.
http://www.sgv.ph/one-economic-region-one-accounting-framework-by-josephine-adrienne-a-abarca-
february-10-2014/