An Accounting Educator’s Summary on IFRS Adoption in Taiwan

Ling-Tai Lynette ChouDirector, Academic Exchange, TAA

Professor, National Chengchi University 2009 TAA Annual Meeting, Tainan, Taiwan

Outline (1)

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Ⅰ) Adoption Status Report

2. Recommendations of IOSCO in 2000

3, Time Table

1. Major Driving Forces

4, Standards Setting

Outline (2)

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II) Impact of IFRS Adoption on Accounting Educators

2. Teaching Materials

3. What Else Can Accounting Educators Do?

1. Adaption of Teaching

I) Adoption Status Report

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1. Major driving forces

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Improve global competitiveness

Make TW accounting standards consistent with the world

Develop an information disclosure mechanism consistent with the world

Recommendations of IOSCO

• Member countries allow cross-border companies to compile financial reports in compliance with IFRS when they apply for public issuance and listing of their stocks.

• To increase comparability of financial statements of international companies and to lower the cost of raising capital from worldwide markets, member countries should make their local standards consistent with international accounting standards.

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A Special Task Force Formed

• Special Task Force on IFRS Adoption

• Members including representatives of FSC, MOE, MOF, accounting academe, TSE,TGTC, public accounting profession, ARDF and industrial organizations.

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Task Assignment

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Planning Group

Promulgatea

blueprint

Group 1: Preliminary tasks

Translation of IAS

Group 2: Implementing IFRS

Gather reported problems

Solve problems

Seamlesstransition

Group 3: Legislative support

Regulation

change

Group 4: Popularization

Active propagat

ion

•Financial reporting•Corporate governance•Franchised industry•Financial/tax difference

•Publicizing exposition•Offering courses•Consultation channels

2. Time Table (1)

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2. Time Table (2)

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• Adoption of IFRS in two phases： First-phase companies： public companies and financial firms under supervision of Financial Supervisory Commission (Credit card issuers, credit corporations, insurance brokers and agents are not included.)

Second-phase companies： private companies, credit corporations and credit card issuers

2. Time Table (3)

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Year

Financial reports complied with IFRS

2012•First-phase companies can voluntarily adopt IFRS

•2010 annual reports•2011 annual reports and interim reports

2013 •First-phase companies will compulsorily adopt IFRS•Second-phase companies can voluntarily adopt IFRS

•2011 annual reports•2012 annual reports and interim reports

2015 •Second-phase companies will compulsorily adopt IFRS

•2013 annual reports•2014 annual reports and interim reports

3. Standards Setting (Financial Accounting Standards)

• Starting 1999, forty ROC Statements of Accounting Standards were revised and updated to converge to IAS.

• In 2009, the IFRS Translation Review Committee issued requests for comments for IAS #18(Revenue), #40(Investment property), #21(Foreign Exchange Rates), #8(Operating Segments) and #17(Leases).

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3. Standards Setting (Statements of Auditing Standards)

No.

Title Pronouncement Date

41 Reporting on Comparative Financial Statements

Nov 2004

42 Auditing Fair Value Measurements and Disclosures

Jul 2005

43 The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements

Sep 2006

44 Quality Control for Audits of Historical Financial Information

Sep 2007

45 Audit Documentation Feb 200846 Quality Control For Accounting Firms Dec 200847 Planning an Audit of Financial Statements Oct 200948 Internal Control In process

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3. Standards Setting (Statements of Valuation Standards)

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No.

Title Pronouncement Date

1 Summary of Valuation Standards Dec 20072 Ethical Guidelines for Valuation  Aug 20083 Valuation Report Aug 20094 Valuation Process To be

pronounced5 Valuation Documentation In process6 Valuation Standards for Financial

ReportingIn process

II) Impact of IFRS Adoption on

Accounting Educators

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1. Adaptation of Teaching: Education Timeframe

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ROC GAAP

Sep.09 Sep.10

Jan.’11 Jan.’12 Jan.13

First-phase companies will compulsorily adopt IFRS

Disclosure of the plan of implementing IFRS and the influence of IFRS

IFRS

Sept.’11 Sept.’12 Sept.’13

Freshman Sophomore Junior Senior Graduation

2009 new students must learn IFRS.Teaching materials for sophomores (e.g. intermediate accounting) also need to be adjusted for them.

1. Adaptation of Teaching: Teaching Methods

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• Rule-Based -> Principle-Based• Teaching Method: Training how to make judgments and choices Training how to find answers; not just memorizing answers

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1. Adaptation of Teaching:

OSU CoursesUndergraduate Graduate Accounting Principles

Financial Accounting Research

Intermediate Accounting

Accounting Theory

Advanced Accounting

Financial Statements Analysis

Development of International Accounting

1. Adaptation of Teaching: Exam/Grading

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• Assigning questions relying on reasoning (not just memorizing)

• Encouraging critical thinking and reward answers based on reasoning (not just memorizing)

• Identifying learning levels: knowledge, comprehension, application, analysis, synthesis, and evaluation (Bloom 1956)

• Knowledge to support judgment-making may come from: economics, finance, industry, research methods, information technology, behavioral sciences, etc.

• Students also need trainings in ethics to hold up their judgments.

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2. Teaching Materials

2. Teaching materials

• Text books• Teaching cases

– Acer: Core management principles

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Acer: Core Management Principles

• Background– Background of Taiwan– Global PC industry– History of Acer

• Company philosophy• Business model• Management of foreign exchanges• Influence of fair value standards

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• We seem to know more about foreign situations than about our own? -Institutions/people matter? -Incentives: Research to know? Research to cure? Research to publish?

• Knowledge consumers vs. knowledge producers -Knowledge-based judgments -Literature review -Meta-analysis -Editorial policy of journals

• Scattered research vs. systematic research

3. What Else Can Accounting Educators Do?

Appreciation

• Thanks to the following individuals for sharing their thoughts with us:

-Rong-Ruey Duh, Professor of NTU– Mei-Yen Jiang, Partner of DT, Taiwan

– Hsien-Yin Lu, Manager of FSC

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Thank you !