2010 KAA Summer International Conference Busan, Korea

Planned IFRS Adoption and Accounting Educators in Taiwan

Ling-Tai Lynette Chou, Ph.D., CPA(Texas)Director of International Exchange, TAA

Professor of National Chengchi University

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Outline

• Progress of planned IFRS adoption in Taiwan• Challenges facing accounting educators• Recent TAA-sponsored conferences on IFRS• CPA exam questions and IFRS• Selected Research on IFRS in Taiwan• Conclusion

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1. Progress of Planned IFRS Adoption in Taiwan

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Progress of Planned IFRS Adoption in Taiwan

• In 2001 Taiwan government held an Economic Development Meeting and made a decision to converge with IFRS.

• The Financial Supervisory Commission (FSC) in 2009 officially announced the Roadmap for full adoption of IFRS:– Listed and financial companies are required to

prepare IFRS F/Ss beginning 2013 with 2012 included as the comparative statements.

– Non-listed companies will begin after 2015.

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Progress of Planned IFRS Adoption in Taiwan

Taiwan GAAP IFRS

SFAS No. 34 Financial Instruments: Recognition and Measurement

IAS 39 Financial Instruments: Recognition and Measurement

SFAS No. 35 Impairment of Assets IAS 36 Impairment of Assets

SFAS No. 36 Financial Instruments: Disclosure and Presentation

IAS 32 Financial Instruments: PresentationIFRS 7 Financial Instruments: Disclosures

SFAS No. 37 Intangible Assets IAS 38 Intangible Assets

SFAS No. 38 Non-current Assets Held for Sale and Discontinued Operations

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

SFAS No. 39 Share-based payment IFRS 2 Share-based Payment

SFAS No. 40 Insurance Contracts IFRS 4 Insurance Contracts

SFAS No. 41 Operating Segments IFRS 8 Operating Segments

• The standard statements released based on IFRS during the convergence era include:

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Progress of Planned IFRS Adoption in Taiwan

Current GAAP IFRSs第 1 號財務會計觀念架構及財務報表之編製 •Framework: Framework for the Preparation and

Presentation of Financial Statements •IAS 1 Presentation of Financial Statements•IAS 16 Property, Plant and Equipment

第 2 號租賃會計處理準則 •IAS 17 Leases

第 3 號利息資本化會計處理準則 •IAS 23 Borrowing Costs

第 5 號採權益法之長期股權投資會計處理準則 •IAS 28 Investments in Associates

第 6 號關係人交易之揭露 •IAS 24 Related Party Disclosures

第 7 號合併財務報表 •IAS 27 Consolidated and Separate Financial 　　　　　 Statements

第 8 號會計變動及前期損益調整之會計處理 •IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

第 9 號或有事項及期後事項之處理準則 •IAS 10 Events after the Reporting Period•IAS 37 Provisions, Contingent Liabilities and Contingent Assets

第 10 號存貨之會計處理 •IAS 2 Inventories

第 11 號長期工程合約之會計處理準則 •IAS 11 Construction Contracts

第 12 號所得稅抵減之會計處理準則 N.A

第 13 號財務困難債務整理之會計處理準則 N.A

第 14 號外幣換算之會計處理準則 •IAS 21 The Effects of Changes in Foreign Exchange Rates

第 15 號會計政策之揭露 •IAS 1 Presentation of Financial Statements6

Progress of Planned IFRS Adoption in Taiwan

Current GAAP IFRSs第 16 號財務預測編製要點 N.A

第 17 號現金流量表 •IAS 7 Cash Flow Statements

第 18 號退休金會計處理準則 •IAS 19 Employee Benefits•IAS 26 Accounting and Reporting by Retirement Benefit Plans

第 19 號創業期間之會計處理準則 N.A

第 20 號部門別財務資訊之揭露(2011 年將被第 41 號公報「營運部門資訊之揭露」取代 )

•IFRS 8 Operating Segments

第 22 號所得稅之會計處理準則 •IAS 12 Income Taxes

第 23 號期中財務報表之表達及揭露 •IAS 34 Interim Financial Reporting

第 24 號每股盈餘 •IAS 33 Earnings Per Share

第 25 號企業合併－購買法之會計處理 •IFRS 3 Business Combinations

第 28 號銀行財務報表之揭露 •IFRS 7 Financial Instruments :Disclosures

第 29 號政府輔助之會計處理準則 •IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

第 30 號庫藏股票會計處理準則 •N.A

第 31 號合資投資之會計處理準則 •IAS 31 Interests in Joint Ventures

第 32 號收入認列之會計處理準則 •IAS 18 Revenue

第 33 號金融資產之移轉及負債消滅之會計處理

•IAS 39 Financial Instruments: Recognition and Measurement

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Current GAAP IFRSs第 34 號金融商品之會計處理準則 •IAS 39 Financial Instruments: Recognition and

Measurement第 35 號資產減損之會計處理準則 •IAS 36 Impairment of Assets

第 36 號金融商品之表達與揭露 •IAS 32 Financial Instruments: Presentation•IFRS 7 Financial Instruments :Disclosures

第 37 號無形資產之會計處理準則 •IAS 38 Intangible Assets

第 38 號待出售非流動資產及停業單位之會計處理準則

•IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

第 39 號股份基礎給付之會計處理準則

•IFRS 2 Share-based Payment

第 40 號保險合約之會計處理準則 •IFRS 4 Insurance Contracts

第 41 號營運部門資訊之揭露 •IFRS 8 Operating Segments

高度通貨膨脹經濟下之財務報導 ，尚不適用 .

•IAS 29 Financial Reporting in Hyperinflationary Economies

未訂 •IAS 40 Investment Property

未訂 •IAS 41 Agriculture

未訂 •IFRS 1 First-time Adoption of International Financial 　　　　 Reporting Standards

未訂 •IFRS 6 Exploration for and Evaluation of Mineral Resources

係取代 IAS 39 金融資產分類，目前未依 IFRS 9 修訂第 34 號公報

•IFRS 9 Financial Instruments

Progress of Planned IFRS Adoption in Taiwan

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2. Challenges Facing Accounting Educators

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(1) Traditional Chinese Translation Of IFRSs

• The First Committee of the FSC IFRS Task Force is in charge of the translation and final review of the Traditional Chinese IFRS (正體中文版 ). The former President of TAA, Professor Ding-Wong Cheng(鄭丁旺教授 ) of NCCU, is the Chairman of this 11-member Committee.

• The collaboration among accounting scholars across the Taiwan Strait is instrumental to maintain certain level of consistency in key-terms of the traditional and simplified Chinese translations of IFRS.

• The translation project is due to be completed by the end of this year.

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(2) Other Aspects Regarding the IFRS Adoption

• The Fourth Committee of the FSC IFRS Task Force is responsible for professional training and public dissemination of IFRS related information. They continually sponsor many workshops and classes for practitioners to obtain updated knowledge regarding the adoption.

• Many instructors of the training sessions are from the academics and the Taiwan Accounting Research and Development Foundation (TARDF), the standard-setting organization in Taiwan.

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(2) Other Aspects Regarding the IFRS Adoption

• To facilitate smooth transitions from historical cost principles to fair value accounting, many accounting educators have contributed to the forming of the Valuation Standards Committee under TARDF.

• Four Statements of Valuation Standards have been released by the Valuation Standards Committee:

No. 01 : Summary of Valuation Standards (pronounced on Dec. 26, 2007)

No. 02 : Code of Ethics (pronounced on Aug. 13, 2008) No. 03 : Valuation Report (pronounced on Aug. 21, 2009) No. 04 : Valuation Process (pronounced on Dec. 31, 2009)

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(3) Impact of IFRS on Collegiate Accounting Education: Addition, Change or Reform?

I Survey of accounting faculty members

Ⅱ Survey of accounting department heads

III Remaining questions

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I. Survey of Faculty Members

• Respondents:– Accounting faculty members of

universities/colleges in Taiwan• Date: 2010/5/22• Location:

– IFRS Teaching Workshop (sponsored by TAA) at National Taipei University

• Responses: 70 faculty members attended the workshop and 33 responded.

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I. Survey of Faculty Members

Yes52%

No48%

Do you cover IFRS in your courses?

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I. Survey of Faculty Members

• Major difficulties in teaching IFRS– Lack of well-recognized teaching materials– Simultaneous coverage of U.S. GAAP and IFRS

• Limited teaching hours• Confusion among students

– Uncertain schedule to fully adopt IFRS– No sufficient training opportunities for the faculty– Few examples/exercises illustrating differences

between U.S. GAAP and IFRS

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I. Survey of Faculty Members

29%

71%

How do you cover IFRS in your courses?Start specifically dedicated coursesSupplement IFRS materials in the original courses

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I. Survey of Faculty Members

50%

29%

19%2%

What are the sources of IFRS teaching materials used?

Textbooks

IFRS statements

IFRS conferences

IFRS training materials from Big 4

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I. Survey of Faculty Members

29%

30%

33%

5% 3%

How do you keep up with IFRS changes?

Materials from Internet

IFRS related books

Domestic conferences

Online learning courses

International conferences

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II. Survey of Accounting Department Heads

• Respondents: members of TAA Accounting Education Committee, all being accounting department heads

• Responses: A questionnaire was emailed to 23 department heads and 11 responded.

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II. Survey of Accounting Department Heads

• Characteristics of the sampleCategory Percentage

Public schools 36.36%

PhD. programs offered 27.27%

Master degrees offered 81.81%

Baccalaureate degrees offered 81.81%

4-year technological institutions

18.18%

Mean of number of faculty members

16(S.D.= 6.39)

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II. Survey of Accounting Department Heads

• Over 90% of respondents assert that their departments offer specific courses covering IFRS.

• All respondents assert that IFRS materials are supplemented in the traditional accounting courses.

• Major difficulties mentioned in offering IFRS courses– Hard to find qualified teaching faculty– Lack of appropriate IFRS teaching materials– Only a few students registered the IFRS-specific courses

while most attendants are non-credit earning students– Difficulty in learning IFRS for students

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III. Remaining Questions from the Survey

• How can we attend to the student needs and/or the accounting curricula in the IFRS adoption era?

• Are pure additions and changes of accounting course materials sufficient for student learning needs? Will these future decision makers be well equipped to deal with challenges in the IFRS era?

• Do we need more comprehensive accounting curriculum reform to enhance students’ judgment ability and/or professional skills?

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3. Recent TAA-sponsored Conferences on IFRS

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Recent TAA-sponsored Conferences on IFRS

• TAA has continuously sponsored conferences on IFRS.

Theme Date City/County Location

Challenges to Converge with IFRS in Taiwan

2009/3/13 Taipei City Shih Chien University

Outlook and Vision of IFRS Adoption 2009/4/9 Taichung County

Providence University

Challenges and Impacts of IFRS on Domestic Capital Markets

2009/5/19 Taipei City Takming University of Science and Technology

2009 Accounting Forum on IFRS 2009/5/22 Taipei City Chinese Culture University

Impacts of IFRS on Taiwan Accounting Education and Solutions

2009/6/12 Taipei City National Taiwan University

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Recent TAA-sponsored Conferences on IFRS

Theme Date City/County Location

Educational and Practical Conference on IFRS & XBRL

2009/8/21~2009/8/22

Tainan County

Tainan University of Technology

Plan for Convergence with International Financial Reporting Standards

2009/11/13 Taipei City Shih Chien University

Challenges Accounting Educators Face in the IFRS Era

2009/12/10~2009/12/11

Tainan City National Cheng Kung University

Implementation and Challenges of International Accounting Principles

2009/12/17~2009/12/18

Taipei City Soochow University

2010 PWC Conference on IFRS 2010/5/14 Taichung City

National Chung Hsing University

IFRS Educational and Academic Conference

2010/5/19~ 2010/5/20

Tainan County

Chang Jung University

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4. CPA Exam Questions on IFRS

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CPA Exam Questions on IFRS

• The percentages of IFRS-related questions in recent Taiwanese CPA exams:

Year Total % Problems Objective questions

2005 30% 20% 10%

2006 22% 20% 2%

2007 33% 25% 8%

2008 25% 15% 10%

2009 19% 15% 4%

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CPA Exam Questions on IFRS

• SFAS No. 34 Financial Instruments: Recognition and Measurement• SFAS No. 35 Impairment of Assets• SFAS No. 37 Intangible Assets • SFAS No. 38 Non-current Assets Held for Sale and Discontinued

Operations• SFAS No. 39 Share-based payment

Year Problems Objective questions

2005 20% 8% 2% 2%2006 20%2007 10% 15% 6% 2%2008 15% 2% 2% 6% 2%2009 15% 2%

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CPA Exam Questions on IFRS

• Current Status: The FSC made an official request to the Ministry of Examination in March 2010 to include IFRS contents in future CPA examinations.

• MOEX Response: Meetings of accounting educators and professionals will start October 2010 to respond to FSC’s request.

• Major Issue: gradual inclusion or immediate full inclusion after the completion of the traditional Chinese translation in December? 30

Selected Research on IFRS in Taiwan

• Duh, R. R., S. H. Yen, and W. Y. Chen, Factors Affecting the Complete Convergence with International Financial Reporting Standards in Taiwan: An Empirical Study, Journal of Accounting and Corporate Governance, 1(2):15-37.(2004)

• Lin, S. and A. R. Yen, The effects of IFRS Adoption on Audit Fees for Listed Companies in China, The Illinois International Accounting symposium, June 2010, Taipei

• Hsu, W. H., R. R. Duh, and K. Cheng, Does control-based approach to consolidated statements reflect market price better than ownership-based approach, The Illinois International Accounting symposium, June 2010, Taipei

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Conclusion

• Impacts of uncertainty regarding IFRS adoption in the U.S.– Teach only IFRS?– Lecture on both IFRS and U.S. GAAP?– Teach IFRS and supplement some materials of U.S.

GAAP or vice versa?• Strong demand for well-recognized teaching

materials of IFRS– Traditional Chinese text books– English text books

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Conclusion

• Suggestions regarding pedagogical methods– Emphasize understanding the essence of

transactions– Cultivate students’ critical thinking and analytic

ability rather than memorization of the rules– Apply active learning approaches, e.g. case

studies, role plays, cross debates, etc.– Test students’ skills and ability accordingly

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Acknowledgements

• Thank President Jang and KAA for this excellent opportunity for us to share our Taiwan experience and learn from colleagues in Australia, Singapore, Korea and Japan.

• Thank TAA President Shiue and his team members for providing relevant data and assistance in administering the surveys.

• Thank FSC Commissioner C.C. Liu for providing current status information.

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Acknowledgements

• Thank my student assistants for their tireless efforts:

Assistant Task

Angela Lin • Analyze the data• Collect survey data

Jennifer Chang • Design the questionnaires

Hsiu-Chin Lin • Collect data

Hsien-Lian Chiu • Draft and prepare the PPT

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Thank you!

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