The Financial Supervisory Commission (FSC) yesterday decided not to delay the nation’s incorporation of the International Accounting Standard Statement No. 10, after a survey found the revised inventory accounting standards will have less impact than expected on public companies.
The standards will be implemented next month as previously scheduled, Chang Li-chen (張麗真), deputy director-general of the commission’s securities and futures bureau, told a media briefing yesterday.
The commission’s latest survey found that only 33 percent of 1,172 respondent companies — out of the nation’s total of 1,255 publicly traded companies — said they would suffer from the new standards, while the remaining 67 percent didn’t see the changes as a threat.
Among those, 12 companies have already applied the new standards, including Tsann Kuen Group (燦坤實業), Hung Sheng Construction Ltd (宏盛建設) and Promate Co (豐藝電子), Chang said.
The standards aim to enhance the transparency of listed companies’ earnings reports by posting the cost of inventories, which would drag down their annual earnings if inventories increase.
If their earnings worsen, listed companies, such as those in the dynamic random access memory (DRAM) chipmaking industry, may see share prices decline and face greater pressure to borrow loans from banks.
Some 801 companies, or 68 percent of surveyed companies, offered a real loss simulation on their earnings for the third quarter with the new standards applied, and concluded they may have to report NT$9.84 billion more in losses, Chang said.
“That only takes up a small portion of their earnings,” she said.
Also, 64 percent of surveyed companies said that they would have no problem implementing the new accounting standards next month, but 48 percent of them hadn’t completed revisions of their accounting system to apply the standards.
However, most companies said that they would finish implementing the standards by the first quarter of next year, she said.
Chang said that the commission found it difficult to endorse the delay of the implementation after neighboring countries such as Japan, Hong Kong and Singapore had all incorporated their domestic accounting standards to meet those of the international standard. The new standard was made public in November last year, she said.
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