Financial Supervisory Commission (FSC) Chairman Sean Chen (陳冲) yesterday said the commission has no plan to suspend the implementation of a revised inventory accounting rule, despite a suggestion by the Presidential Office’s economic advisers on Thursday to delay it.
“There’s no plan to renounce our previous ‘no delay’ decision,” Chen told a press briefing yesterday.
He said that the inventory accounting rule, International Accounting Standards Statement No. 10, will have less impact than expected on public companies based on two past surveys conducted by the commission’s Securities and Futures Bureau.
Chen’s remark came after the Presidential Office’s economic advisory committee, headed by Vice President Vincent Siew (蕭萬長), suggested on Thursday that the FSC temporarily suspend the implementation.
“Although the government’s decision to implement International Accounting Standards No. 10 and No. 34 was on the right path, the timing is not suitable, as it may have a catastrophic impact on the nation’s businesses amid the global economic slump,” the economic advisory committee said in a presidential office statement on Thursday night.
Chen said 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 firms — said they would suffer under the new standards, that require companies to mark-to-market their inventories in financial reports.
The remaining 67 percent did not see the changes as a threat, Chen said.
He likened the new accounting standards to a messenger delivering a message about a company’s finances, saying: “Nobody should blame the messenger because of an unfavorable message.”
Chen said that the commission hadn’t received any recommendations from the Presidential Office’s economic advisory committee.
The market is worried the revised rule will hit the nation’s high-tech industry particularly hard, notably dynamic random access memory (DRAM) and component makers.
Earlier this week, Ta Chen Stainless Pipe Co (大成不鏽鋼) said it would report a net loss of NT$2.8 billion (US$84.6 million) for last year, which was thought to be because of the implementation of the new accounting rules. The company said later yesterday that it had used the old rules.
Following the FSC’s announcement, the nation’s six major business groups, including the Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA, 電電公會), said they would submit a joint petition that would urge the government to delay the implementation.
“We sincerely hope the government will reconsider and reschedule the implementation,” TEEMA industry policy center executive director Luo Huai-jia (羅懷家) told the Taipei Times by phone yesterday.
Luo said the new accounting standards would force companies to report more losses on their balance sheets, which would likely “make banks shy away from granting loans and may trigger waves of closures.”
Luo said the petition had been endorsed by firms across the board.
Business tycoons, including Frank Huang (黃崇仁), chairman of loss-making Powerchip Semiconductor Corp (力晶半導體), also voiced concerns over the new standards personally to President Ma Ying-jeou (馬英九) during a meeting at Hsinchu Science Park yesterday afternoon, local media reported.
ADDITIONAL REPORTING BY FLORA WANG