Intent Declared Summary

Accounting standards in Taiwan are set by the Financial Accounting Standards Committee (FASC) of the Accounting Research and Development Foundation (ARDF). In 1999, in its ongoing efforts to achieve convergence with International Financial Reporting Standards (IFRSs), the FASC initiated a three-year "comparability project" to review differences between IFRSs and the Taiwanese Statements of Financial Accounting Standards, according to a 2008 presentation by Dr. Rong-Ruey Duh, the chairman of the ARDF. Dr. Duh noted that the results of this comparison served as the basis for revising then-current national standards and issuing new standards more aligned with IFRSs. As stated in the ARDF's "Project Plan Concerning the Convergence with IFRSs," as of October 2007 many IFRSs had been incorporated in the national requirements. Nevertheless, differences between Taiwanese and international requirements still existed. Finally, on June 5, 2009, the ARDF released its “Roadmap toward IFRS Adoption in Taiwan,” announcing its plan to fully adopt IFRSs in Taiwan using a phased-in approach. In Phase I, listed companies and financial institutions supervised by the Financial Supervisory Commission (FSC) (except for credit cooperatives, credit card companies, and insurance intermediaries) will be required to adopt Taiwan-IFRSs starting 2013, with early adoption permitted in 2012 for certain types of companies. In Phase II, other companies, including unlisted public companies, credit cooperatives, and credit card companies will me mandated to apply Taiwan-IFRSs starting from January 1, 2015, with earlier application permitted from January 1, 2013.

General Overview

According to the description of the regulatory and standard-setting framework provided in the 2004 National Federation of Certified Public Accountants Associations of Chinese Taiwan (NFCPAA) self-assessment, the Company Law requires listed and private companies to prepare financial statements in accordance with Taiwanese Generally Accepted Accounting Principles (GAAP) and submit annual financial statements to respective shareholders for their approval. The GAAP are mainly comprised of Statements of Financial Accounting Standards (SFASs) issued by the Financial Accounting Standards Committee (FASC) of the Accounting Research and Development Foundation (ARDF). For listed entities, the requirements of GAAP are supplemented by the Guidelines Governing the Preparation of Financial Reports by Securities Issuers adopted by the Securities and Futures Bureau (SFB) of the Financial Supervisory Commission (FSC). The SFB also establishes financial reporting requirements for banks and similar institutions. Insurance companies are subject to additional reporting requirements set by the Insurance Bureau of the FSC.

According to a 2006 presentation (updated in 2008) made by Dr. Rong-Ruey Duh, prior to 1999, Taiwanese accounting standards were developed based on the U.S. GAAP. However, the endorsement of international accounting standards by the International Organization of Securities Commissions, the decision of the European Union to adopt international accounting standards for application in the member countries as well as other developments led to the change in the FASC’s policy and since the late 1990s, the FASC has been aligning national accounting standards with International Financial Reporting Standards (IFRSs). Duh explains that in 1999, the FASC initiated a three-year long "comparability project" to review differences between IFRSs and the Taiwanese SFASs. As noted in the presentation, "the outcome of the comparison and public hearing serves as the basis for revising the then existing standards and for issuing new standards to align with IAS (IFRS)" (p. 17). As stated in the ARDF's "Project Plan Concerning the Convergence with IFRSs" released in 2007, as of October 2007 many IFRSs have been incorporated in the national requirements; however, to achieve full convergence, the FASC was planning to revise or replace existing standards in accordance with IFRSs and to issue newly adopted IFRSs. The ARDF has been updating it Project Plan by issuing Project Updates (in August 2008 and January 2009).

Although much progress has been achieved to align Taiwanese standards with the international standards, differences vis-a -vis IFRSs still existed. Finally, on June 5, 2009, the ARDF released its “Roadmap toward IFRS Adoption in Taiwan,” announcing its plan to fully adopt IFRSs in Taiwan in two phases. In Phase I, listed companies and financial institutions supervised by the FSC (except for credit cooperatives, credit card companies, and insurance intermediaries) will be required to adopt Taiwan-IFRSs starting 2013. Early adoption in 2012 is optional for companies that have already issued securities overseas, or have registered an overseas securities issuance with the FSC, or have a market capitalization of greater than NT$10 billion. In Phase II, other companies, including unlisted public companies, credit cooperatives, and credit card companies will be mandated to apply Taiwan-IFRSs starting from January 1, 2015, with earlier application permitted from January 1, 2013. The ARDF’s work plan, according to the Roadmap, includes “(1) translation, review and issuance of Taiwan-IFRS: (2) study on possible IFRS implementation issues and resolutions; (3) modification to related regulations and supervisory mechanisms; and (4) enhancement of related publicity and training activities” (p. 3).

According to Duh, the ARDF was established in 1984 and was delegated by the SFB to develop high quality accounting and auditing standards in Taiwan. The standard-setting process includes issuing exposure drafts to the public for comments, following which "three readings" of the standard must take place before issuance. The Financial Accounting Issues Task Force, a committee under the ARDF, is responsible for publishing interpretations of the standards. As of end 2007, Duh observes, 39 standards and more than 700 interpretations had been issued. The 2004 NFCPAA self-assessment notes that the NFCPAA issues ethics requirements which were last amended in 2003. The NFCPAA is a self-regulatory, non-profit professional organization and is listed as a member on the International Federation of Accountants website.

The Principles

NCIFRS 1: First-time Adoption of International Financial Reporting Standards (revised 2009)

According to the 2008 Duh presentation, there is no corresponding standard in Taiwan.

IIIFRS 2: Share-based Payment (revised 2009)

According to the text of SFAS 39 Share-based Payment, this standard was issued in August 2007 and is effective for annual periods beginning on or after January 1, 2008. Although the Deloitte's IAS Plus website states that SFAS 39 is based on IFRS 2, no further information on the extent of compliance of SFAS 39 with its international counterpart is publicly available.

IIIFRS 3: Business Combinations (revised 2009)

According to the text of SFAS 25 Business Combinations, this standard was issued in November 2006 effective for financial statements for the fiscal year beginning on and after January 1, 2006. However, there is no information as to compliance of SFAS 25 with IFRS 3 (revised 2009).

IIIFRS 4: Insurance Contracts (effective 2006)

According to the text of SFAS 40 Insurance Contracts, this standard was issued by the FASC on December 4, 2008 effective for fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted. No further information as to the compliance of SFAS 40 with its international counterpart is publicly available.

IIIFRS 5: Non-current Assets Held for Sale and Discontinued Operations (revised 2009)

According to the text of SFAS 38 Non-current Assets Held for Sale and Discontinued Operations, this standard was issued in November 2006 effective for financial statements for the fiscal year beginning on or after January 1, 2007. However, there is insufficient information as to compliance of SFAS 38 with IFRS 5 (revised 2009).

IIIFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

According to the 2009 Update of the Project Plan Concerning the Convergence with IFRSs available from the ARDF website, the draft of the standard on exploration for and evaluation of mineral resources had been completed by the research division. The expected date of adoption is 2009. No further information is publicly available.

IIIFRS 7: Financial Instruments: Disclosures (effective 2007)

According to the text of SFAS 36 Financial Instruments: Disclosure and Presentation, this standard was issued on December 31, 2006 effective for financial statements for the fiscal year ending on and after December 31, 2006. However, there is insufficient information as to compliance of SFAS 36 with IFRS 7.

IIIFRS 8: Operating Segments (effective 2009)

According to the text of SFAS 41 Operating Segments, this standard was issued on April 9, 2009 and is effective for fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted. Upon the effective date, SFAS 41 will supersede SFAS 20 Segment Reporting issued in June 1992. There is insufficient information as to compliance of SFAS 41 with IFRS 8.

IIIAS 1: Presentation of Financial Statements (revised 2009)

According to the January 2008 Update of the Deloitte's IAS Plus website and the 2008 Duh presentation, the equivalent Taiwanese requirements are contained in SFAS 1 Conceptual Framework for Fincial Accounting and Preparation of Financial Statements issued in 2006 and SFAS 15 issued in 2005. However, there is insufficient publicly available information as to the compliance of these pronouncements with IAS 1.

IIIAS 2: Inventories (effective 2005)

According to the text of SFAS 10, the original standard became effective for financial statements for the fiscal year ending on and after December 31, 1987. Subsequently, the FASC revised SFAS 10 and the revised statement became effective for financial statements for the fiscal year beginning on and after January 1, 2009. As mentioned in the January 2008 Update of the Deloitte's IAS Plus website, SFAS 10 "resembles" IAS 2. However, there is no further information on the extent of compliance of SFAS 10 with IAS 2.

IIIAS 7: Cash Flow Statements (effective 1994)

According to the January 2008 Update of the Deloitte's IAS Plus website, SFAS 17 Statement of Cash Flows was revised by the FASC on September 22, 2005 effective for the fiscal year ending on and after December 31, 2000. However, there is insufficient information as to compliance of SFAS 17 with IAS 7.

IIIAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

According to the text of SFAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, this standard was revised in July 2006 effective for periods commencing on December 31, 1986. However, there is insufficient information as to compliance of SFAS 8 with IAS 8.

IIIAS 10: Events after the Reporting Period (effective 2005)

According to the text of SFAS 9 Contingencies and Subsequent Events, this standard was issued in September 1986 effective for financial statements for the fiscal year ending after December 31, 1986. However, there is insufficient information as to compliance of SFAS 9 with IAS 10.

IIIAS 11: Construction Contracts (effective 1995)

According to the text of SFAS 9 Contingencies and Subsequent Events, this standard was issued in September 1986 effective for financial statements for the fiscal year ending after December 31, 1986. However, there is insufficient information as to compliance of SFAS 9 with IAS 10.

IIIAS 12: Income Taxes (effective 2001)

According to the text of SFAS 22 Income Taxes, this standard was revised by the FASC on September 22, 2006 effective for financial statements for the fiscal year ending on and after December 31, 2006. However, there is insufficient information as to compliance of SFAS 22 with IAS 12.

IIIAS 16: Property, Plant and Equipment (revised 2009)

According to the 2008 Duh presentation, SFAS 1 Conceptual Framework for Financial Accounting and Preparation of Financial Statements is the equivalent Taiwanese standard. SFAS 1 was revised by the FASC on July 20, 2006 effective for financial statements for the fiscal year ending on and after December 31, 2006. However, there is insufficient publicly available information as to Taiwan's compliance with this principle.

IIIAS 17: Leases (effective 2005)

According to the text of SFAS 2 Leases, this standard was issued in November 2000 effective for financial statements for the fiscal year ending on and after December 31, 2000. However, there is insufficient information as to compliance of SFAS 2 with IAS 17.

IIIAS 18: Revenue (effective 1995)

According to the text of SFAS 32 Revenue, this standard was issued in September 2005 effective for financial statements for the fiscal year ending on and after December 31, 2003. However, there is insufficient information as to compliance of SFAS 32 with IAS 18.

IIIAS 19: Employee Benefits (revised 2009)

According to the text of SFAS 18 Accounting for Pensions, this standard was revised by the FASC on September 22, 2005 effective for financial statements for the fiscal year ending on or after December 31, 2002. However, there is insufficient information as to compliance of SFAS 18 with IAS 19.

IIIAS 20: Accounting for Government Grants and Disclosure of Government Assistance (revised 2009)

According to the text of SFAS 29 Accounting for Government Grants and Disclosure of Government Assistance, this standard was issued in June 1999 effective for financial statements for the fiscal year ending on and after December 31, 2000. However, there is insufficient information as to compliance of SFAS 29 with IAS 20.

IIIAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

According to the text of SFAS 14 The Effects of Changes in Foreign Exchange Rates, this standard was issued in December 10, 1988 and was subsequently revised in September 2005. The revised standard has been effective for financial statements for the fiscal year ending on and after January 1, 2006. However, there is insufficient information as to compliance of SFAS 14 with IAS 21.

IIIAS 23: Borrowing Costs (revised 2009)

According to the text of SFAS 3: Borrowing Costs, this standard was issued in January 2001 effective for the fiscal year ending on and after December 31, 2001. However, there is insufficient information as to compliance of SFAS 3 with IAS 23.

IIIAS 24: Related Party Disclosures (effective 2005)

According to the text of SFAS 6 Related Party Disclosures, this standard was issued in June 1985 effective for financial statements for the fiscal year ending on or after December 31, 1985. However, there is insufficient information as to compliance of SFAS 6 with IAS 24.

IIIAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

According to the text of SFAS 18 Accounting for Pensions, this standard was revised by the FASC on September 22, 2005 effective for financial statements for the fiscal year ending on or after December 31, 2002. However, there is insufficient information as to compliance of SFAS 18 with IAS 26.

IIIAS 27: Consolidated and Separate Financial Statements (revised 2009)

According to the text of SFAS 7 Consolidated Financial Statements, this standard was last revised in November 2006 effective for financial statements for the fiscal year beginning on and after January 1, 2007. However, there is insufficient information as to compliance of SFAS 7 with IAS 27.

IIIAS 28: Investments in Associates (revised 2009)

According to the 2008 Duh presentation, SFAS 5 Long-term Equity Investments under Equity Method is the equivalent Taiwanese standard. SFAS 5 was revised by the FASC on December 22, 2005 effective for financial statements for the fiscal year beginning on and after January 1, 2006. However, there is insufficient publicly available information as to Taiwan's compliance with this principle.

IIIAS 29: Financial Reporting in Hyperinflationary Economies (revised 2009)

According to the 2006 Duh presentation, as of October 2006, there was no corresponding standard in Taiwan.

IIIAS 31: Interests in Joint Ventures (revised 2009)

According to the text of SFAS 31 Interests in Joint Ventures, this standard was issued in September 2005 effective for financial statements for the fiscal year ending on and after December 31, 2001. However, there is insufficient information as to compliance of SFAS 31 with IAS 31.

IIIAS 32: Financial Instruments: Disclosure and Presentation (revised 2009)

According to the text of SFAS 36 Financial Instruments: Disclosure and Presentation, this standard was issued on December 31, 2006 effective for financial statements for the fiscal year ending on and after December 31, 2006. However, there is insufficient information as to compliance of SFAS 36 with IAS 32.

IIIAS 33: Earnings per Share (effective 2005)

According to the text of SFAS 24 Earnings per Share, this standard was revised in November 2001. The revised standard became effective for the fiscal year ending on and after December 31, 2002. However, there is insufficient information as to compliance of SFAS 24 with IAS 33.

IIIAS 34: Interim Financial Reporting (effective 1999)

According to the text of SFAS 23 Interim Financial Reporting, this standard was issued in July 1999. However, there is insufficient information as to compliance of SFAS 23 with IAS 34.

IIIAS 36: Impairment of Assets (revised 2009)

According to the text of SFAS 35 Impairment of Assets, this standard, was issued in November 2006 effective for financial statements for the fiscal year ending on and after December 31, 2005. However, there is insufficient information as to compliance of SFAS 35 with IAS 36 (revised 2009).

IIIAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

According to the text of SFAS 9 Contingencies and Subsequent Events, this standard was issued in September 1986 effective for financial statements for the fiscal year ending after December 31, 1986. However, there is insufficient information as to compliance of SFAS 9 with IAS 37.

IIIAS 38: Intangible Assets (effective 2004)

According to the text of SFAS 37 Intangible Assets, this standard was issued in July 2006 effective for financial statements for the fiscal year beginning on and after January 1, 2007. However, there is insufficient information as to compliance of SFAS 37 with IAS 38.

IIIAS 39: Financial Instruments: Recognition and Measurement (revised 2009)

According to the text of SFAS No. 34 Financial Instruments: Recognition and Measurement, this standard was issued in September 2005 and was subsequently revised by the FASC on December 4, 2008. The amended standard becomes effective for financial statements for the fiscal year beginning on and after January 1, 2011. Earlier adoption is allowed. However, the accounting principle for reclassifications becomes effective from July 1, 2008, but reclassifications prior to June 30, 2008 is prohibited. Despite the information above, there is insufficient information publicly available on the extent of compliance of SFAS 34 with IAS 39 (revised 2009).

IIIAS 40: Investment Property (revised 2009)

According to the 2009 Update of the Project Plan Concerning the Convergence with IFRSs available from the ARDF website, the draft of the standard on investment property had been completed by the research division. The expected date of adoption is 2010. No further information is publicly available.

IIIAS 41: Agriculture (revised 2009)

According to the 2009 Update of the Project Plan Concerning the Convergence with IFRSs available from the ARDF website, the draft of the standard on agriculture had been completed by the research division. The expected date of adoption is 2010. No further information is publicly available.