Thai Financial Reporting Standard for SMEs
As previously reported, the Federation of Accounting Professions (“FAP”) is currently in the process of adopting IFRS for SMEs in full without modification, to be known as the Thai Financial Reporting Standard for SMEs (“TFRS for SMEs”), with an expected effective date of 2017.
Keywords: Mazars, Thailand, TFRS, FAP, SMEs, IAS12, NPAEs
4 February 2016
Currently, SMEs in Thailand can use either the Thai Financial Reporting Standards (“TFRS”), or the Thai Financial Reporting Standards for Non-Publicly Accountable Entities (“TFRS for NPAEs”). TFRS for NPAEs is ‘short and simple and uses a historical cost measurement basis’.
A study is currently being conducted as to which type of entity will be required to adopt the TFRS for SMEs. The proposed plan is for a two-tier approach, namely:
- Tier 1 would apply TFRS for SMEs in full; and
- Tier 2 would apply TFRS for SMEs with exceptions from certain sections.
The criteria for determining which entities will be considered tier 1 and which will be considered tier 2 are still being discussed.
The following major standards are likely to be included in the new set of accounting standards in addition to the current TFRS for NPAEs:
(a) Components of financial statements
A complete set of financial statements prepared under the TFRS for SMEs includes:
- a statement of financial position as at the reporting date;
- either a single statement of comprehensive income, or a separate income statement and a separate statement of comprehensive income;
- a statement of cash flows;
- a statement of changes in equity for the reporting period; and
- notes consisting of a summary of significant accounting policies and other explanatory information.
(b) Recognition and measurement principle:
- preparing consolidated financial statements
- using a revaluation method when accounting for property, plants, and equipment
- applying IAS 12, “Income Taxes”, to the issue of deferred taxes;
- recognizing financial instruments, such as options forward contracts, interest rate swaps, and investments in convertible debt, among other things; and
- addressing the issue of recognition and measurement of revenue.