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.