Thai Financial Reporting Standards for SMEs

As previously reported, the Federation of Accounting Professions (“FAP”) is currently preparing new accounting standards in accordance with International Financial Reporting Standards for Small and Medium-sized Entities (2009).

Keywords: Mazars, Thailand, Accounting, FAP, TFRS, NPAEs

19 November 2013

The following major standards would likely be expected to be included in the new set of accounting standards in addition to the current TFRS for NPAEs:

  • Statement of comprehensive income
  • Statement of cash flows
  • Consolidated financial statements
  • Deferred taxes
  • Accounting for revenue from the sales of real estate
  • Financial instruments

The criteria to identify what constitutes a SME are currently based on revenue and/or assets of over Baht 30 million. However, these criteria are subject to change in the future. In the case an entity applies TFRS for SMEs due to its revenue being over Baht 30 million but subsequently annual revenues reduce to under Baht 30 million the entity will still have to apply TFRS for SMEs.

This new set of accounting standards is expected to be effective by 2016. In regards of first-time adoption, the standard is expected to be applied retrospectively but this is subject to future confirmation from the FAP.

Mazars note that the additional requirements under this new accounting standard will put small businesses under pressure to improve their financial reporting. It is highly questionable whether this will be of benefit to the business stakeholders as most of these businesses are owner managed. Further, few accountants in Thailand have the technical skills required to prepare consolidations and account for deferred taxes because previously only publicly accountable entities had to apply such standards. There will need to be extensive training led by the FAP to ensure that the new TFRS for SMEs can be effectively applied.

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