Thai Financial Reporting Standard for SMEs

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.

For more information, please visit the IFRS's website and the FAP's website.