The planned application of International Financial Reporting Standards 9 will have the greatest impact on banks and a significant influence on insurers locally, says KPMG Thailand.
IFRS 9 is due to take effect here in 2019.
"The new standard is not only going to have a significant impact on Thai companies, most notably banks, but also on insurers and other corporates," said Somboon Supasiripinyo, senior technical partner at KPMG Thailand.
"After extensive debates on what are complex areas, it is good that we now have a final standard and the planned implementation can begin."
On July 24, the International Accounting Standards Board issued the fourth and final version of IFRS 9, the new standard for financial instruments accounting. The announcement completed a project launched in 2008 in response to the global financial crisis.
The new standard includes revised guidance for the classification and measurement of financial assets including impairment and supplements, the new hedge accounting principles published in 2013.
Christopher Saunders, a banking partner at KPMG Thailand, said adopting the new rules would take time, effort and money for banks.
"A further issue for banks and investors in banks will be the impact of the new standard on regulatory capital ratios," he said. "Banks will need to be prepared to respond to questions from analysts and regulators, so factoring this into capital planning activities now is key."
Nick Bellamy, head of KPMG Financial Services in Thailand, said insurers must plan for new standards dealing with financial instruments and insurance contracts over the next few years.
"The overall effect cannot be assessed until the insurance standard is finalised over the next 12 months," he said. "But a significant change in financial reporting for most insurers should be expected."
Piyapong Sangpattarachai, an executive director for financial risk management at KPMG Thailand, said other companies should not assume the impact of the classification, measurement and impairment requirements of the new standard will be small, as it depends on the exposure corporations have and how they manage it.
Furthermore, many Thai companies do not adhere to fair-value accounting or hedging principles in relation to derivatives used in hedging activities, so adoption of IFRS 9 could introduce significant earnings volatility and accounting complexity.