Respite for SME accounting

Respite for SME accounting

The Thai Financial Reporting Standards (TFRS) for SMEs will be pushed back one more year to 2018 to give small and medium-sized enterprises (SMEs) more time to make changes.

Adoption will occur in three phases beginning from Jan 1, 2018, said Chanchai Chaiprasit, a partner of advisory PwC Thailand.

The second phase will be adopted in Jan 1, 2019 and the final phase -- which involves complicated issues such as classifying financial liabilities and owners' equity and financial instruments -- will take effect from Jan 1, 2022, he said.

The Federation of Accounting Professions has found that TFRS for non-publicly accountable entities is not appropriate for the majority of local SMEs, and has issued TFRS for SMEs.

"The adoption of TFRS for SMEs will come as a boon to operators who want to seek sources of funding from borrowing, bond issuance and foreign partnerships, and especially those lining up to list on the stock market as it can reduce costs, and reduce the time required to prepare for the transition," Mr Chanchai said.

These changes in the accounting standards are inevitable, but first movers in the change can get an edge over their rivals, he said.

The most frequent problem for SMEs in adopting accounting standards is a lack of consolidated financial statements and cash flow statements, as well as inaccurate records in balance sheets, Mr Chanchai said.

He said companies that invest in financial and equity markets and foreign exchange dealers should consider setting aside impairment funds to cushion against the impact of Brexit and Donald Trump's presidential win.

"In the short run, impacts from the changes will not be obvious and it is too early to estimate them," Mr Chanchai said. "There needs to be a period of time to absorb the US government's direction and policy next year. It's highly likely that such changes will take a toll on several industries in the medium to long term."

"Operators might need to review business plans and businesses need to closely monitor political movements as some policies could hurt operations. Tax barriers and trade agreements could be changed," he noted.

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