ARTICLE - ASEAN Voices: Shaping the Future of IFRS Standards

ASEAN Voices: Shaping the Future of IFRS Standards

Supporting adoption and implementation of IFRS Standards in ASEAN, the ASEAN Federation of Accountants (AFA) hosted a virtual event on the IASBs Third Agenda Consultation with representatives of ASEAN stakeholders.

By: Aucky Pratama (Executive Director, AFA)

With IFRS Standards being widely adopted and implemented in ASEAN, engagement with the IASB is becoming even more important. The message is clear—ASEAN stakeholders want the Board to reduce its focus on developing new IFRS Standards and major amendments to IFRS Standards. They want more focus on maintenance of the Standards, supporting their consistent application, improving their understandability and accessibility, while engaging with stakeholders, especially those that tend to be underrepresented.

IFRS Standards in ASEAN
As reported by the IFRS Foundation, 144 jurisdictions around the world now require IFRS Standards for all or most domestic publicly accountable entities (listed companies and financial institutions) in their capital markets, whilst a further 12 jurisdictions permit its use. 34 of these jurisdictions are based in Asia and Oceania, where 25 (74%) require IFRS Standards for all or most domestic publicly accountable entities.
In Southeast Asia, all ten ASEAN Member States have either adopted, converged their local standards into IFRS Standards, or are on course to adopt and implement IFRS Standards. From first adopter such as the Philippines, to Vietnam who has announced its plan to begin voluntary implementation of IFRS Standards from 2022 (with mandatory implementation after 2025), jurisdictions in ASEAN are dealing with a different set of challenges when it comes to adoption and implementation of the Standards. However, they have raised their voices and shared a common aspiration for the future of IFRS Standards in ASEAN.

Engagement with the ASEAN Stakeholders
The IASB understands well the importance of ASEAN as a growing economic force and an important stakeholder of the global financial reporting standard-setting. Whilst many of the jurisdictions are represented by their respective national standard-setting bodies in regional grouping such as the Asian-Oceanian Standard-Setters Group (AOSSG), AFA recognises the need to provide a platform for those underrepresented to engage with the Board.
“Responses to our consultation will help shape the IASBs thinking when determining its priorities for the next 5 years from 2022 to 2026. Given the increase in the use of IFRS Standards in ASEAN jurisdictions, feedback from our stakeholders in this region becomes more important than ever. We look forward to receiving your responses to the IASBs Third Agenda Consultation. Comments are due by 27 September 2021.” said IASB Member, Rika Suzuki.
Facilitated by AFA, the ASEAN stakeholders were presented with an opportunity to engage with representatives of the IASB and its technical staff. 200 participants from 16 countries, led by 16 representatives of the ASEAN jurisdictions shared their aspirations on what they believe the Boards priorities for 2022-2026 should be.

Time for Some Breathing Space
Over the past decade, the IASB introduced new major IFRS Standards on financial instruments, revenue, leases and insurance contracts. Adoption and implementation of these Standards in ASEAN vary. While some jurisdictions may have successfully implemented the Standards, many are still dealing with their complexities including but not limited to the (technical) capacity needed to apply the requirements.  
On top of challenges in adopting and implementing the Standards, stakeholders are also dealing with the impact of the COVID-19 pandemic, not only on financial reporting but also on their professional and personal lives. Recently published educational materials helped preparers and users tackle the complexities associated with covid-19 and has contributed to consistent application of the requirements in the Standards during and perhaps after the pandemic.
Under such challenging circumstances, representatives of the ASEAN stakeholders raised a common aspiration for the Board to provide some breathing space and sufficient time to build expertise and capacity to properly implement these complex Standards. Stakeholders suggest that in the period from 2022 to 2026, the Board focus less on developing new IFRS Standards and major amendments to IFRS Standards and focus more on maintenance and consistent application of IFRS Standards, and improve their understandability and accessibility.
Stakeholders also suggest the Board engage more with stakeholders from jurisdictions that have recently adopted IFRS Standards or jurisdictions that are planning to adopt IFRS Standards. Working with regional bodies such as AFA could help the Board extend its reach and engagement with stakeholders who may be underrepresented.
“For AFA, it is about presenting our ASEAN stakeholders with an opportunity to contribute to the development of IFRS Standards and at the same time continue to build our region’s capacity to adopt and implement the Standards” said Aucky Pratama, Executive Director of AFA.

Financial Reporting for the SMEs
Stock exchanges are present in 9 out of 10 jurisdictions. But, according to ASEAN, more than 90% of companies in ASEAN are SMEs (non-Public Interest Entities). These entities are an important group of users of the IFRS for SMEs Standard. Representatives of the ASEAN stakeholders believe that the Board should increase its current level of focus on providing financial reporting requirements for companies that do not have public accountability, ensuring that the Standard continuously meets these stakeholders needs.
Shazali Sulaiman of the Brunei Institute of Certified Public Accountants (BICPA) and Sonexay Silaphet of the Lao Chamber of Professional Accountants and Auditors (LCPAA) highlighted the importance for the Board to hear the voices of stakeholders from developing jurisdictions and consider their demand for more discussions and guidance on the IFRS for SMEs Standard.

New Financial Reporting Projects
Responding to the Board’s inquiry on new financial reporting issues that could be given priority in its 2022-2026 work plan, AFA understands that each jurisdiction may have different interests, challenges, and aspirations. However, a common interest raised by the ASEAN stakeholders is for the IASB to focus on completing projects currently on its work plan, prioritising projects that can deliver results sooner.
For many developing jurisdictions in ASEAN, the priority is to build their capacity to adopt and implement the Standards. Thus, allowing for some space to focus on current Standards without adding new projects to the work plan would be appreciated by many.
Nevertheless, projects identified by many stakeholders from the region as high priorities are:

• Review of requirements relating to going concern in IAS 1 Presentation of Financial Statements. The need for this project has increased as a result of the covid-19 pandemic.
• Review of requirements in IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. Due to the prevalence of covid-19-related government grants introduced by various governments, the Standard has taken on greater prominence.
• Intangible assets. Stakeholders generally agree that this project will require a lot of capacity of the Board and its stakeholders.  

A recording of the webinar is available at the AFA Facebook page.

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Category: ASEAN Accountants | Post on 10 Agustus 2021