Leo Watanabe
2024年7月17日
The 27th meeting of the Emerging Economies Group (EEG) convened in Taiyuan, China, on 28-29 May 2024. The EEG, established in 2011 under the International Financial Reporting Standards (IFRS) Foundation Trustees, aims to amplify the involvement of emerging economies in the formulation of IFRS Accounting Standards.
The meeting served as a forum for discussions on financial reporting matters from the perspective of emerging economies, aligning with the IFRS Foundation's mission to develop globally applicable accounting standards. The EEG meeting highlighted several key trends and changes in IFRS Accounting Standards, which are crucial for companies operating in an international setting. Staying informed about these global trends empowers businesses operating in Thailand and Southeast Asia to maintain compliance and adhere to best practices. BizWings is actively monitoring the developments in IFRS and their implications for businesses operating in Thailand. Key topics covered during the meeting included climate-related financial reporting, targeted improvements to provisions, adjustments to financial instruments classification, and data resource accounting.
Climate-Related Financial Reporting:
Discussion around climate-related uncertainties in financial statements took center stage at the EEG meeting. As businesses face increasing regulatory and stakeholder pressure to disclose environmental impacts, integrating these requirements into financial reporting becomes essential. Members shared developments in their jurisdictions related to climate-related uncertainties and their impact on financial statements. There were mixed views on including illustrative examples as part of IFRS Standards, with concerns raised about disaggregation principles and the potential for errors in reflecting climate-related uncertainties. The IASB (International Accounting Standards Board) is expected to publish the exposure draft in July 2024 and will consider feedback from members.
It is anticipated that companies operating within Thailand will be influenced to adopt transparent and accountable practices that accurately reflect climate-related opportunities and risks. This shift is likely to be driven by stakeholder pressure and international regulatory developments, such as the European Corporate Sustainability Due Diligence Directive (CSDDD) which was recently adopted by the European Parliament and will come into force in 2028.
Provisions and Financial Instruments:
The EEG also addressed targeted improvements to provisions and amendments to the classification and measurement of financial instruments. These changes impact how companies account for liabilities and financial assets, affecting financial statements, investment strategies, and compliance obligations. Concerns have been raised about the proposed threshold for strategic business combinations, as well as the removal of restrictions on future restructurings and asset enhancements. Members also noted application challenges, particularly around principal versus agent determinations and expected credit losses. The IASB is expected to publish project summaries and feedback statements in the third quarter of 2024.
Data Resource Accounting:
The incorporation of accounting provisions for data resources within Chinese Generally Accepted Accounting Principles (GAAP) indicates a growing recognition of data as a valuable asset. This trend is likely to influence future IFRS standards, emphasizing the importance of data management and valuation. For businesses in Thailand, effective data resource accounting can provide a competitive edge. To achieve this, it is essential to ensure accurate valuation of data assets.
The next and 28th EEG meeting will be held on 17-18 December 2024 and will be closely followed by our team to ensure that we are up to date with the latest discussions.
As an emerging economy, Thailand is continuously adapting and updating the Thai Financial Reporting Standards (TFRS) to converge with the IFRS. The discussions and decisions made at the EEG meeting directly impact the future direction and amendments to the IFRS. BizWings, an accounting and advisory firm headquartered in Bangkok, is committed to assisting foreign companies in navigating these evolving standards. Our mission is to ensure compliance and provide strategic insights to our clients, positioning them for success in this dynamic business landscape.
Source: IFRS Emerging Economies Group